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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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04-3505116
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.01 par value per share
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Nasdaq Global Market
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
x
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Emerging growth company
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PART I
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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PART II
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ITEM 5.
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ITEM 6.
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ITEM 7.
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ITEM 7A.
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ITEM 8.
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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PART III
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ITEM 10.
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ITEM 11.
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ITEM 12.
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ITEM 13.
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ITEM 14.
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PART IV
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ITEM 15.
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ITEM 16.
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ITEM 1.
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BUSINESS
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1.
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IRAK4 Program - a precision oncology program of small molecule inhibitors of IRAK4. The development candidate is CA-4948, an orally available small molecule inhibitor of IRAK4.
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2.
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PD1/VISTA Program - an immuno-oncology program of small molecule antagonists of PD1 and VISTA immune checkpoint pathways. The development candidate is CA-170, an orally available small molecule antagonist of VISTA and PDL1.
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3.
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PD1/TIM3 Program - an immuno-oncology program of small molecule antagonists of PD1 and TIM3 immune checkpoint pathways. The development candidate is CA-327, an orally available small molecule antagonist of PDL1 and TIM3.
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4.
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In March 2018, we exercised our option to license a fourth program, which is an immuno-oncology program.
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1.
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IRAK4 Program - a precision oncology program of small molecule inhibitors of IRAK4. The development candidate is CA-4948, an orally available small molecule inhibitor of IRAK4.
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2.
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PD1/VISTA Program - an immuno-oncology program of small molecule antagonists of PD1 and VISTA immune checkpoint pathways. The development candidate is CA-170, an orally available small molecule antagonist of VISTA and PDL1.
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3.
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PD1/TIM3 Program - an immuno-oncology program of small molecule antagonists of PD1 and TIM3 immune checkpoint pathways. The development candidate is CA-327, an orally available small molecule antagonist of PDL1 and TIM3.
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4.
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In March 2018, we exercised our option to license a fourth program, which is an immuno-oncology program.
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with respect to amounts that we and our affiliates receive from sublicensees under a licensed program in the U.S. or the European Union, a declining percentage of non-royalty sublicense revenues that is dependent on the stage of the most advanced product for such licensed program at the time the sublicense is granted, including, for example
25%
of such amounts following our initiation of a Phase 2 clinical study and
15%
of such amounts after initiation of the
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with respect to sublicensing revenues we and our affiliates receive from sublicensees under a licensed program in Asia,
50%
of such sublicensing revenues, including both non-royalty sublicensee revenues and royalties that we receive from sublicensees; and
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with respect to non-royalty sublicensing revenues we and our affiliates receive from sublicensees under a licensed program outside of the U.S., the European Union and Asia, a percentage of such non-royalty sublicense revenues ranging from
30%
to
50%
. We are also obligated to share
50%
of royalties that we receive from sublicensees that we receive in these territories.
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our license with respect to any licensed program that is not a terminated program (defined below), either in our entire territory or in countries within our territory outside of the terminated region (defined below), as applicable, shall
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our license with respect to any terminated program, either in our entire territory or in the terminated region, as applicable, shall terminate and revert to Aurigene;
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we will grant Aurigene a perpetual, royalty-free (except for pass-through royalties and milestone payments payable by us under licenses to third party patent rights with respect to products developed or commercialized by or on behalf of Aurigene) license, with the right to sublicense, under our relevant patent rights and other technology solely to develop, manufacture and commercialize compounds and products for any terminated program, either in our entire territory or in the terminated region, as applicable. The foregoing license will be non-exclusive with respect to our patent rights and exclusive with respect to our other technology;
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we will grant to Aurigene a right of first negotiation, exercisable within 90 days after termination, to obtain an exclusive, royalty-bearing license, with the right to sublicense, under our relevant patent rights solely to develop, manufacture and commercialize compounds and products for any terminated program, either in our entire territory or in the terminated region, as applicable, upon commercially reasonable terms and conditions to be negotiated in good faith by the parties;
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we will perform other specified activities and actions reasonably necessary for Aurigene to develop, manufacture and commercialize compounds and products for any terminated program, either in our entire territory or in the terminated region, as applicable; and
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the applicable license to Aurigene will survive termination.
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completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations;
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submission to the FDA of an IND, which must take effect before human clinical trials may begin;
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approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated;
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performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug product for each indication;
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preparation and submission to the FDA of a new drug application, or NDA, requesting marketing for one or more proposed indications;
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review of the candidate product by an FDA advisory committee, where appropriate or if applicable;
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satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current good manufacturing practices, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity;
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satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data;
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payment of user fees and securing FDA approval of the NDA; and
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compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and the potential requirement to conduct post-approval studies required by the FDA.
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Phase 1.
The drug is initially introduced into a small number of healthy human subjects or, in certain indications such as cancer, patients with the target disease or condition (e.g., cancer) and tested for safety, dosage tolerance, absorption, distribution, metabolism, excretion and, if possible, to gain an early indication of its effectiveness and to determine optimal dosage.
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Phase 2.
The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage, and regimen.
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Phase 3.
These clinical trials are commonly referred to as “pivotal” studies, which denotes a study which presents the data that the FDA or other relevant regulatory agency will use to determine whether or not to approve a drug. The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product and to provide adequate information for the labeling of the product.
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Phase 4.
Post-approval studies may be conducted after initial marketing approval. These studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication.
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restrictions on the marketing or manufacturing of the product, suspension of the approval, or complete withdrawal of the product from the market or product recalls;
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fines, warning letters or holds on post-approval clinical trials;
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refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals;
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product seizure or detention, or refusal to permit the import or export of products; or
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injunctions or the imposition of civil or criminal penalties.
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the required patent information has not been filed;
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the listed patent has expired;
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the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or
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the listed patent is invalid, unenforceable or will not be infringed by the new product.
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the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, paying, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid;
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the federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalties laws, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false, fictitious or fraudulent or knowingly making, using or causing to made or used a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal government;
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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
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the federal false statements statute prohibits knowingly and willfully falsifying, concealing ·or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;
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the Foreign Corrupt Practices Act, or FCPA, which prohibits companies and their intermediaries from making, or offering or promising to make improper payments to non-U.S. officials for the purpose of obtaining or retaining business or otherwise seeking favorable treatment; and
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the federal transparency requirements known as the federal Physician Payments Sunshine Act, under the Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, or the Affordable Care Act, or ACA, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, or CMS, within the United States Department of Health and Human Services, information related to payments and other transfers of value made by that entity to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to healthcare items or services that are reimbursed by non-governmental third-party payors, including private insurers.
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an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications;
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expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability;
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expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans;
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addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;
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expanded the types of entities eligible for the 340B drug discount program;
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established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a 50% point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D;
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a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;
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the Independent Payment Advisory Board, or IPAB, which has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs. However, the IPAB implementation has been not been clearly defined. The ACA provided that under certain circumstances, IPAB recommendations will become law unless Congress enacts legislation that will achieve the same or greater Medicare cost savings; and
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established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. Funding has been allocated to support the mission of the Center for Medicare and Medicaid Innovation from 2011 to 2019.
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Name
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Age
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Position
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James Dentzer
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52
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President and Chief Executive Officer
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Robert Martell, M.D., Ph.D.
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56
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Head of Research and Development
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James Dentzer
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Mr. Dentzer has served on our board of directors and as our President, Chief Executive Officer, Secretary and Treasurer since September 2018. From March 2018 to September 2018, Mr. Dentzer served as our Chief Operating Officer, Chief Financial Officer, Secretary, and Treasurer. Mr. Dentzer joined the Company in March 2016 as Chief Administrative Officer, Chief Financial Officer, Secretary, and Treasurer. From December 2013 to December 2015, Mr. Dentzer served as Chief Financial Officer of Dicerna Pharmaceuticals, Inc., an RNA interference-based biopharmaceutical company. From March 2010 to December 2013, Mr. Dentzer was the Chief Financial Officer of Valeritas, Inc., a commercial-stage medical technology company. From October 2006 to October 2009, Mr. Dentzer was the Chief Financial Officer of Amicus Therapeutics, Inc., a biotechnology company. In prior positions, Mr. Dentzer spent six years as corporate controller of Biogen and six years in various senior financial roles at E.I. du Pont de Nemours and Company in the U.S. and Asia. Mr. Dentzer holds a B.A. in philosophy from Boston College and an M.B.A. from the University of Chicago.
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Robert Martell, M.D., Ph.D.
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Dr. Martell has served as our Head of Research & Development since June 2018 and has been an Attending Physician at Tufts Medical Center since September 2015. From September 2011 to May 2018, Dr. Martell served on our board of directors. Dr. Martell is a co-founder of Epi-Cure Pharmaceuticals, a privately held early-stage biotechnology company, and has served on its board of directors and as president from June 2016 to August 2018. From September 2015 to May 2018, Dr. Martell has served as Associate Chief for the Division of Hematology/Oncology and on faculty at Tufts University School of Medicine. From September 2012 until June 2015, Dr. Martell served as Chief Medical Officer at Tesaro, Inc., a biopharmaceutical company developing Zejula and Varubi. During this time, he also held the position of an Adjunct Associate Professor of Medicine at the Tufts University School of Medicine, and was a practicing medical oncologist at Tufts Medical Center. From September 2009 to September 2012, Dr. Martell was an Associate Professor at Tufts Medical Center, serving as both the Director of the Neely Center for Clinical Cancer Research, overseeing oncology clinical research, and the Leader of the Cancer Center’s Program in Experimental Therapeutics, where he was responsible for developing the center’s phase I oncology clinical development program. From May 2005 to July 2009, Dr. Martell served as Vice President and Chief Medical Officer of MethylGene, a publicly-traded biotechnology company focused on the development of cancer therapeutics. From November 2002 to May 2005, Dr. Martell also served as Director of Oncology Global Clinical Research at Bristol-Myers Squibb Company, a biopharmaceutical company developing Sprycel, Erbitux and Ixempra. From July 2001 to May 2005, Dr. Martell served concurrently as Assistant Clinical Professor of Oncology at Yale University School of Medicine and Staff Physician at the Veterans Affairs hospital. From July 2000 to October 2002, Dr. Martell worked at Bayer Corporation, Pharmaceutical Division, where he oversaw phase I and phase II clinical studies of Nexavar. Dr. Martell received a B.A. in chemistry from Kalamazoo College, a Ph.D. in pharmacology from the University of Michigan, and an M.D. from Wayne State University. He completed his internal medicine internship and residency and medical oncology fellowship at Duke University Medical Center.
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ITEM 1A.
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RISK FACTORS
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continue to develop and conduct clinical trials with respect to drug candidates;
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seek to identify and develop additional drug candidates;
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acquire or in-license other drug candidates or technologies;
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seek regulatory and marketing approvals for our drug candidates that successfully complete clinical trials, if any;
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establish sales, marketing, distribution and other commercial infrastructure in the future to commercialize various drugs for which we may obtain marketing approval, if any;
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require the manufacture of larger quantities of drug candidates for clinical development and, potentially, commercialization;
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maintain, expand, and protect our intellectual property portfolio;
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hire and retain additional personnel, such as clinical, quality control and scientific personnel; and
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add equipment and physical infrastructure as may be required to support our research and development programs.
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unanticipated costs in our research and development programs;
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the timing and cost of obtaining regulatory approvals for our drug candidates and maintaining compliance with regulatory requirements;
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the timing and amount of option exercise fees, milestone payments, royalties and other payments, including payments due to licensors, including Aurigene, for patent rights and technology used in our drug development programs;
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the costs of commercialization activities for any of our drug candidates that receive marketing approval, to the extent such costs are our responsibility, including the costs and timing of establishing drug sales, marketing, distribution and manufacturing capabilities;
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unplanned costs to prepare, file, prosecute, defend and enforce patent claims and other patent-related costs, including litigation costs and technology license fees; and
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unexpected losses in our cash investments or an inability to otherwise liquidate our cash investments due to unfavorable conditions in the capital markets.
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any royalty and royalty-related payments to be remitted into a certain Curis Royalty designated account controlled by the Agent pursuant to a control agreement, referred to as the royalty account, into which all royalty and royalty-related payments must be paid by Curis or Curis Royalty are not so remitted in accordance with the Oberland Purchase Agreement;
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any representation or warranty made by Curis or Curis Royalty in the Oberland Purchase Agreement or any other transaction document proves to be incorrect or misleading in any material respect when made;
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a default by Curis or Curis Royalty in the performance of affirmative and negative covenants set forth in the Oberland Purchase Agreement or any other transaction document;
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a default by Curis in the performance or observance of its indemnity obligations under the Oberland Purchase Agreement;
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the failure by Genentech to pay material amounts owed under the Genentech collaboration agreement because of an actual breach or default by Curis under the Genentech collaboration agreement;
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the failure of the security agreement to create a valid and perfected first priority security interest in any of the collateral;
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a material breach or default by Curis under our agreement with Curis Royalty pursuant to which we transferred our rights to the royalty revenues under the Genentech collaboration agreement to Curis Royalty;
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the voluntary or involuntary commencement of bankruptcy proceedings by either Curis or Curis Royalty and other insolvency related events;
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any materially adverse effect on the binding nature of any of the Oberland Purchase Agreement, Security Agreement, Pledge Agreement or other transaction documents, the Genentech collaboration agreement or our agreement with Curis Royalty;
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any person shall be designated as an independent director of Curis Royalty other than in accordance with Curis Royalty’s limited liability company operating agreement; or
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Curis shall at any time cease to own, of record and beneficially, 100% of the equity interests in Curis Royalty.
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payments we may be required to make to collaborators such as Aurigene to exercise license rights and satisfy milestones and royalty obligations;
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the status of, and level of expenses incurred in connection with, our programs, including development costs relating to fimepinostat, CA-4948 and CA-170, as well as funding programs that we have licensed or may in the future license and develop under our collaboration with Aurigene;
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fluctuations in sales of Erivedge and related royalty and milestone payments, including fluctuations resulting from the sales of competing drug products such as sonidegib, which is approved in the U.S. and Europe for the treatment of locally advanced BCC and is now being marketed and sold by Sun Pharmaceuticals Industries Ltd., or Sun Pharmaceuticals;
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any intellectual property infringement lawsuit or other litigation in which we may become involved;
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the implementation of restructuring and cost-savings strategies;
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the occurrence of an event of default under the Oberland Purchase Agreement;
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the implementation or termination of collaboration, licensing, manufacturing or other material agreements with third parties, and non-recurring revenue or expenses under any such agreement; and
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compliance with regulatory requirements.
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successful enrollment in, and completion of, ongoing and future clinical trials of fimepinostat, CA-4948, CA-170 and other compounds that we may develop under our collaboration agreement with Aurigene;
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Aurigene’s ability to successfully discover and preclinically develop other drug candidates under the collaboration agreement;
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a safety, tolerability and efficacy profile that is satisfactory to the FDA or any comparable foreign regulatory authority for marketing approval;
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receipt of requisite marketing approvals from applicable regulatory authorities;
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the extent of any required post marketing approval commitments to applicable regulatory authorities;
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establishment of supply arrangements with third party raw materials suppliers and manufacturers;
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establishment of arrangements with third party manufacturers to obtain finished drug products that is appropriately packaged for sale;
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adequate ongoing availability of raw materials and drug products for clinical development and any commercial sales;
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obtaining and maintaining patent, trade secret protection and regulatory exclusivity, both in the U.S. and internationally;
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protection of the rights in our intellectual property portfolio;
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successful launch of commercial sales following any marketing approval;
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a continued acceptable safety profile following any marketing approval;
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commercial acceptance by patients, the medical community and third-party payors; and
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our ability to compete with other therapies.
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incur additional unplanned costs;
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be delayed in obtaining marketing approval for our drug candidates;
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not obtain marketing approval at all;
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obtain approval for indications or patient populations that are not as broad as intended or desired;
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obtain approval with labeling that includes significant use or distribution restrictions or significant safety warnings, including boxed warnings;
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be subject to additional post-marketing testing or other requirements; or
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be required to remove the drug from the market after obtaining marketing approval.
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regulators or institutional review boards may not authorize us, any collaborators or our or their investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;
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we, or any collaborators, may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;
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clinical trials of our drug candidates may produce unfavorable or inconclusive results;
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we, or any collaborators, may decide, or regulators may require us or them, to conduct additional clinical trials or abandon drug development programs;
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the number of patients required for clinical trials of our drug candidates may be larger than we, or any collaborators, anticipate, patient enrollment in these clinical trials may be slower than we, or any collaborators, anticipate or participants may drop out of these clinical trials at a higher rate than we, or any collaborators, anticipate;
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our estimates of the patient populations available for study may be higher than actual patient numbers and result in our inability to sufficiently enroll our trials;
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the cost of planned clinical trials of our drug candidates may be greater than we anticipate;
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our third-party contractors or those of any collaborators, including those manufacturing our drug candidates or components or ingredients thereof or conducting clinical trials on our behalf or on behalf of any collaborators, may fail to comply with regulatory requirements or meet their contractual obligations to us or any collaborators in a timely manner or at all;
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patients that enroll in a clinical trial may misrepresent their eligibility to do so or may otherwise not comply with the clinical trial protocol, resulting in the need to drop the patients from the clinical trial, increase the needed enrollment size for the clinical trial or extend the clinical trial’s duration;
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we, or any collaborators, may have to delay, suspend or terminate clinical trials of our drug candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of the drug candidate;
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regulators or institutional review boards may require that we, or any collaborators, or our or their investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or
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the FDA or comparable foreign regulatory authorities may disagree with our, or any collaborators’, clinical trial designs or our or their interpretation of data from preclinical studies and clinical trials;
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the FDA or comparable foreign regulatory authorities may fail to approve or subsequently find fault with the manufacturing processes or facilities of third-party manufacturers with which we, or any collaborators, enter into agreements for clinical and commercial supplies;
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the supply or quality of raw materials or manufactured drug candidates or other materials necessary to conduct clinical trials of our drug candidates may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; and
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the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient to obtain marketing approval.
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the size and nature of the patient population;
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the severity of the disease under investigation;
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the availability of approved therapeutics for the relevant disease;
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the proximity of patients to clinical sites;
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the eligibility criteria and design for the trial;
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efforts to facilitate timely enrollment;
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competing clinical trials; and
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clinicians’ and patients’ perceptions as to the potential advantages and risks of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.
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regulatory authorities may withdraw their approval of the drug or seize the drug;
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we, or any future collaborators, may be required to recall the drug, change the way the drug is administered or conduct additional clinical trials;
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additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the particular drug;
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we may be subject to fines, injunctions or the imposition of civil or criminal penalties;
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regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;
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we, or any future collaborators, may be required to create a Medication Guide outlining the risks of the previously unidentified side effects for distribution to patients;
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we, or any future collaborators, could be sued and held liable for harm caused to patients;
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the drug may become less competitive; and
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our reputation may suffer.
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the efficacy and safety of the drug;
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the potential advantages of the drug compared to competitive therapies;
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the prevalence and severity of any side effects;
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•
|
whether the drug is designated under physician treatment guidelines as a first-, second- or third-line therapy;
|
•
|
our ability, or the ability of any future collaborators, to offer the drug for sale at competitive prices;
|
•
|
the drug’s convenience and ease of administration compared to alternative treatments;
|
•
|
the willingness of the target patient population to try, and of physicians to prescribe, the drug;
|
•
|
limitations or warnings, including distribution or use restrictions, contained in the drug’s approved labeling;
|
•
|
the strength of sales, marketing and distribution support;
|
•
|
changes in the standard of care for the targeted indications for the drug; and
|
•
|
availability and amount of coverage and reimbursement from government payors, managed care plans and other third-party payors.
|
•
|
we may not be able to attract and build a significant and skilled marketing staff or sales force;
|
•
|
the cost of establishing a marketing staff or sales force may not be justifiable in light of the revenues generated by any particular drug; and
|
•
|
our direct sales and marketing efforts may not be successful.
|
•
|
decreased demand for our drug candidates or drugs that we may develop;
|
•
|
injury to our reputation and significant negative media attention;
|
•
|
withdrawal of clinical trial participants;
|
•
|
significant costs to defend resulting litigation;
|
•
|
substantial monetary awards to trial participants or patients;
|
•
|
loss of revenue;
|
•
|
reduced resources of our management to pursue our business strategy; and
|
•
|
the reduced ability or inability to commercialize any drugs that we may develop.
|
•
|
Erivedge becomes no longer accepted as safe, efficacious, cost-effective and preferable for the treatment of advanced BCC to current therapies in the medical community and by third-party payors;
|
•
|
Genentech and/or Roche fail to continue to apply the necessary financial resources and expertise to manufacturing, marketing and selling Erivedge for advanced BCC, and to regulatory approvals for this indication outside of the U.S.;
|
•
|
Genentech and/or Roche do not continue to develop and implement effective marketing, sales and distribution strategies and operations for development and commercialization of Erivedge for advanced BCC;
|
•
|
Genentech and/or Roche do not continue to develop, validate and maintain a commercially viable manufacturing process for Erivedge that is compliant with current good manufacturing practices;
|
•
|
Genentech and/or Roche do not successfully obtain third party reimbursement and generate commercial demand that results in sales of Erivedge for advanced BCC in any geographic areas where requisite approvals have been, or may be, obtained;
|
•
|
we, Genentech, or Roche encounter third-party patent interference, derivation, inter partes review, post-grant review, reexamination or patent infringement claims with respect to Erivedge;
|
•
|
Genentech and/or Roche do not comply with regulatory and legal requirements applicable to the sale of Erivedge for advanced BCC;
|
•
|
competing drug products are approved for the same indications as Erivedge, such as is the case with sonidegib, which is being marketed and sold by Sun Pharmaceutical, both in the U.S. and abroad for the treatment of adults with locally advanced BCC;
|
•
|
new safety risks are identified;
|
•
|
Erivedge does not demonstrate acceptable safety and efficacy in current or future clinical trials, or otherwise does not meet applicable regulatory standards for approval in indications other than advanced BCC;
|
•
|
Genentech and/or Roche determine to re-prioritize Genentech’s commercial or development programs and reduce or terminate Genentech’s efforts on the development or commercialization of Erivedge; or
|
•
|
Genentech does not exercise its first right to maintain or defend intellectual property rights associated with Erivedge.
|
•
|
Our collaborators each have significant discretion in determining the efforts and resources that they will apply to their respective collaboration with us. If a collaborator fails to allocate sufficient time, attention and resources to our collaboration, the successful development and commercialization of drug candidates under such collaboration is likely to be adversely affected. For example, we are dependent on Aurigene to successfully discover and advance preclinical programs from which we may exercise our option to license drug candidates for future development.
|
•
|
Our collaborators may develop and commercialize, either alone or with others, drugs that are similar to or competitive with the drug candidates that are the subject of our respective collaborations. For example, Genentech and Roche are involved in the commercialization of many cancer medicines and are seeking to develop several other cancer drug therapies, and Aurigene has other active cancer-focused discovery programs and has also entered into license agreements with other companies that focus on cancer therapies.
|
•
|
Our collaborators may change the focus of their development and commercialization efforts or pursue higher-priority programs.
|
•
|
Our collaborators may enter into one or more transactions with third parties, including a merger, consolidation, reorganization, sale of substantial assets, sale of substantial stock or change of control. Any such transaction could divert the attention of our collaborative partner’s management and adversely affect its ability to retain and motivate key personnel who are important to the continued development of the programs under such collaboration. In addition, an acquirer could determine to reprioritize our collaborator’s development programs such that our collaborator ceases to diligently pursue the development of our programs, and/or terminates our collaboration.
|
•
|
Our collaborators may, under specified circumstances, terminate their collaborations with us on short notice and for circumstances outside of our control, which could make it difficult for us to attract new collaborators or adversely affect how we are perceived in the scientific, biotech, pharma and financial communities.
|
•
|
Our collaborators may utilize our intellectual property rights in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights, or expose us to potential liability.
|
•
|
Disputes may arise between collaborators and us regarding ownership of or other rights in the intellectual property generated in the course of the collaborations.
|
•
|
If any of our collaborators were to breach or terminate its arrangement with us, the development and commercialization of the affected drug candidate or program could be delayed, curtailed or terminated.
|
•
|
the development of certain of our current or future drug candidates may be terminated or delayed;
|
•
|
our cash expenditures related to development of certain of our current or future drug candidates would increase significantly and we may need to seek additional financing;
|
•
|
we may be required to hire additional employees or otherwise develop additional expertise, such as clinical, regulatory, sales and marketing expertise, for which we have not budgeted;
|
•
|
we will have to bear all of the risk related to the development of any such drug candidates; and
|
•
|
our future prospects may be adversely affected and our stock price could decline.
|
•
|
manufacturing delays if our third-party contractors give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them, or if unforeseen events in the manufacturing process arise;
|
•
|
the failure of third-party contractors to comply with applicable regulatory requirements;
|
•
|
the possible mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or active drug or placebo not being properly identified;
|
•
|
the possibility of clinical supplies not being delivered to clinical sites on time, leading to clinical trial interruptions, or of drug supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; and
|
•
|
the possible misappropriation of our proprietary information, including our trade secrets and know-how.
|
•
|
we, and any collaborators, may not be able to initiate or continue certain preclinical and/or clinical trials of our drug candidates under development;
|
•
|
we, and any collaborators, may be delayed in submitting applications for regulatory approvals for our drug candidates; and
|
•
|
we, and any collaborators, may not be able to meet commercial demand for any approved drug products.
|
•
|
a diversion of management attention from our existing operations;
|
•
|
increased operating complexity of our business, requiring greater personnel and resources;
|
•
|
significant additional cash expenditures to expand our operations and acquire and integrate new businesses and technologies;
|
•
|
unanticipated expenses and potential delays related to integration of the operations, technology and other resources of any acquired companies;
|
•
|
uncertainty related to the value, benefits or legitimacy of intellectual property or technologies acquired;
|
•
|
retaining and assimilating key personnel and the potential impairment of relationships with our employees;
|
•
|
incurrence of debt, other liabilities and contingent liabilities, including potentially unknown contingent liabilities; and
|
•
|
dilutive stock issuances.
|
•
|
obtain patents to protect our technologies and discoveries;
|
•
|
protect trade secrets from disclosure to competitors;
|
•
|
operate without infringing upon the proprietary rights of others; and
|
•
|
prevent others from infringing on our proprietary rights.
|
•
|
initiation of litigation or other proceedings against third parties to enforce our patent rights, to seek to invalidate the patents held by third parties or to obtain a judgment that our drug candidates do not infringe such third parties’ patents;
|
•
|
participation in interference and/or derivation proceedings to determine the priority of invention if our competitors file U.S. patent applications that claim technology also claimed by us;
|
•
|
initiation of opposition, reexamination, post grant review or inter partes review proceedings by third parties that seek to limit or eliminate the scope of our patent protection;
|
•
|
initiation of litigation by third parties claiming that our processes or drug candidates or the intended use of our drug candidates infringes their patent or other intellectual property rights; and
|
•
|
initiation of litigation by us or third parties seeking to enforce contract rights relating to intellectual property that may be important to our business.
|
•
|
restrictions on such drugs, manufacturers or manufacturing processes;
|
•
|
restrictions on the labeling or marketing of a drug;
|
•
|
restrictions on drug distribution or use;
|
•
|
requirements to conduct post-marketing studies or clinical trials;
|
•
|
warning letters or untitled letters;
|
•
|
withdrawal of the drugs from the market;
|
•
|
refusal to approve pending applications or supplements to approved applications that we submit;
|
•
|
recall of drugs;
|
•
|
restrictions on coverage by third-party payors;
|
•
|
fines, restitution or disgorgement of profits or revenues;
|
•
|
suspension or withdrawal of marketing approvals;
|
•
|
refusal to permit the import or export of drugs;
|
•
|
drug seizure; or
|
•
|
injunctions or the imposition of civil or criminal penalties.
|
•
|
an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents;
|
•
|
an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;
|
•
|
expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance;
|
•
|
a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices to eligible beneficiaries during their coverage gap period, as a condition for a manufacturer’s outpatient drugs to be covered under Medicare Part D;
|
•
|
extension of manufacturers’ Medicaid rebate liability;
|
•
|
expansion of eligibility criteria for Medicaid programs;
|
•
|
expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;
|
•
|
new requirements to report certain financial arrangements with physicians and teaching hospitals;
|
•
|
a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and
|
•
|
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
|
•
|
the timing and result of clinical trials of our drug candidates;
|
•
|
the success of, and announcements regarding, existing and new technologies and/or drug candidates by us or our competitors;
|
•
|
regulatory actions with respect to our product candidates or our competitors’ products and product candidates;
|
•
|
market conditions in the biotechnology and pharmaceutical sectors;
|
•
|
rumors relating to us or our collaborators or competitors;
|
•
|
commencement or termination of collaborations for our development programs;
|
•
|
litigation or public concern about the safety of our drug candidates;
|
•
|
actual or anticipated variations in our quarterly operating results and any subsequent restatement of such results;
|
•
|
the amount and timing of any royalty revenue we receive from Genentech related to Erivedge;
|
•
|
actual or anticipated changes to our research and development plans;
|
•
|
deviations in our operating results from the estimates of securities analysts;
|
•
|
entering into new collaboration agreements or termination of existing collaboration agreements;
|
•
|
adverse results or delays in clinical trials being conducted by us or any collaborators;
|
•
|
any intellectual property disputes or other lawsuits involving us;
|
•
|
third-party sales of large blocks of our common stock;
|
•
|
sales of our common stock by our executive officers, directors or significant stockholders;
|
•
|
equity sales by us of our common stock to fund our operations;
|
•
|
the loss of any of our key scientific or management personnel;
|
•
|
FDA or international regulatory actions;
|
•
|
limited trading volume in our common stock;
|
•
|
general economic and market conditions, including recent adverse changes in the domestic and international financial markets; and
|
•
|
the other factors described in this “Risk Factors” section.
|
•
|
our or our collaborators’ preclinical studies and clinical trials may not advance or be completed in the time frames we or they announce or expect;
|
•
|
we or our collaborators may not make regulatory submissions, receive regulatory approvals or commercialize approved drugs as predicted; and
|
•
|
we or our collaborators may not be able to adhere to our or their current schedule for the achievement of key milestones under any programs.
|
•
|
the composition of our board of directors;
|
•
|
the adoption of amendments to our certificate of incorporation and bylaws;
|
•
|
the approval of mergers or sales of substantially all of our assets;
|
•
|
our capital structure and financing; and
|
•
|
the approval of contracts between us and these shareholders or their affiliates, which could involve conflicts of interest.
|
•
|
delaying, deferring or preventing a change in control of our company and making some transactions more difficult or impossible without the support of these shareholders, even if such transactions are beneficial to other shareholders;
|
•
|
impeding a merger, consolidation, takeover or other business combination involving our company; or
|
•
|
entrenching our management or the board of directors.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Fimepinostat (CUDC-907), our internally-developed drug candidate for which our clinical studies in patients with relapsed refractory DLBCL including those with MYC alterations are ongoing. Fimepinostat was granted Orphan Drug Designation in April 2015 and Fast Track Designation in May 2018 by the FDA for the treatment of DLBCL. We are planning a Phase 1 combination study with venetoclax in DLBCL patients with alterations in both MYC and the BCL2 gene, also referred to as double-hit lymphoma, with planned enrollment commencing in the first half of 2019. We expect to report initial clinical data from this combination study in the second half of 2019;
|
•
|
CA-4948, for which, in January 2018 we initiated a dose escalating clinical trial in patients with non-Hodgkin lymphomas, including those with MYD88 alterations. We expect to report initial Phase 1 clinical data from this study in mid-year 2019; and
|
•
|
CA-170, for which we are currently conducting a clinical study in patients with advanced solid tumors and lymphomas. We have amended the current protocol for the study to include mesothelioma patients. We announced in January 2019 that we have begun enrollment of these patients and expect to report initial clinical data from this study with respect to mesothelioma in the second half of 2019.
|
1.
|
IRAK4 Program - a precision oncology program of small molecule inhibitors of IRAK4. The development candidate is CA-4948, an orally available small molecule inhibitor of IRAK4.
|
2.
|
PD1/VISTA Program - an immuno-oncology program of small molecule antagonists of PD1 and VISTA immune checkpoint pathways. The development candidate is CA-170, an orally available small molecule antagonist of VISTA and PDL1.
|
3.
|
PD1/TIM3 Program - an immuno-oncology program of small molecule antagonists of PD1 and TIM3 immune checkpoint pathways. The development candidate is CA-327, an orally available small molecule antagonist of PDL1 and TIM3.
|
4.
|
In March 2018, we exercised our option to license a fourth program, which is an immuno-oncology program.
|
1.
|
IRAK4 Program - a precision oncology program of small molecule inhibitors of IRAK4. The development candidate is CA-4948, an orally available small molecule inhibitor of IRAK4.
|
2.
|
PD1/VISTA Program - an immuno-oncology program of small molecule antagonists of PD1 and VISTA immune checkpoint pathways. The development candidate is CA-170, an orally available small molecule antagonist of VISTA and PDL1.
|
3.
|
PD1/TIM3 Program - an immuno-oncology program of small molecule antagonists of PD1 and TIM3 immune checkpoint pathways. The development candidate is CA-327, an orally available small molecule antagonist of PDL1 and TIM3.
|
4.
|
In March 2018, we exercised our option to license a fourth program, which is an immuno-oncology program.
|
•
|
with respect to amounts that we and our affiliates receive from sublicensees under a licensed program in the U.S. or the European Union, a declining percentage of non-royalty sublicense revenues that is dependent on the stage of the most advanced product for such licensed program at the time the sublicense is granted, including, for example
25%
of such amounts following our initiation of a Phase 2 clinical study and
15%
of such amounts after initiation of the first pivotal study. This sharing will also extend to royalties that we receive from sublicensees, subject to minimum royalty percentage rates that we are obligated to pay to Aurigene, which generally range from mid-to-high single-digit royalty percentage rates up to
10%
;
|
•
|
with respect to sublicensing revenues we and our affiliates receive from sublicensees under a licensed program in Asia,
50%
of such sublicensing revenues, including both non-royalty sublicensee revenues and royalties that we receive from sublicensees; and
|
•
|
with respect to non-royalty sublicensing revenues we and our affiliates receive from sublicensees under a licensed program outside of the U.S., the European Union and Asia, a percentage of such non-royalty sublicense revenues ranging from
30%
to
50%
. We are also obligated to share
50%
of royalties that we receive from sublicensees that we receive in these territories.
|
•
|
our ability to successfully plan, finance and complete current and planned clinical trials for fimepinostat, CA-4948 and CA-170 as well as for such clinical trials to generate favorable data;
|
•
|
Aurigene’s ability to advance additional preclinical immuno-oncology, and precision oncology drug candidates, and our ability to license these programs from Aurigene and further progress them clinically;
|
•
|
Genentech and Roche’s ability to continue to successfully commercialize Erivedge in advanced BCC in the United States and in other global territories; and
|
•
|
our ability to raise the substantial additional financing required to fund our operations through our at-the-market sale facility with Cowen or other potential financing.
|
•
|
costs of conducting clinical trials, including amounts paid to clinical centers, clinical research organizations and consultants, among others;
|
•
|
certain payments that we make to Aurigene under our collaboration agreement, including, for example, option exercise fees and milestone payments; and
|
•
|
payments that we are obligated to make to certain third-party university licensors upon our receipt of payments from Genentech related to the achievement of clinical development and regulatory objectives under our collaboration agreement.
|
•
|
the scope, quality of data, rate of progress and cost of clinical trials and other research and development activities undertaken by us or our collaborators;
|
•
|
the results of future preclinical studies and clinical trials;
|
•
|
the cost and timing of regulatory approvals and maintaining compliance with regulatory requirements;
|
•
|
the cost and timing of establishing sales, marketing and distribution capabilities;
|
•
|
the cost of establishing clinical and commercial supplies of our drug candidates and any products that we may develop;
|
•
|
the effect of competing technological and market developments; and
|
•
|
the cost and effectiveness of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
|
Level 1
|
Quoted prices in active markets for identical assets or liabilities.
|
Level 2
|
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
Level 3
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
|
For the Year Ended
December 31,
|
|
Percentage Increase/ (Decrease)
|
|||||||
|
2018
|
|
2017
|
|
2018 v. 2017
|
|||||
Revenues
|
$
|
10,428
|
|
|
$
|
9,898
|
|
|
5
|
%
|
Cost of royalty revenues
|
563
|
|
|
496
|
|
|
13
|
%
|
||
Research and development
|
24,413
|
|
|
45,096
|
|
|
(46
|
)%
|
||
General and administrative
|
14,785
|
|
|
14,066
|
|
|
5
|
%
|
||
Total other expense, net
|
3,242
|
|
|
3,557
|
|
|
(9
|
)%
|
||
Net loss
|
$
|
(32,575
|
)
|
|
$
|
(53,317
|
)
|
|
39
|
%
|
|
For the Year Ended
December 31,
|
|
Percentage Increase/ (Decrease)
|
|||||||
|
2018
|
|
2017
|
|
2018 v. 2017
|
|||||
REVENUES:
|
|
|
|
|
|
|||||
Royalties
|
10,421
|
|
|
9,849
|
|
|
6
|
%
|
||
Research and development, net
|
7
|
|
|
49
|
|
|
(85
|
)%
|
||
Total revenues
|
$
|
10,428
|
|
|
$
|
9,898
|
|
|
5
|
%
|
|
For the Year Ended
December 31,
|
|
Percentage Increase/ (Decrease)
|
|||||||
|
2018
|
|
2017
|
|
2018 v. 2017
|
|||||
Direct research and development expenses
|
$
|
10,941
|
|
|
$
|
31,468
|
|
|
(65
|
)%
|
Employee-related expenses
|
11,378
|
|
|
11,752
|
|
|
(3
|
)%
|
||
Facilities, depreciation and other expenses
|
2,094
|
|
|
1,876
|
|
|
12
|
%
|
||
Total research and development expenses
|
$
|
24,413
|
|
|
$
|
45,096
|
|
|
(46
|
)%
|
|
For the Year Ended
December 31,
|
|
Percentage Increase/ (Decrease)
|
|||||||
|
2018
|
|
2017
|
|
2018 v. 2017
|
|||||
Personnel
|
$
|
5,277
|
|
|
$
|
4,620
|
|
|
14
|
%
|
Occupancy and depreciation
|
553
|
|
|
460
|
|
|
20
|
%
|
||
Legal services
|
2,906
|
|
|
2,055
|
|
|
41
|
%
|
||
Professional and consulting services
|
2,142
|
|
|
1,835
|
|
|
17
|
%
|
||
Insurance costs
|
409
|
|
|
404
|
|
|
1
|
%
|
||
Other general and administrative expenses
|
869
|
|
|
819
|
|
|
6
|
%
|
||
Stock-based compensation
|
2,630
|
|
|
3,873
|
|
|
(32
|
)%
|
||
Total general and administrative expenses
|
$
|
14,785
|
|
|
$
|
14,066
|
|
|
5
|
%
|
•
|
unanticipated costs in our research and development programs;
|
•
|
the timing and cost of obtaining regulatory approvals for our drug candidates and maintaining compliance with regulatory requirements;
|
•
|
the timing and amount of option exercise fees, milestone payments, royalties and other payments, including payments due to licensors, including Aurigene, for patent rights and technology used in our drug development programs;
|
•
|
the costs of commercialization activities for any of our drug candidates that receive marketing approval, to the extent such costs are our responsibility, including the costs and timing of establishing drug sales, marketing, distribution and manufacturing capabilities;
|
•
|
unplanned costs to prepare, file, prosecute, defend and enforce patent claims and other patent-related costs, including litigation costs and technology license fees; and
|
•
|
unexpected losses in our cash investments or an inability to otherwise liquidate our cash investments due to unfavorable conditions in the capital markets.
|
|
Payment Due By Period (amounts in 000’s)
|
||||||||||||||||||
|
Total
|
|
Less than
One Year
|
|
One to
Three Years
|
|
Three to
Five Years
|
|
More than
Five Years
|
||||||||||
Debt obligations under credit agreement (1)
|
$
|
46,492
|
|
|
$
|
10,037
|
|
|
$
|
21,619
|
|
|
$
|
14,836
|
|
|
$
|
—
|
|
Operating lease obligations (2)
|
1,170
|
|
|
1,002
|
|
|
168
|
|
|
—
|
|
|
—
|
|
|||||
Outside service obligations (3)
|
795
|
|
|
450
|
|
|
345
|
|
|
—
|
|
|
—
|
|
|||||
Licensing obligations (4)
|
404
|
|
|
320
|
|
|
84
|
|
|
—
|
|
|
—
|
|
|||||
Total future obligations
|
$
|
48,861
|
|
|
$
|
11,809
|
|
|
$
|
22,216
|
|
|
$
|
14,836
|
|
|
$
|
—
|
|
(1)
|
As of
December 31, 2018
, the outstanding balance, including interest, on the debt was
$35.8
million. The above amounts reflect management’s estimates as of
December 31, 2018
of repayments, including accrued interest payments, based on the terms of Curis Royalty’s credit facility with HealthCare Royalty, and assumptions about potential future Erivedge royalties.
I
n March 2019 we terminated and repaid all amounts outstanding under the loan with HealthCare Royalty. For further discussion please refer to “Part II, Item 9B. Other Information - Royalty Interest Purchase Agreement.”
|
(2)
|
We are party to a lease agreement with the Trustees of Lexington Office Realty Trust pursuant to which we lease
24,529
square feet of property for office, research and laboratory space located at 4 Maguire Road in Lexington, Massachusetts. The term of the lease agreement commenced on
December 1, 2010
and, pursuant to a second amendment to the lease agreement on
November 1, 2017
, it will expire on
February 29, 2020
. The total remaining cash obligation for the base rent over the second amended term of the lease agreement is approximately
$1.2
million. In addition to the base rent, we are responsible for our share of operating expenses and real estate taxes, in accordance with the terms of the lease agreement. Amounts include contractual rent payments as defined in the agreement.
|
(3)
|
Outside service obligations consist of agreements we have with outside labs, consultants and various other service organizations. Obligations to clinical research organizations, medical centers and hospitals conducting our clinical trials are included in our financial statements for costs incurred as of
December 31, 2018
. Our obligations under these types of arrangements are limited to actual costs incurred for services performed and do not include any contingent or milestone payments.
|
(4)
|
Licensing obligations include only obligations that are known to us as of
December 31, 2018
. In the future, we may owe royalties and other contingent payments to our licensors based on the achievement of developmental milestones, product sales, and other specified objectives. These future obligations, including those related to Aurigene, Genentech, Debiopharm and LLS, are not reflected in the table above as these payments are contingent upon achievement of developmental and commercial milestones, the likelihood and timing of which cannot be reasonably estimated at this time. These contingent obligations are further described under the “Our Collaborations and License Agreements” section.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
•
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and our board of directors; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
/s/ PricewaterhouseCoopers LLP
|
Boston, Massachusetts
|
March 26, 2019
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
23,636
|
|
|
$
|
38,288
|
|
Investments
|
634
|
|
|
21,944
|
|
||
Accounts receivable
|
2,864
|
|
|
3,073
|
|
||
Prepaid expenses and other current assets
|
827
|
|
|
989
|
|
||
Total current assets
|
27,961
|
|
|
64,294
|
|
||
Property and equipment, net
|
267
|
|
|
366
|
|
||
Long-term investment—restricted
|
153
|
|
|
153
|
|
||
Goodwill
|
8,982
|
|
|
8,982
|
|
||
Other assets
|
2
|
|
|
3
|
|
||
Total assets
|
$
|
37,365
|
|
|
$
|
73,798
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
2,909
|
|
|
$
|
5,423
|
|
Accrued liabilities
|
3,457
|
|
|
2,793
|
|
||
Current portion of long-term debt, net
|
6,884
|
|
|
5,886
|
|
||
Total current liabilities
|
13,250
|
|
|
14,102
|
|
||
Long-term debt, net
|
28,600
|
|
|
35,669
|
|
||
Other long-term liabilities
|
11
|
|
|
34
|
|
||
Total liabilities
|
41,861
|
|
|
49,805
|
|
||
Stockholders’ Equity:
|
|
|
|
||||
Common stock, $0.01 par value—67,500,000 shares authorized, 33,159,253 shares issued and outstanding at December 31, 2018; 45,000,000 shares authorized, 33,075,949 shares issued and 32,831,380 shares outstanding at December 31, 2017
|
332
|
|
|
331
|
|
||
Additional paid-in capital
|
980,012
|
|
|
977,453
|
|
||
Treasury stock, at cost, 0 shares at December 31, 2018 and 244,569 shares at December 31, 2017
|
—
|
|
|
(1,524
|
)
|
||
Accumulated deficit
|
(984,840
|
)
|
|
(952,265
|
)
|
||
Accumulated other comprehensive loss
|
—
|
|
|
(2
|
)
|
||
Total stockholders’ equity
|
(4,496
|
)
|
|
23,993
|
|
||
Total liabilities and stockholders’ equity
|
$
|
37,365
|
|
|
$
|
73,798
|
|
|
Years Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Revenues:
|
|
|
|
||||
Royalties
|
$
|
10,421
|
|
|
$
|
9,849
|
|
Research and development, net
|
7
|
|
|
49
|
|
||
Total revenues
|
10,428
|
|
|
9,898
|
|
||
Costs and Expenses:
|
|
|
|
||||
Cost of royalties
|
563
|
|
|
496
|
|
||
Research and development
|
24,413
|
|
|
45,096
|
|
||
General and administrative
|
14,785
|
|
|
14,066
|
|
||
Total costs and expenses
|
39,761
|
|
|
59,658
|
|
||
Loss from operations
|
(29,333
|
)
|
|
(49,760
|
)
|
||
Other (Expense) Income:
|
|
|
|
||||
Interest income
|
684
|
|
|
513
|
|
||
Other expense
|
—
|
|
|
(104
|
)
|
||
Interest expense
|
(3,926
|
)
|
|
(3,966
|
)
|
||
Total other expense, net
|
(3,242
|
)
|
|
(3,557
|
)
|
||
Net loss
|
$
|
(32,575
|
)
|
|
$
|
(53,317
|
)
|
Net Loss per Common Share (Basic and Diluted)
|
$
|
(0.98
|
)
|
|
$
|
(1.79
|
)
|
Weighted Average Common Shares (Basic and Diluted)
|
33,118,393
|
|
|
29,826,693
|
|
||
Net Loss
|
$
|
(32,575
|
)
|
|
$
|
(53,317
|
)
|
Other comprehensive gain, net of tax:
|
|
|
|
||||
Unrealized gain on marketable securities
|
2
|
|
|
2
|
|
||
Comprehensive loss
|
$
|
(32,573
|
)
|
|
$
|
(53,315
|
)
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Treasury
Stock
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
|
Total
Stockholders’
Equity
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
Balance, December 31, 2016
|
28,469,330
|
|
|
$
|
285
|
|
|
$
|
929,642
|
|
|
$
|
(1,524
|
)
|
|
$
|
(898,948
|
)
|
|
$
|
(4
|
)
|
|
$
|
29,451
|
|
Issuances of common pursuant to sales of shares in the Company’s public offering, net of $0.3 million of issuance costs
|
4,000,000
|
|
|
40
|
|
|
35,131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,171
|
|
||||||
Issuances of common pursuant to sales of shares from the Company's ATM, net of $0.2 million of commissions
|
420,796
|
|
|
4
|
|
|
6,194
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,198
|
|
||||||
Issuances of common stock upon the exercise of stock options and for purchases under the ESPP
|
190,700
|
|
|
2
|
|
|
1,169
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,171
|
|
||||||
Exercise of stock options settled in shares
|
(4,877
|
)
|
|
—
|
|
|
(42
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
||||||
Recognition of employee stock-based compensation
|
—
|
|
|
—
|
|
|
5,365
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,365
|
|
||||||
Non-employee stock-based compensation expense, including mark-to-market
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||
Other comprehensive gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53,317
|
)
|
|
—
|
|
|
(53,317
|
)
|
||||||
December 31, 2017
|
33,075,949
|
|
|
331
|
|
|
977,453
|
|
|
(1,524
|
)
|
|
(952,265
|
)
|
|
(2
|
)
|
|
23,993
|
|
||||||
Issuance of stock under grant of restricted stock awards
|
294,250
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuances of common stock upon the exercise of stock options and for purchases under the ESPP
|
101,623
|
|
|
1
|
|
|
142
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
143
|
|
||||||
Recognition of employee stock-based compensation
|
—
|
|
|
—
|
|
|
3,941
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,941
|
|
||||||
Cancellation of restricted stock awards
|
(68,000
|
)
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Retirement of Treasury Stock
|
(244,569
|
)
|
|
(2
|
)
|
|
(1,522
|
)
|
|
1,524
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other comprehensive gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,575
|
)
|
|
—
|
|
|
(32,575
|
)
|
||||||
Balance, December 31, 2018
|
33,159,253
|
|
|
$
|
332
|
|
|
$
|
980,012
|
|
|
$
|
—
|
|
|
$
|
(984,840
|
)
|
|
$
|
—
|
|
|
$
|
(4,496
|
)
|
|
Years Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net loss
|
$
|
(32,575
|
)
|
|
$
|
(53,317
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
177
|
|
|
235
|
|
||
Stock-based compensation expense
|
3,940
|
|
|
5,359
|
|
||
Amortization of debt issuance costs
|
35
|
|
|
144
|
|
||
Non-cash interest income
|
(147
|
)
|
|
(53
|
)
|
||
Loss on sale of fixed assets
|
7
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
209
|
|
|
(614
|
)
|
||
Prepaid expenses and other assets
|
162
|
|
|
267
|
|
||
Accounts payable and accrued and other liabilities
|
(1,873
|
)
|
|
(376
|
)
|
||
Total adjustments
|
2,510
|
|
|
4,962
|
|
||
Net cash used in operating activities
|
(30,065
|
)
|
|
(48,355
|
)
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Purchases of investments
|
(26,741
|
)
|
|
(51,121
|
)
|
||
Sales/maturities of investments
|
48,200
|
|
|
47,679
|
|
||
Expenditures for property and equipment
|
(85
|
)
|
|
(188
|
)
|
||
Net cash provided by (used in) investing activities
|
21,374
|
|
|
(3,630
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Proceeds from issuance of common stock associated with offerings, net of issuance costs (see Note 11)
|
—
|
|
|
41,546
|
|
||
Proceeds from issuance of common stock under the Company’s share-based compensation plans
|
143
|
|
|
1,138
|
|
||
Proceeds from new credit agreement with HealthCare Royalty
|
—
|
|
|
45,000
|
|
||
Payment of debt issuance costs
|
—
|
|
|
(192
|
)
|
||
Payment on termination of former credit agreement with BioPharma
|
—
|
|
|
(18,303
|
)
|
||
Payments made on Curis Royalty’s debt
|
(6,104
|
)
|
|
(4,954
|
)
|
||
Net cash (used in)/provided by financing activities
|
(5,961
|
)
|
|
64,235
|
|
||
Net (decrease)/increase in cash and cash equivalents
|
(14,652
|
)
|
|
12,250
|
|
||
Cash and cash equivalents, beginning of period
|
38,288
|
|
|
26,038
|
|
||
Cash and cash equivalents, end of period
|
$
|
23,636
|
|
|
$
|
38,288
|
|
Supplemental cash flow data:
|
|
|
|
||||
Cash paid for interest
|
$
|
3,919
|
|
|
$
|
3,942
|
|
(1)
|
Nature of Business
|
•
|
Fimepinostat is currently being explored in clinical studies in patients with MYC-altered diffuse large B-cell lymphoma (DLBCL) and solid tumors and has been granted Orphan Drug Designation and Fast Track Designation for the treatment of DLBCL by the U.S. Food and Drug Administration, or FDA in April 2015 and May 2018, respectively. The Company is planning a combination study with venetoclax in DLBCL patients with alterations in both MYC and the BCL2 gene, also referred to as double-hit lymphoma, with planned enrollment commencing in the first half of 2019. The Company expects to report initial clinical data from this combination study in the second half of 2019.
|
•
|
CA-4948 is being tested in a dose escalating clinical trial in patients with non-Hodgkin lymphomas, including those with myeloid differentiation primary response 88, or MYD88, alterations. The Company expects to report initial clinical data from this study in mid-year 2019.
|
•
|
CA-170 is currently undergoing testing in a clinical study in patients with advanced solid tumors and lymphomas. The Company has amended the current protocol for the study to include mesothelioma patients. The Company announced in January 2019 that it had begun enrollment of these patients and expects to report initial clinical data from this study with respect to mesothelioma in the second half of 2019.
|
(2)
|
Summary of Significant Accounting Policies
|
(a)
|
USE OF ESTIMATES
|
(b)
|
CONSOLIDATION
|
(c)
|
REVENUE RECOGNITION
|
(d)
|
RESEARCH AND DEVELOPMENT
|
(e)
|
CASH EQUIVALENTS AND INVESTMENTS
|
(f)
|
LONG-LIVED ASSETS OTHER THAN GOODWILL
|
Asset Classification
|
Estimated Useful Life
|
Laboratory equipment, computers and software
|
3-5 years
|
Leasehold improvements
|
Lesser of life of the lease or the life of the asset
|
Office furniture and equipment
|
5 years
|
(g)
|
GOODWILL
|
|
For the Year Ended December 31,
|
||||
|
2018
|
|
2017
|
||
Stock options outstanding
|
3,714,394
|
|
|
3,206,858
|
|
Total antidilutive securities
|
3,714,394
|
|
|
3,206,858
|
|
(3)
|
Research and Development Collaborations
|
(a)
|
Genentech
|
(b)
|
Aurigene
|
1.
|
IRAK4 Program - a precision oncology program of small molecule inhibitors of IRAK4. The development candidate is CA-4948, an orally available small molecule inhibitor of IRAK4.
|
2.
|
PD1/VISTA Program - an immuno-oncology program of small molecule antagonists of PD1 and VISTA immune checkpoint pathways. The development candidate is CA-170, an orally available small molecule antagonist of VISTA and PDL1.
|
3.
|
PD1/TIM3 Program - an immuno-oncology program of small molecule antagonists of PD1 and TIM3 immune checkpoint pathways. The development candidate is CA-327, an orally available small molecule antagonist of PDL1 and TIM3.
|
4.
|
In March 2018, the Company exercised its option to license a fourth program, which is an immuno-oncology program.
|
(4)
|
Fair Value of Financial Instruments
|
Level 1
|
Quoted prices in active markets for identical assets or liabilities.
|
|
|
Level 2
|
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
|
Level 3
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
Other
Observable
Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
|
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
As of December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
18,180
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,180
|
|
Corporate commercial paper, stock, bonds and notes
|
—
|
|
|
2,199
|
|
|
—
|
|
|
2,199
|
|
||||
Municipal bonds
|
—
|
|
|
135
|
|
|
—
|
|
|
135
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate commercial paper, stock, bonds and notes
|
—
|
|
|
634
|
|
|
—
|
|
|
634
|
|
||||
Total assets at fair value
|
$
|
18,180
|
|
|
$
|
2,968
|
|
|
$
|
—
|
|
|
$
|
21,148
|
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
Other
Observable
Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
|
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
As of December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
35,308
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,308
|
|
Municipal bonds
|
—
|
|
|
260
|
|
|
—
|
|
|
260
|
|
||||
Short- and long-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate commercial paper, stock, bonds and notes
|
—
|
|
|
21,944
|
|
|
—
|
|
|
21,944
|
|
||||
Total assets at fair value
|
$
|
35,308
|
|
|
$
|
22,204
|
|
|
$
|
—
|
|
|
$
|
57,512
|
|
(5)
|
Investments
|
|
Amortized
Cost
|
|
Unrealized
Gain
|
|
Unrealized
Loss
|
|
Fair Value
|
||||||||
Corporate bonds and notes—short-term
|
$
|
634
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
634
|
|
Total investments
|
$
|
634
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
634
|
|
|
Amortized
Cost
|
|
Unrealized
Gain
|
|
Unrealized
Loss
|
|
Fair Value
|
||||||||
Corporate bonds and notes—short-term
|
$
|
21,946
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
21,944
|
|
Total investments
|
$
|
21,946
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
21,944
|
|
(6)
|
Stock Plans and Stock Based Compensation
|
|
For the Year Ended
December 31,
|
||||
|
2018
|
|
2017
|
||
Expected term (years)—Employees
|
5.5
|
|
|
5.5
|
|
Expected term (years)—Officers
|
5.5
|
|
|
5.5
|
|
Expected term (years)—Directors
|
N/A
|
|
|
6.3
|
|
Risk-free interest rate
|
2.5-3.0%
|
|
|
2.0-2.1%
|
|
Expected volatility
|
66-73%
|
|
|
63-64%
|
|
Expected dividend yield
|
None
|
|
|
None
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price per
Share
|
|
Weighted
Average
Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
|||||
Outstanding, December 31, 2017
|
3,206,858
|
|
|
$
|
12.08
|
|
|
|
|
|
||
Granted
|
2,072,596
|
|
|
2.56
|
|
|
|
|
|
|||
Exercised
|
—
|
|
|
—
|
|
|
|
|
|
|||
Canceled
|
(1,565,060
|
)
|
|
9.91
|
|
|
|
|
|
|||
Outstanding, December 31, 2018
|
3,714,394
|
|
|
$
|
7.68
|
|
|
6.38
|
|
$
|
—
|
|
Exercisable at December 31, 2018
|
1,776,293
|
|
|
$
|
11.90
|
|
|
3.52
|
|
$
|
—
|
|
Vested and unvested expected to vest
|
3,347,440
|
|
|
$
|
8.23
|
|
|
6.06
|
|
$
|
—
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date Fair Value
|
||
Outstanding, December 31, 2017
|
—
|
|
|
—
|
|
Awarded
|
294,250
|
|
|
3.45
|
|
Vested
|
—
|
|
|
—
|
|
Forfeited
|
(68,000
|
)
|
|
3.45
|
|
Outstanding, December 31, 2018
|
226,250
|
|
|
3.45
|
|
|
For the Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Compensation expense recognized under ESPP
|
$
|
173
|
|
|
$
|
268
|
|
Expected term
|
6-24 months
|
|
|
6-24 months
|
|
||
Risk-free interest rate
|
2.1-2.7%
|
|
|
1.1-1.8%
|
|
||
Volatility
|
79-104%
|
|
|
65-76%
|
|
||
Dividends
|
None
|
|
|
None
|
|
|
For the Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Research and development expenses
|
$
|
1,310
|
|
|
$
|
1,486
|
|
General and administrative expenses
|
2,630
|
|
|
3,873
|
|
||
Total stock-based compensation expense
|
$
|
3,940
|
|
|
$
|
5,359
|
|
(7)
|
Property and Equipment, net
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Laboratory equipment, computers and software
|
$
|
1,753
|
|
|
$
|
1,736
|
|
Leasehold improvements
|
185
|
|
|
185
|
|
||
Office furniture and equipment
|
354
|
|
|
354
|
|
||
|
2,292
|
|
|
2,275
|
|
||
Less—Accumulated depreciation and amortization
|
(2,025
|
)
|
|
(1,909
|
)
|
||
Total
|
$
|
267
|
|
|
$
|
366
|
|
(8)
|
Accrued Liabilities
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Accrued compensation
|
$
|
2,774
|
|
|
$
|
2,187
|
|
Professional fees
|
233
|
|
|
148
|
|
||
Accrued interest on debt (see Note 9)
|
165
|
|
|
193
|
|
||
Other
|
285
|
|
|
265
|
|
||
Total
|
$
|
3,457
|
|
|
$
|
2,793
|
|
(9)
|
Debt
|
(a)
|
BioPharma-II
|
(b)
|
HealthCare Royalty Partners III
|
(c)
|
Respective Debt Payments to BioPharma-II and HealthCare Royalty Partners III
|
|
As of
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Debt, current
|
6,920
|
|
|
5,919
|
|
||
Debt issue costs, current
|
(36
|
)
|
|
(33
|
)
|
||
Debt, current portion net of issuance costs
|
$
|
6,884
|
|
|
$
|
5,886
|
|
Debt, long-term
|
28,696
|
|
|
35,802
|
|
||
Debt issue costs, long-term
|
(96
|
)
|
|
(133
|
)
|
||
Debt, net of current portion and issuance costs
|
$
|
28,600
|
|
|
$
|
35,669
|
|
|
Principal
|
||
2019
|
$
|
6,920
|
|
2020
|
8,157
|
|
|
2021
|
9,531
|
|
|
2022
|
11,008
|
|
|
2023
|
—
|
|
|
Total payments
|
35,616
|
|
|
Less current portion, gross
|
(6,920
|
)
|
|
Total long-term debt obligations, gross
|
$
|
28,696
|
|
(10)
|
Commitments
|
(a)
|
OPERATING LEASES
|
Year Ending December 31,
|
|
||
2019
|
$
|
1,002
|
|
2020
|
168
|
|
|
Total minimum payments
|
$
|
1,170
|
|
(b)
|
LICENSE AGREEMENTS
|
(11)
|
Common Stock
|
(a)
|
Reverse Stock Split
|
(b)
|
Treasury Stock Retirement
|
(c)
|
2017 Public Offering of Common Stock
|
(12)
|
Income Taxes
|
|
For the Year Ended
December 31,
|
||||
|
2018
|
|
2017
|
||
Statutory federal income tax rate
|
21.0
|
%
|
|
34.0
|
%
|
State income taxes, net of federal benefit
|
5.9
|
%
|
|
4.4
|
%
|
Research and development tax credits
|
3.8
|
%
|
|
2.7
|
%
|
Orphan drug tax credits
|
3.2
|
%
|
|
10.9
|
%
|
Deferred rate change
|
—
|
%
|
|
(104.4
|
)%
|
Expiration of NOLs/Credits
|
(13.5
|
)%
|
|
—
|
%
|
Permanent Adjustments and other
|
(1.1
|
)%
|
|
(6.5
|
)%
|
Change in valuation allowance
|
(19.3
|
)%
|
|
58.9
|
%
|
Effective income tax rate
|
—
|
%
|
|
—
|
%
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Deferred Tax Assets:
|
|
|
|
||||
NOL carryforwards
|
$
|
67,068
|
|
|
$
|
63,688
|
|
Research and development tax credit carryforwards
|
15,825
|
|
|
15,340
|
|
||
Orphan drug tax credit carryforwards
|
16,625
|
|
|
15,580
|
|
||
Depreciation and amortization
|
10,672
|
|
|
11,663
|
|
||
Capitalized research and development expenditures
|
33,993
|
|
|
32,550
|
|
||
Stock options
|
5,783
|
|
|
4,948
|
|
||
Accrued expenses and other
|
259
|
|
|
155
|
|
||
Total Gross Deferred Tax Asset
|
150,225
|
|
|
143,924
|
|
||
Valuation Allowance
|
(150,225
|
)
|
|
(143,924
|
)
|
||
Net Deferred Tax Asset
|
$
|
—
|
|
|
$
|
—
|
|
(13)
|
Related Party Transactions
|
(a)
|
Agreement with Head of Research and Development - Robert E. Martell, M.D., Ph.D.
|
(b)
|
Agreement with David Tuck
|
(14)
|
Retirement Savings Plan
|
(15)
|
Selected Quarterly Financial Data (Unaudited)
|
|
Quarter Ended
|
||||||||||||||
|
March 31,
2018 |
|
June 30,
2018 |
|
September 30,
2018 |
|
December 31, 2018
|
||||||||
Revenues
|
$
|
2,468
|
|
|
$
|
2,358
|
|
|
$
|
2,847
|
|
|
$
|
2,755
|
|
Loss from operations
|
(9,908
|
)
|
|
(7,860
|
)
|
|
(6,417
|
)
|
|
(5,148
|
)
|
||||
Net loss
|
(10,747
|
)
|
|
(8,664
|
)
|
|
(7,223
|
)
|
|
(5,941
|
)
|
||||
Net loss per common share (basic and diluted)
|
$
|
(0.33
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.18
|
)
|
Weighted average common shares (basic and diluted)
|
33,053,702
|
|
|
33,135,391
|
|
|
33,161,592
|
|
|
33,121,666
|
|
|
Quarter Ended
|
||||||||||||||
|
March 31,
2017 |
|
June 30,
2017 |
|
September 30,
2017 |
|
December 31, 2017
|
||||||||
Revenues
|
$
|
2,131
|
|
|
$
|
2,061
|
|
|
$
|
2,444
|
|
|
$
|
3,262
|
|
Loss from operations
|
(15,053
|
)
|
|
(13,109
|
)
|
|
(14,471
|
)
|
|
(7,127
|
)
|
||||
Net loss
|
(15,742
|
)
|
|
(14,090
|
)
|
|
(15,457
|
)
|
|
(8,028
|
)
|
||||
Net loss per common share (basic and diluted)
|
$
|
(0.55
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(0.24
|
)
|
Weighted average common shares (basic and diluted)
|
28,402,355
|
|
|
28,757,341
|
|
|
29,302,839
|
|
|
32,801,650
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
•
|
any royalty and royalty-related payments to be remitted into a certain Curis Royalty designated account controlled by the Agent pursuant to a control agreement, referred to as the royalty account, into which all royalty and royalty-related payments must be paid by Curis or Curis Royalty are not so remitted in accordance with the Oberland Purchase Agreement;
|
•
|
any representation or warranty made by Curis or Curis Royalty in the Oberland Purchase Agreement or any other transaction document proves to be incorrect or misleading in any material respect when made;
|
•
|
a default by Curis or Curis Royalty in the performance of affirmative and negative covenants set forth in the Oberland Purchase Agreement or any other transaction document;
|
•
|
a default by Curis in the performance or observance of its indemnity obligations under the Oberland Purchase Agreement;
|
•
|
the failure by Genentech to pay material amounts owed under the Genentech collaboration agreement because of an actual breach or default by Curis under the Genentech collaboration agreement;
|
•
|
the failure of the security agreement to create a valid and perfected first priority security interest in any of the collateral;
|
•
|
a material breach or default by Curis under the purchase and sale agreement;
|
•
|
the voluntary or involuntary commencement of bankruptcy proceedings by either Curis or Curis Royalty and other insolvency related events;
|
•
|
any materially adverse effect on the binding nature of any of the Oberland Purchase Agreement, Security Agreement, Pledge Agreement or other transaction documents, the Genentech collaboration agreement or the purchase and sale agreement;
|
•
|
any person shall be designated as an independent director of Curis Royalty other than in accordance with Curis Royalty’s limited liability company operating agreement; or
|
•
|
Curis shall at any time cease to own, of record and beneficially, 100.0% of the equity interests in Curis Royalty.
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
|
Page
number
in this
report
|
Curis, Inc. and Subsidiaries
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
No.
|
|
Description
|
|
Link to Filing
|
|
Form
|
|
SEC Filing
Date
|
|
Exhibit
Number
|
|
Filed with
this 10-K
|
|
|
Articles of Incorporation and By-laws
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Restated Certificate of Incorporation of Curis, Inc., as amended
|
|
|
|
|
|
|
|
|
X
|
|
3.2
|
|
Certificate of Designations of Curis, Inc.
|
|
|
S-3 (333-50906)
|
|
8/10/2001
|
|
3.2
|
|
|
|
3.3
|
|
Amended and Restated By-laws of Curis, Inc.
|
|
|
10-K
|
|
2/29/2016
|
|
3.3
|
|
|
|
|
|
Instruments defining the rights of security holders, including indentures
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Form of Curis Common Stock Certificate
|
|
|
10-K
|
|
3/1/2004
|
|
4.1
|
|
|
|
|
|
Material contracts—Management Contracts and Compensatory Plans
|
|
|
|
|
|
|
|
|
|
|
#10.1
|
|
Employment Agreement, dated March 29, 2016, as amended September 24, 2018 by and between Curis, Inc. and James E. Dentzer.
|
|
|
10-Q
|
|
11/1/2018
|
|
10.2
|
|
|
|
#10.2
|
|
Employment Agreement, dated June 2, 2014 as amended March 21, 2018 by and between Curis, Inc. and Ali Fattaey, Ph. D
|
|
|
10-Q
|
|
5/3/2018
|
|
10.1
|
|
|
|
#10.3
|
|
Employment Agreement, dated February 29, 2016 as amended March 21, 2018 by and between Curis, Inc. and David Tuck, M.D
|
|
|
10-Q
|
|
5/3/2018
|
|
10.3
|
|
|
|
#10.4
|
|
Employment Agreement, dated June 1, 2018, by and between Curis, Inc. and Robert E. Martell, M.D., Ph.D.
|
|
|
10-Q
|
|
8/2/2018
|
|
10.2
|
|
|
|
#10.5
|
|
Separation Agreement, dated September 24, 2018, by and between Curis, Inc. and Ali Fattaey, Ph.D.
|
|
|
10-Q
|
|
11/1/2018
|
|
10.3
|
|
|
|
#10.6
|
|
Letter Agreement, dated August 1, 2018, by and between Curis, Inc. by and David Tuck, M.D.
|
|
|
10-Q
|
|
8/2/2018
|
|
10.1
|
|
|
|
#10.7
|
|
Form of Indemnification Agreement, by and between Curis, Inc. and each non-employee director of the Board of Directors of Curis, Inc.
|
|
|
10-Q
|
|
8/7/2014
|
|
10.3
|
|
|
|
#10.8
|
|
Curis 2000 Stock Incentive Plan
|
|
|
S-4/A (333-32446)
|
|
5/31/2000
|
|
10.71
|
|
|
|
#10.9
|
|
Curis 2000 Director Stock Option Plan
|
|
|
S-4/A (333-32446)
|
|
5/31/2000
|
|
10.72
|
|
|
|
#10.10
|
|
Form of Incentive Stock Option Agreement for awards granted to named executive officers under Curis’ 2000 Stock Incentive Plan
|
|
|
10-Q
|
|
10/26/2004
|
|
10.2
|
|
|
|
#10.11
|
|
Form of Non-statutory Stock Option Agreement for awards granted to directors and named executive officers under Curis’ 2000 Stock Incentive Plan
|
|
|
10-Q
|
|
10/26/2004
|
|
10.3
|
|
|
|
#10.12
|
|
Form of Non-statutory Stock Option Agreement for awards granted to non-employee directors under Curis’ 2000 Director Stock Option Plan
|
|
|
10-Q
|
|
10/26/2004
|
|
10.4
|
|
|
#10.13
|
|
Curis 2010 Stock Incentive Plan
|
|
|
Def 14A
|
|
4/16/2010
|
|
Exhibit A
|
|
|
|
#10.14
|
|
Curis 2010 Employee Stock Purchase Plan
|
|
|
|
Def 14A
|
|
4/16/2010
|
|
Exhibit B
|
|
|
#10.15
|
|
Form of Incentive Stock Option Agreement for awards granted to named executive officers under Curis’ 2010 Stock Incentive Plan
|
|
|
8-K
|
|
6/4/2010
|
|
10.1
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
No.
|
|
Description
|
|
Link to Filing
|
|
Form
|
|
SEC Filing
Date
|
|
Exhibit
Number
|
|
Filed with
this 10-K
|
#10.16
|
|
Form of Non-Statutory Stock Option Agreement for awards granted to directors and named executive officers under Curis’ 2010 Stock Incentive Plan
|
|
|
8-K
|
|
6/4/2010
|
|
10.2
|
|
|
|
#10.17
|
|
Form of Restricted Stock Agreement for awards granted to directors and named executive officers under Curis’ 2010 Stock Incentive Plan
|
|
|
8-K
|
|
6/4/2010
|
|
10.3
|
|
|
|
#10.18
|
|
Curis Amended and Restated 2010 Stock Incentive Plan, as amended
|
|
|
8-K
|
|
5/28/2015
|
|
99.1
|
|
|
|
#10.19
|
|
Form of Incentive Stock Option Agreement for awards granted to named executive officers under Curis’ Amended and Restated 2010 Stock Incentive Plan, as amended
|
|
|
10-K
|
|
3/8/2018
|
|
10.21
|
|
|
|
#10.20
|
|
Form of Non-Statutory Stock Option Agreement for awards granted to directors and named executive officers under Curis’ Amended and Restated 2010 Stock Incentive Plan, as amended
|
|
|
10-K
|
|
3/8/2018
|
|
10.22
|
|
|
|
#10.21
|
|
Form of Restricted Stock Agreement for awards granted to directors and named executive officers under Curis’ Amended and Restated 2010 Stock Incentive Plan, as amended
|
|
|
10-K
|
|
3/8/2018
|
|
10.23
|
|
|
|
#10.22
|
|
Form of Incentive Stock Option Agreement (Online Acceptance) for awards granted to named executive officers under Curis’ Amended and Restated 2010 Stock Incentive Plan
|
|
|
10-K
|
|
3/9/2017
|
|
10.21
|
|
|
|
#10.23
|
|
Form of Nonstatutory Stock Option Agreement (Online Acceptance) granted to directors and named executive officers under Curis’ Amended and Restated 2010 Stock Incentive Plan
|
|
|
10-K
|
|
3/9/2017
|
|
10.22
|
|
|
|
#10.24
|
|
Curis Second Amended and Restated 2010 Stock Incentive Plan
|
|
|
8-K
|
|
5/22/2017
|
|
99.1
|
|
|
|
#10.25
|
|
Form of Incentive Stock Option Agreement for awards granted to named executive officers under Curis’ Second Amended and Restated 2010 Stock Incentive Plan
|
|
|
10-K
|
|
3/8/2018
|
|
10.27
|
|
|
|
#10.26
|
|
Form of Non-Statutory Stock Option Agreement for awards granted to directors and named executive officers under Curis’ Second Amended and Restated 2010 Stock Incentive Plan
|
|
|
10-K
|
|
3/8/2018
|
|
10.28
|
|
|
#10.27
|
|
Form of Restricted Stock Agreement for awards granted to directors and named executive officers under Curis’ Second Amended and Restated 2010 Stock Incentive Plan
|
|
|
10-K
|
|
3/8/2018
|
|
10.29
|
|
|
|
#10.28
|
|
Form of Nonstatutory Stock Option Agreement - Inducement Grant pursuant to Nasdaq Stock Market Rule 5635(c)(4)
|
|
|
S-8
|
|
1/6/2017
|
|
99.1
|
|
|
|
#10.29
|
|
Curis Third Amended and Restated 2010 Stock Incentive Plan
|
|
|
8-K
|
|
5/18/2018
|
|
99.1
|
|
|
|
#10.30
|
|
Curis Amended and Restated 2010 Employee Stock Purchase Plan, as amended
|
|
|
10-K
|
|
3/8/2018
|
|
10.31
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
No.
|
|
Description
|
|
Link to Filing
|
|
Form
|
|
SEC Filing
Date
|
|
Exhibit
Number
|
|
Filed with
this 10-K
|
|
|
Material contracts—Leases
|
|
|
|
|
|
|
|
|
|
|
#10.31
|
|
Lease, dated September 16, 2010, by and between Curis, Inc. and the Trustees of Lexington Office Realty Trust relating to the premises at 4 Maguire Road, Lexington, Massachusetts
|
|
|
8-K
|
|
9/21/2010
|
|
10.1
|
|
|
|
#10.32
|
|
Second Amendment to Lease, dated November 1, 2017, by and between Curis, Inc. and the Trustees of Lexington Office Realty Trust relating to the premises at 4 Maguire Road, Lexington, Massachusetts
|
|
|
10-Q
|
|
11/7/2017
|
|
10.2
|
|
|
|
|
|
Material contracts—Financing Agreements
|
|
|
|
|
|
|
|
|
|
|
†10.33
|
|
Credit Agreement, dated November 27, 2012, by and between Curis, Inc., Curis Royalty LLC, a wholly-owned subsidiary of Curis, Inc. and BioPharma Secured Debt Fund II Sub, S.à r.l.
|
|
|
10-K
|
|
3/13/2013
|
|
10.31
|
|
|
|
10.34
|
|
Consent and Payment Direction Letter Agreement, dated November 20, 2012 and effective as of December 11, 2012 by and between Curis, Inc., Curis Royalty LLC and Genentech, Inc.
|
|
|
10-K
|
|
3/13/2013
|
|
10.32
|
|
|
|
†10.35
|
|
Credit Agreement, dated March 6, 2017, by and between Curis, Inc., Curis Royalty LLC, a wholly-owned subsidiary of Curis, Inc. and HealthCare Royalty Partners III, L.P.
|
|
|
10-K
|
|
3/9/2017
|
|
10.27
|
|
|
|
10.36
|
|
Consent and Payment Direction Letter Agreement, dated March 3, 2017 by and between Curis, Inc., Curis Royalty LLC and Genentech, Inc.
|
|
|
10-K
|
|
3/9/2017
|
|
10.28
|
|
|
|
†10.37
|
|
Purchase and Sale Agreement, dated as of December 11, 2012 between Curis and Curis Royalty
|
|
|
10-K
|
|
3/13/2013
|
|
10.33
|
|
|
|
10.38
|
|
Escrow Agreement, dated December 11, 2012, by and between Curis, Curis Royalty LLC, a wholly-owned subsidiary of Curis, BioPharma Secured Debt Fund II Sub, S.à r.l., a Luxembourg limited liability company managed by Pharmakon Advisors and Boston Private Bank and Trust Company
|
|
|
10-K
|
|
3/13/2013
|
|
10.34
|
|
|
|
10.39
|
|
Escrow Agreement, dated March 22, 2017, by and between Curis Royalty LLC, HealthCare Royalty Partners III, L.P., Curis, Inc. and Boston Private Bank and Trust Company
|
|
|
10-Q
|
|
5/4/2017
|
|
10.1
|
|
|
††10.40
|
|
Royalty Interest Purchase Agreement, dated March 22, 2019, by and between, Curis, Inc., Curis Royalty LLC, a wholly-owned subsidiary of Curis, Inc., TPC Investments I LP and TPC Investments II LP
|
|
|
|
|
|
|
|
|
X
|
|
10.41
|
|
Security Agreement, dated March 22, 2019, by and between, Curis Royalty LLC, a wholly-owned subsidiary of Curis, Inc., TPC Investments I LP and TPC Investments II LP
|
|
|
|
|
|
|
|
|
X
|
|
10.42
|
|
Pledge Agreement, dated March 22, 2019, by and between, Curis, Inc. , TPC Investments I LP and TPC Investments II LP
|
|
|
|
|
|
|
|
|
X
|
|
10.43
|
|
Consent and Payment Direction Letter Agreement, dated March 22, 2019, by and between Curis, Inc., Curis Royalty LLC and Genentech, Inc.
|
|
|
|
|
|
|
|
|
X
|
|
|
|
Material contracts—License and Collaboration Agreements
|
|
|
|
|
|
|
|
|
|
|
†10.44
|
|
Collaborative Research, Development and License Agreement, dated June 11, 2003, by and between Curis, Inc. and Genentech, Inc.
|
|
|
10-Q
|
|
8/6/2015
|
|
10.1
|
|
|
|
†10.45
|
|
Collaboration, License and Option Agreement, dated January 18, 2015, by and between Curis, Inc. and Aurigene Discovery Technologies Limited
|
|
|
10-K
|
|
2/24/2015
|
|
10.32
|
|
|
|
†10.46
|
|
First Amendment to Collaboration, License and Option Agreement, dated September 7, 2016, by and between Curis, Inc. and Aurigene Discovery Technologies Limited
|
|
|
10-Q
|
|
11/3/2016
|
|
10.2
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit
No.
|
|
Description
|
|
Link to Filing
|
|
Form
|
|
SEC Filing
Date
|
|
Exhibit
Number
|
|
Filed with
this 10-K
|
|
|
Material contracts—Miscellaneous
|
|
|
|
|
|
|
|
|
|
|
10.47
|
|
Sales Agreement, dated July 2, 2015, by and between Curis, Inc. and Cowen and Company, LLC
|
|
|
S-3
|
|
7/2/2015
|
|
1.2
|
|
|
|
10.48
|
|
Underwriting Agreement, dated September 13, 2017, by and between Curis, Inc. and Robert W. Baird & Co. Incorporated
|
|
|
8-K
|
|
9/15/2017
|
|
1.1
|
|
|
|
10.49
|
|
Common Stock Purchase Agreement, dated January 18, 2015, by and between Curis, Inc. and Aurigene Discovery Technologies Limited
|
|
|
10-K
|
|
2/24/2015
|
|
10.34
|
|
|
|
10.50
|
|
Stock Purchase Agreement, dated September 7, 2016, by and between Curis, Inc. and Aurigene Discovery Technologies Limited
|
|
|
10-Q
|
|
11/3/2016
|
|
10.3
|
|
|
|
10.51
|
|
Registration Rights Agreement, dated January 18, 2015, by and between Curis, Inc. and Aurigene Discovery Technologies Limited
|
|
|
|
10-K
|
|
2/24/2015
|
|
10.35
|
|
|
10.52
|
|
Registration Rights Agreement, dated September 7, 2016, by and between Curis, Inc. and Aurigene Discovery Technologies Limited
|
|
|
10-Q
|
|
11/3/2016
|
|
10.4
|
|
|
|
|
|
Code of Conduct
|
|
|
|
|
|
|
|
|
|
|
14
|
|
Amended and Restated Code of Business Conduct and Ethics
|
|
|
10-K
|
|
3/8/2018
|
|
14
|
|
|
|
|
|
Additional Exhibits
|
|
|
|
|
|
|
|
|
|
|
21
|
|
Subsidiaries of Curis
|
|
|
|
|
|
|
|
|
X
|
23.1
|
|
Consent of PricewaterhouseCoopers LLP
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act/15d-14(a) of the Exchange Act
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act/15d-14(a) of the Exchange Act
|
|
|
|
|
|
|
|
|
X
|
|
32.1
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(b)/15d-14(b) of the Exchange Act and 18 U.S.C. Section 1350
|
|
|
|
|
|
|
|
|
X
|
|
32.2
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(b)/15d-14(b) of the Exchange Act and 18 U.S.C. Section 1350
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
†
|
Confidential treatment has been granted as to certain portions, which portions have been separately filed with the Securities and Exchange Commission.
|
††
|
Confidential treatment has been requested as to certain portions, which portions have been separately filed with the Securities and Exchange Commission.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
|
|
|
C
URIS
, I
NC
.
|
||
|
|
|
By:
|
|
/s/ JAMES DENTZER
|
|
|
James Dentzer
President and Chief Executive Officer
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ JAMES DENTZER
|
|
President, Chief Executive Officer and Director (Principal Executive Officer and Principal Financial Officer)
|
|
March 26, 2019
|
James Dentzer
|
|
|
||
/s/ WILLIAM STEINKRAUSS
|
|
Vice President, Finance (Principal Accounting Officer)
|
|
March 26, 2019
|
William Steinkrauss
|
|
|
||
/s/ MARTYN D. GREENACRE
|
|
Chairman of the Board of Directors
|
|
March 26, 2019
|
Martyn D. Greenacre
|
|
|
||
/s/ KENNETH I. KAITIN
|
|
Director
|
|
March 26, 2019
|
Kenneth I. Kaitin
|
|
|
||
/s/ LORI A. KUNKEL
|
|
Director
|
|
March 26, 2019
|
Lori A. Kunkel
|
|
|
||
/s/ MARC RUBIN
|
|
Director
|
|
March 26, 2019
|
Marc Rubin
|
|
|
|
|
(a)
|
Common Stock
|
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:30 PM 06/19/2000
001309790 - 3152050
|
|
|
|
|
(b)
|
Preferred Stock
|
(a)
|
Amendment of By-Laws
|
(b)
|
Election of Directors
|
(c)
|
Location of Corporate Books
|
|
|
|
CURIS, INC.
|
||
|
|
|
By:
|
|
/s/ Doros Platika
|
|
|
Doros Platika
President and Chief Executive Officer
|
|
|
|
By:
|
|
/s/ Dan Passeri
|
|
|
Dan Passeri
Title: Chief Executive Officer
|
|
|
/s/ Ali Fattaey
|
By:
|
|
Ali Fattaey, Ph.D.
|
Title:
|
|
President and Chief Executive Officer
|
|
|
/s/ Ali Fattaey
|
By:
|
|
Ali Fattaey, Ph.D.
|
Title:
|
|
President and Chief Executive Officer
|
COMPANY
|
By:
/s/ James Dentzer
Name: James E. Dentzer Title: President |
PARENT
|
By:
/s/ James Dentzer
Name: James E. Dentzer Title: President and Chief Executive Officer |
PURCHASERS:
TPC Investments I LP
By:
/s/ Andrew Rubinstein
Name: Andrew Rubinstein Title: Authorized Signatory
TPC Investments II LP
By:
/s/ Andrew Rubinstein
Name: Andrew Rubinstein Title: Authorized Signatory |
|
COLLATERAL AGENT
By:
/s/ Andrew Rubinstein
Name: Andrew Rubinstein Title: Authorized Signatory |
|
1.
|
Proprietary Information. As used in this Agreement, the term “
Proprietary Information
” shall mean any scientific, technical, trade or business information possessed or obtained by, developed for or given to one party to this Agreement (“
Disclosing Party
”) which is treated by Disclosing Party as confidential or proprietary including, without limitation, formulations, techniques, methodology, assay systems, formulae, chemical structures, procedures, tests, equipment, data, computer software, documentation, reports, know-how, sources of supply, patent positioning, relationships with consultants and employees, business plans and business developments, financial information, information concerning the existence, scope or activities of any research, development, manufacturing, marketing or other projects of Disclosing Party, and any other confidential or proprietary information about or belonging to Disclosing Party’s suppliers, licensors, licensees, partners, affiliates, customers, potential customers or others whether disclosed orally, visually, or in intangible form to the other party to this Agreement (“
Recipient
”). “Proprietary Information” does not include information which (i) was known by Recipient at the time it was disclosed, as evidenced by Recipient’s written records at the time of disclosure; (ii) is at the time of disclosure or later becomes publicly known under circumstances involving no breach of this Agreement; or (iii) is lawfully and in good faith made available to Recipient by a third party who had the right to disclose such information to Recipient. References in this Annex to “this Agreement” shall be deemed to be references to this Annex or to the Royalty Interest Purchase Agreement to which this Annex is attached, as the context shall require.
|
2.
|
Nondisclosure, and Use of Proprietary Information. Recipient shall not, directly or indirectly, publish, disseminate or otherwise disclose, deliver or make available to any person any Proprietary Information except to (i) directors, employees contractors and agents of Recipient who reasonably require access to such information and who are under obligations of confidentiality to Recipient at least as stringent as those set forth in this Agreement to maintain the confidentiality of such Proprietary Information, (ii) third party consultants who have a need to know and who are under obligations of confidentiality to Recipient at least as stringent as those set forth in this Agreement to maintain the confidentiality of such Proprietary Information or (iii) such Recipient’s Affiliates, potential or actual acquirers, merger partners, licensees, permitted assignees, collaborators (including licensees), subcontractors, investment bankers, investors, limited partners, partners, lenders, or other financial partners, and their respective directors, employees, contractors and agents who have a need to know and who are under obligations of confidentiality to Recipient at least as stringent as those set forth in this Agreement to maintain the confidentiality of such Proprietary Information. If required, Recipient may disclose the Proprietary Information to a government authority or by order of a court of competent jurisdiction, provided that such disclosure is subject to all applicable governmental or judicial protection available for like information and reasonable advance notice is given to Disclosing Party. Recipient shall use the Proprietary Information solely for the purpose of evaluating the potential relationship between the parties or for such other purposes as may be approved by Disclosing Party in writing. Recipient shall not use the Proprietary Information for the benefit of any party other than Disclosing Party, absent a separate agreement that permits such use. Upon request by Disclosing Party, Recipient shall promptly return to Disclosing Party all Proprietary Information including all copies thereof or destroy such Proprietary Information
|
3.
|
Nothing in this Agreement shall be interpreted as a grant of any rights to Disclosing Party’s intellectual property.
|
4.
|
Recipient shall adhere to the U.S. Export Administration Laws and Regulations and shall not export or re-export any technical data received from Disclosing Party hereunder or the direct product of such technical data to any proscribed country listed in the U.S. Export Administration Regulations unless properly authorized by the U.S. Government.
|
Curis Case No.
|
Country
|
Serial No.
|
Publication Number
|
Patent Number
|
1.
|
The Seller hereby sells, transfers, conveys, assigns and delivers to the Purchasers, and the Purchasers hereby purchase and receive, to have and to hold in accordance with the Royalty Interest Purchase Agreement and this Bill of Sale, all of the Seller’s right, title and interest in, to and under all of the Purchased Receivables.
|
2.
|
The Seller hereby covenants that, at any time or from time to time after the date hereof, at either or both of the Purchasers’ reasonable request and without further consideration, the Seller will execute and deliver to the Purchasers such other instruments of sale, transfer, conveyance and assignment as either or both of the Purchasers may reasonably deem necessary to sell, transfer, convey, assign and deliver to the Purchasers, and to confirm the Purchasers’ title to, all of the Seller’s right, title and interest in, to and under the Purchased Receivables.
|
3.
|
The Seller does hereby irrevocably constitute and appoint the Purchasers, its successors and assigns, its true and lawful attorneys, with full power of substitution, in its name or otherwise, and on behalf of the Seller, or for its own use, to claim, demand, collect and receive in accordance with the Royalty Interest Purchase Agreement any and all of the Purchased Receivables. The Seller further authorizes the Collateral Agent and the Purchasers to file financing statements (and continuation statements with respect to such financing statements when applicable) naming the Seller as the seller and the Purchasers as the purchasers and/or the Collateral Agent as the secured party.
|
4.
|
The Seller, by its execution of this Bill of Sale, and the Purchasers, by their acceptance of this Bill of Sale, each hereby acknowledges and agrees that neither the representations and warranties nor the rights, remedies or obligations of any party under the Royalty Interest Purchase Agreement shall be deemed to be enlarged, modified or altered in any way by this instrument except as specifically provided in Sections 3 and 4 hereof.
|
5.
|
This Bill of Sale will be binding upon and inure to the benefit of the Seller, the Purchasers and their respective successors and assigns under the Royalty Interest
|
Account
|
[BANK GDO USE ONLY]
|
Account
|
[BANK GDO USE ONLY]
|
Cash Sweep
|
Cash Sweep
|
||
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[GDO initials]
|
|
[GDO initials]
|
[BANK GDO USE ONLY]
|
|
BANK:
Address for Notices
: Silicon Valley Bank
Global Deposit Operations
80 East Rio Salado Parkway, Mail Sort AZ145 Tempe, AZ 85281
Email:
GroupControlAgreementSupport@svb.com
Telephone: (480) 557-4964
|
SILICON VALLEY BANK
By:
Name:
Title:
Global Deposit Operations
Date:
|
CUSTOMER:
Address for Notices
:
4 Maguire Road
Lexington, MA 02421
Email: bsteinkrauss@curis.com
Telephone:
617-503-6624
|
Curis Royalty LLC
(name)
a
Delaware
(jurisdiction)
Limited Liability Company
(entity form)
TIN
*
46-1451371
By:
(must be an authorized signer on the current BDA)
Name:
William Steinkrauss
Title:
VP Finance and Treasurer
|
CREDITOR:
Address for Notices
:
1700 Broadway, 37th Floor
New York, NY 10019
Email:
ddubinsky@oberlandcapital.com;
Telephone:
212-257-5860
|
Lind SA LLC
(name)
, a
Delaware
(jurisdiction)
Limited Liability Company
(entity form)
TIN
*
By:
Name:
David Dubinsky
Title:
Authorized Signatory
|
To:
|
Silicon Valley Bank (“Bank”) Global Deposit Operations
|
CREDITOR:
|
Lind SA LLC
(name)
By:
Name:
Title:
|
(if by email)
[BANK GDO USE ONLY]
|
|
ACKNOWLEDGED BY:
|
SILICON VALLEY BANK
By:
Name:
Title:
Global Deposit Operations
Date:
Time:
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21.
|
Termination; Survival . |
Creditor wishes to leave a peg amount of $
|
in the named account and wire all proceeds in excess of the peg amount.
|
|
CURIS ROYALTY LLC, as Grantor
|
|
By
/s/ James E. Dentzer
____________
Name: James E. Dentzer
Title: President
Address for Notices:
4 Maguire Road Lexington, MA 02421 Attention: President Telephone No.: (617) 503-6597 Facsimile No.: (617) 503-6501 |
|
LIND SA LLC, as Secured Party
|
|
By_
/s/ Andrew Rubinstein
_________
Name: Andrew Rubinstein
Title: Authorized Signatory
Address for Notices:
c/o Oberland Capital Management 1700 Broadway 37th Floor New York, NY 10019 Attention: Andrew Rubinstein Facsimile No.: (212) 257-5851 |
1
|
DEFINED TERMS
|
4
|
1.1
|
Definitions
|
4
|
1.2
|
Other Definitional Provisions
|
5
|
2
|
GRANT OF SECURITY INTEREST; LIMIT ON RECOURSE
|
6
|
3
|
REPRESENTATIONS AND WARRANTIES
|
6
|
3.1
|
Title; No Other Liens
|
6
|
3.2
|
Perfected First Priority Liens.
|
6
|
3.3
|
Jurisdiction of Organization; Chief Executive Office
|
7
|
3.4
|
[Reserved].
|
7
|
3.5
|
Investment Property
|
7
|
4
|
COVENANTS
|
7
|
4.1
|
Delivery of Certificated Securities
|
7
|
4.2
|
[Reserved]
|
7
|
4.3
|
Maintenance of Perfected Security Interest; Further Documentation
|
7
|
4.4
|
Changes in Name, etc.
|
8
|
4.5
|
Notices
|
8
|
4.6
|
Investment Property
|
8
|
5
|
REMEDIAL PROVISIONS
|
8
|
5.1
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Pledged Stock
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8
|
5.2
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Proceeds to be Turned Over To Pledgee
|
9
|
5.3
|
Application of Proceeds
|
9
|
5.4
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Code and Other Remedies
|
9
|
5.5
|
Private Sales
|
10
|
5.6
|
Put Option Exercise
|
10
|
6
|
THE PLEDGEE
|
11
|
6.1
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Pledgee’s Appointment as Attorney-in-Fact, etc.
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11
|
6.2
|
Duty of the Pledgee
|
12
|
6.3
|
Authorization of Financing Statements
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12
|
7
|
MISCELLANEOUS
|
12
|
7.1
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Amendments; Waivers
|
12
|
7.2
|
Notices
|
13
|
7.3
|
No Waiver by Course of Conduct; Cumulative Remedies
|
13
|
7.4
|
Enforcement Expenses; Indemnification
|
13
|
7.5
|
Successors and Assigns
|
13
|
7.6
|
[Reserved]
|
13
|
7.7
|
Counterparts
|
14
|
7.8
|
Severability
|
14
|
7.9
|
Section Headings
|
14
|
7.1
|
Integration
|
14
|
7.1
|
Governing Law
|
14
|
7.1
|
JUDICIAL PROCEEDINGS; WAIVER OF JURY TRIAL
|
14
|
7.1
|
Acknowledgements
|
15
|
7.1
|
Releases
|
15
|
1.
|
DEFINED TERMS
|
1.1
|
Definitions
.
|
1.1.1
|
Unless otherwise defined herein, terms defined in the Royalty Interest Purchase Agreement and used herein shall have the meanings given to them in the Royalty Interest Purchase Agreement, and the following terms are used herein as defined in the New York UCC: Certificated Security.
|
1.1.2
|
The following terms shall have the following meanings:
|
1.2
|
Other Definitional Provisions
.
|
1.2.1
|
The words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.
|
1.2.2
|
The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.
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1.2.3
|
Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to the Grantor, shall refer to the Grantor’s Collateral or the relevant part thereof.
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2.
|
GRANT OF SECURITY INTEREST; LIMIT ON RECOURSE
|
2.1
|
The Grantor hereby assigns and transfers to the Pledgee, and hereby grants to the Pledgee a security interest in, all of the following property now owned or at any time hereafter acquired by the Grantor or in which the Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “
Collateral
”), as collateral security for the prompt and complete payment and performance when due of the Obligations:
|
2.1.1
|
all Investment Property;
|
2.1.2
|
all books and records pertaining to the Collateral; and
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2.1.3
|
all Proceeds.
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2.2
|
Notwithstanding anything to the contrary stated in this Agreement, the Royalty Interest Purchase Agreement or any other Transaction Document, the recourse of the Pledgee and the Purchasers under this Agreement, including the satisfaction of any claims hereunder, or the exercise of any rights and remedies hereunder, is limited solely to the Collateral, and the Pledgee and the Purchasers shall have no claim under this Agreement against the Grantor or any other asset of the Grantor for the satisfaction of any of the Obligations. Without limiting the foregoing,
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3.
|
REPRESENTATIONS AND WARRANTIES
|
3.1
|
Title; No Other Liens
. Except for the security interest granted to the Pledgee pursuant to this Agreement, the Grantor owns each item of the Collateral free and clear of any and all Liens or claims of others. No valid and effective financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Pledgee pursuant to this Agreement.
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3.2
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Perfected First Priority Liens
. The security interests granted pursuant to this Agreement create in favor of the Pledgee, a legal and valid security interest in the Collateral. In the case of the certificated Pledged Stock, when stock certificates representing such Pledged Stock are delivered to the Pledgee (together with a properly completed and signed stock power or endorsement), and in the case of the other Collateral granted hereunder, when financing statements specified on Schedule 2 in appropriate form are filed in the offices specified on Schedule 2, the security interest granted hereunder shall constitute a fully perfected Lien (to the extent such Lien can be perfected by filing or, with respect to the Pledged Stock, possession and then with respect to such Collateral such Lien shall be perfected only to the extent perfection is required hereunder) on, and security interest in, all right, title and interest of the Grantor in such Collateral and the proceeds thereof, as security for the Obligations, in each case prior in right to any other Person.
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3.3
|
Jurisdiction of Organization; Chief Executive Office
.
On the date hereof, the Grantor’s jurisdiction of organization, identification number from the jurisdiction of organization (if any), and the location of the Grantor’s chief executive office or sole place of business or principal residence, as the case may be, are specified on Schedule 3.
|
3.4
|
[
Reserved
].
|
3.5
|
Investment Property
.
|
3.5.1
|
The shares of the Pledged Stock pledged by the Grantor hereunder constitute all the issued and outstanding shares of all classes of the Capital Stock of each Issuer of the Pledged Stock.
|
3.5.2
|
All the shares of the Pledged Stock have been duly and validly issued and are fully paid and nonassessable.
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3.5.3
|
The Grantor is the record and beneficial owner of, and has legally valid rights in, the Investment Property pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the Liens created by this Agreement.
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4.
|
COVENANTS
|
4.1
|
Delivery of Certificated Securities
. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Certificated Security, such Certificated Security shall be promptly delivered to the Pledgee, duly indorsed in a manner reasonably satisfactory to the Pledgee, to be held as Collateral pursuant to this Agreement,
|
4.2
|
[
Reserved
] .
|
4.3
|
Maintenance of Perfected Security Interest; Further Documentation
.
|
4.3.1
|
Subject to the limitations and exceptions set forth in the Transaction Documents, the Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority described in Section 3.2 and shall defend such security interest against the claims and demands of all Persons whomsoever.
|
4.3.2
|
The Grantor will furnish to the Pledgee from time to time statements and schedules further identifying and describing the assets and property of the Grantor constituting Collateral and such other reports in connection therewith as the Pledgee may reasonably request, all in reasonable detail.
|
4.3.3
|
Subject to the limitations and exceptions set forth in the Transaction Documents, at any time and from time to time, upon the written request of the Pledgee, and at the sole expense of the Grantor, the Grantor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Pledgee may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, (i) authorize the filing of any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby and (ii) in the case of Investment Property and any other relevant Collateral, taking any actions necessary to enable the Pledgee to obtain “control” (within the meaning of the applicable Uniform Commercial Code) with respect thereto; provided, that Grantor shall not be required to enter into control agreement with any securities intermediary maintaining any Securities Account in which any Collateral is credited thereto.
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4.4
|
Changes in Name, etc
. The Grantor will not, except upon 15 days’ (or such shorter time period as the Pledgee may agree) prior written notice to the Pledgee and delivery to the Pledgee of all additional financing statements and other documents reasonably requested by the Pledgee to maintain the validity, perfection and priority of the security interests provided for herein, (i) change its jurisdiction of organization or the location of its chief executive office or sole place of business or principal residence from that referred to in Section 3.3 or (ii) change its name.
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4.5
|
Notices
. The Grantor will advise the Pledgee promptly, in reasonable detail, of any Lien (other than security interests created hereby) on any of the Collateral.
|
4.6
|
Investment Property
. If the Grantor shall become entitled to receive or shall receive any certificate (including, without limitation, any certificate representing a dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the Capital Stock of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect thereof, the Grantor shall accept the same as the agent of the Pledgee, hold the same in trust for the Pledgee and deliver the same forthwith to the Pledgee in the exact form received, duly indorsed by the Grantor to the Pledgee, if required, together with an undated stock power covering such certificate duly executed in blank by the Grantor and with, if the Pledgee so requests, signature guaranteed, to be held by the Pledgee, subject to the terms hereof, as additional collateral security for the Obligations. Any sums paid upon or in respect of the Investment Property upon the liquidation or dissolution of any Issuer shall be paid over to the Pledgee to be held by it hereunder as additional collateral security for the Obligations.
|
5.
|
REMEDIAL PROVISIONS
|
5.1
|
Pledged Stock
.
|
5.1.1
|
Unless an Event of Default shall have occurred and be continuing and the Pledgee shall have given notice to the Grantor of the Pledgee’s intent to exercise its corresponding rights pursuant to Section 5.1.2, the Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Stock to the extent permitted pursuant to the terms of the Royalty Interest Purchase Agreement, and to exercise all voting and corporate or other organizational rights with respect to the Investment Property.
|
5.1.2
|
If an Event of Default shall occur and be continuing and the Pledgee shall give notice of the Pledgee’s intent to exercise such rights to the Grantor, (i) the Pledgee shall have the right to receive any and all cash dividends, payments or other Proceeds paid in respect of the Investment Property and make application thereof to the Obligations in such order as set forth in Section 5.3, and (ii) any or all of the Investment Property shall be registered in the name of the Pledgee or its nominee, and the Pledgee or its nominee may thereafter exercise (x) all voting, corporate and other rights pertaining to such Investment Property at any meeting of shareholders of the relevant Issuer or Issuers or otherwise (including, without limitation, the right to remove directors of the relevant Issuer or Issuers) and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Investment Property as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Investment Property upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate or other organizational structure of any Issuer, or upon the exercise by the Grantor or the Pledgee of any right, privilege or option pertaining to such Investment Property, and in connection therewith, the right to deposit and deliver any and all of the Investment Property with any
|
5.1.3
|
The Grantor hereby authorizes and instructs each Issuer of any Investment Property pledged by the Grantor hereunder to (i) comply with any instruction received by it from the Pledgee in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from the Grantor, and the Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Investment Property directly to the Pledgee.
|
5.2
|
Proceeds to be Turned Over To Pledgee
. If an Event of Default shall occur and be continuing, upon the request of the Pledgee, all Proceeds received by the Grantor consisting of cash, checks and other near-cash items shall be held by the Grantor in trust for the Pledgee, segregated from other funds of the Grantor, and shall, forthwith upon receipt by the Grantor, be turned over to the Pledgee in the exact form received by the Grantor (duly indorsed by the Grantor to the Pledgee, if required). All Proceeds received by the Pledgee hereunder shall be held by the Pledgee in a Collateral Account maintained under its sole dominion and control. All Proceeds while held by the Pledgee in a Collateral Account (or by the Grantor in trust for the Pledgee) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in Section 5.3.
|
5.3
|
Application of Proceeds
. If an Event of Default shall have occurred and be continuing, at any time at the Pledgee’s election, the Pledgee may apply all or any part of Proceeds constituting Collateral, whether or not held in any Collateral Account, in payment of the Obligations.
|
5.4
|
Code and Other Remedies
. If an Event of Default shall occur and be continuing, the Pledgee may exercise, in addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the New York UCC or any other applicable law. Without limiting the generality of the foregoing, the Pledgee, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice as required below or by law) to or upon the Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Pledgee or elsewhere upon such terms and conditions as the Pledgee may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery
|
5.5
|
Private Sales
. The Grantor recognizes that the Pledgee may be compelled, during the exercise of its rights and remedies upon and after the occurrence and during the continuation of an Event of Default, to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for its own account for investment and not with a view to the distribution or resale thereof. The Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall not, for such reason, be deemed to have been made in a commercially unreasonable manner. The Pledgee shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so. The Grantor agrees to use its best efforts to do or cause to be done all such acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this Section 5.5 valid and binding and in compliance with any and all other applicable Requirements of Law.
|
5.6
|
Put Option Exercise
. An exercise of any remedy set out in Sections 5.1 through 5.5 by the Pledgee shall also be deemed to constitute an exercise by Purchasers of the Put Option, and, for the avoidance of doubt, upon such deemed exercise the Put/Call Price shall be immediately due and payable without any further action or notice by any party.
|
6.
|
THE PLEDGEE
|
6.1
|
Pledgee’s Appointment as Attorney-in-Fact, etc
.
|
6.1.1
|
The Grantor hereby irrevocably constitutes and appoints the Pledgee and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Grantor and in the name of the Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, the Grantor hereby gives the Pledgee the power and right, on behalf of the Grantor, without notice to or assent by the Grantor, to do any or all of the following:
|
(a)
|
in the name of the Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due with respect to any Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Pledgee for the purpose of collecting any and all such moneys due with respect to any Collateral whenever payable;
|
(b)
|
pay or discharge taxes and Liens levied or placed on or threatened against the Collateral;
|
(c)
|
execute, in connection with any sale provided for in Section 5.4 or 5.5, any indorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and
|
(d)
|
(1) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Pledgee or as the Pledgee shall direct; (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (3) sign and indorse any assignments, verifications, notices and other documents in connection with any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding brought against the Grantor with respect to any Collateral; (6) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Pledgee may deem appropriate; and (7) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Pledgee were the absolute owner thereof for all purposes, and do, at the Pledgee’s option and the Grantor’s expense, at any time, or from time to time, all acts and things which the Pledgee deems necessary to protect, preserve or realize upon the Collateral and the Pledgee’s security interests therein and to effect the intent of this Agreement, all as fully and effectively as the Grantor might do.
|
6.1.2
|
If the Grantor fails to perform or comply with any of its agreements contained herein, the Pledgee, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.
|
6.1.3
|
Subject to Section 7.16 of this Agreement, the expenses of the Pledgee incurred in connection with actions undertaken as provided in this Section 6.1 shall be payable by the Grantor to the Pledgee on demand.
|
6.1.4
|
The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.
|
6.2
|
Duty of the Pledgee
. The Pledgee’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Pledgee deals with similar property for its own account. Neither the Pledgee nor any of its officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Pledgee hereunder are solely to protect the Pledgee’s interests in the Collateral and shall not impose any duty upon the Pledgee to exercise any such powers. The Pledgee shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to the Grantor for any act or failure to act hereunder, except for its own gross negligence or willful misconduct.
|
6.3
|
Authorization of Financing Statements
. Pursuant to any applicable law, the Grantor authorizes the Pledgee to file or record financing statements with respect to the Collateral without the signature of the Grantor in such form and in such offices as the Pledgee determines appropriate to perfect the security interests of the Pledgee under this Agreement. The Grantor hereby ratifies and authorizes the filing by the Pledgee of any financing statement with respect to the Collateral made prior to the date hereof.
|
7.
|
MISCELLANEOUS
|
7.1
|
Amendments; Waivers
. Any term, covenant, agreement or condition of this Agreement may be amended, and any right under this Agreement may be waived, if, but only if, such amendment or waiver is in writing and is signed by the Pledgee and by the Grantor. Unless otherwise specified in such waiver, a waiver of any right under this Agreement shall be effective only in the specific instance and for the specific purpose for which given. No election not to exercise, failure to exercise or delay in exercising any right, nor any course of dealing or performance, shall operate as a waiver of any right of the Pledgee under this Agreement or Applicable Law, nor shall any single or partial exercise of any such right preclude any other or further exercise
|
7.2
|
Notices
. All notices or other written communications hereunder shall be made in accordance with Section 8.01 of the Royalty Interest Purchase Agreement.
|
7.3
|
No Waiver by Course of Conduct; Cumulative Remedies
. The Pledgee shall not by any act (except by a written instrument pursuant to Section 7.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Pledgee, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Pledgee of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Pledgee would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.
|
7.4
|
Enforcement Expenses; Indemnification
. Subject to Section 2.2 and Section 7.16 of this Agreement,
|
7.4.1
|
The Grantor agrees to pay or reimburse the Pledgee for all its costs and expenses incurred in enforcing or preserving any rights under this Agreement, including, without limitation, the fees and disbursements of counsel as required of the Company pursuant to Section 8.14 of the Royalty Interest Purchase Agreement.
|
7.4.2
|
The Grantor agrees to pay, and to save the Pledgee harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.
|
7.4.3
|
The Grantor agrees to pay, and to save the Pledgee harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Company would be required to do so pursuant to Section 8.14 of the Royalty Interest Purchase Agreement.
|
7.4.4
|
The agreements in this Section 7.4 shall survive repayment of the Obligations and all other amounts payable under the Royalty Interest Purchase Agreement and the other Transaction Documents.
|
7.5
|
Successors and Assigns
. This Agreement shall be binding upon the successors and assigns of the Grantor and shall inure to the benefit of the Pledgee and its successors and assigns; provided that the Grantor may not assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Pledgee.
|
7.6
|
[
Reserved
] .
|
7.7
|
Counterparts
. To facilitate execution, this Agreement may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages. Delivery of an executed signature page of this Agreement by email or facsimile transmission shall be effective as delivery of a manually executed counterpart hereof. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law.
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7.8
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Severability
.
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
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7.9
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Section Headings
. The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.
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7.10
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Integration
. This Agreement and the other Transaction Documents represent the agreement of the Grantor and the Pledgee with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Pledgee relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Transaction Documents.
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7.11
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Governing Law
. The rights and duties of Grantor and the Pledgee under this Agreement shall be governed by the laws of the State of New York regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.
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7.12
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JUDICIAL PROCEEDINGS; WAIVER OF JURY TRIAL
. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
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7.13
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Acknowledgements
. The Grantor hereby acknowledges that:
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7.13.1
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it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Transaction Documents to which it is a party;
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7.13.2
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the Pledgee does not have any fiduciary relationship with or duty to the Grantor arising out of or in connection with this Agreement or any of the other Transaction Documents, and the relationship between the Grantor, on the one hand, and the Pledgee, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and
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7.13.3
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no joint venture is created hereby or by the other Transaction Documents or otherwise exists by virtue of the transactions contemplated hereby between the Grantor and the Pledgee.
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7.14
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Releases
. At such time as the Obligations shall have been performed and paid in full, the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Pledgee and the Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantor. At the request and sole expense of the Grantor following any such termination, the Pledgee shall deliver to the Grantor any Collateral held by the Pledgee hereunder. Upon any such termination of the security interests or release of Collateral, as the case may be, referred to in this clause, the Pledgee will, at the expense of the Grantor, execute and deliver to the Grantor such documents, as the Grantor shall reasonably request to evidence the termination of the security interests or the release of such Collateral, as the case may be, including without limitation, subordination or nondisturbance agreements, in form and substance satisfactory to the Grantor.
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Issuer
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Holder
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Class of
Stock
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Stock
Certificate No.
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No. of Shares
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Curis Royalty, LLC
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Curis, Inc.
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Membership Interest
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N/A
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100% ownership
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Grantor
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Jurisdiction of Organization
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Location of Chief Executive Office
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Curis, Inc.
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Delaware
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4 Maguire Road
Lexington, Massachusetts 02421 |
Re:
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Collaborative Research, Development and License Agreement:
Consent and Payment Direction
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1.
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EXISTING CONSENT TO ASSIGNMENT OF CERTAIN RIGHTS UNDER THE LICENSE AGREEMENT
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2.
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EXISTING CONSENTS
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3.
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CONSENT TO ASSIGNMENT OF CERTAIN RIGHTS UNDER THE LICENSE AGREEMENT, PLEDGE OF THE SUBJECT PAYMENTS AND PLEDGE OF EQUITY IN CURIS LLC
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4.
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CONSENT TO DISCLOSURE OF CERTAIN GENENTECH CONFIDENTIAL INFORMATION
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5.
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PAYMENT DIRECTION
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6.
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MISCELLANEOUS
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SUBSIDIARY NAME
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JURISDICTION OF ORGANIZATION
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DOING BUSINESS AS
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Curis Securities Corporation
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Massachusetts
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Curis Securities Corporation
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Curis Royalty LLC
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Delaware
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Curis Royalty LLC
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/s/ P
RICEWATERHOUSE
C
OOPERS
LLP
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Boston, Massachusetts
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March 26, 2019
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1.
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I have reviewed this Annual Report on Form 10-K of Curis, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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March 26, 2019
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/
S
/ JAMES E. DENTZER
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|
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James Dentzer
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|
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President and Chief Executive Officer
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|
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(Principal Executive Officer)
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1.
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I have reviewed this Annual Report on Form 10-K of Curis, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
|
March 26, 2019
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/
S
/ JAMES E. DENTZER
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|
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James Dentzer
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Financial Officer)
|
Date:
|
March 26, 2019
|
/
S
/ JAMES E. DENTZER
|
|
|
James Dentzer
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
Date:
|
March 26, 2019
|
/
S
/ JAMES E. DENTZER
|
|
|
James Dentzer
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Financial Officer)
|