ITEM 1. BUSINESS

 

Merger of Signal Genetics, Inc. and Miragen Therapeutics, Inc.

On February 13, 2017, we, then known as Signal Genetics, Inc., or Signal, completed our merger with Miragen Therapeutics, Inc., a then privately-held Delaware corporation, or Private Miragen. Pursuant to the Agreement and Plan of Merger and Reorganization, or the Merger Agreement, by and among Signal, Private Miragen, and Signal Merger Sub, Inc., a wholly-owned subsidiary of Signal, or Merger Sub, Merger Sub merged with and into Private Miragen, with Private Miragen surviving as a wholly-owned subsidiary of Signal, or the Merger. Immediately, following the Merger, Private Miragen merged with and into us, with us as the surviving corporation, or the Short-Form Merger, and, together with the Merger, the Mergers. In connection with the Short-Form Merger, we changed our corporate name to “Miragen Therapeutics, Inc.” Our common stock, par value $0.01 per share, or our common stock, began trading on The Nasdaq Capital Market under the ticker symbol “MGEN” on February 14, 2017.

Overview

We are a clinical-stage biopharmaceutical company discovering and developing proprietary RNA-targeted therapies with a specific focus on microRNAs and their role in diseases where there is a high unmet medical need. microRNAs are short RNA molecules, or oligonucleotides, that regulate gene expression and play vital roles in influencing the pathways responsible for many disease processes. A leader in microRNA therapeutics discovery and development, we have advanced two product candidates, cobomarsen, also known as MRG-106, and MRG-201, into clinical development. We are also developing MRG-110 under a license and collaboration agreement, or the Servier Collaboration Agreement, with Les Laboratoires Servier and Institut de Recherches Servier, or, collectively, Servier.

Cobomarsen is an inhibitor of microRNA-155, or miR-155, which is found at abnormally high levels in malignant cells of several blood cancers, as well as certain cells involved in inflammation. In our Phase 1 clinical trial of cobomarsen in cutaneous T-cell lymphoma, or CTCL, 90% of patients treated systemically demonstrated improvement in modified Severity Weighted Assessment Tool, or mSWAT, score, which is a measurement of the severity of skin disease over a patient’s entire body.

MRG-201 is a replacement for microRNA-29, or miR-29, which is found at abnormally low levels in a number of pathological fibrotic conditions, including cutaneous, cardiac, renal, hepatic, pulmonary, and ocular fibrosis, as well as in systemic sclerosis. In a Phase 1 clinical trial of MRG-201, we observed a statistically-significant reduction in fibroplasia, or scar tissue deposition, with no adverse effects on incisional wound healing when MRG-201 was given.

MRG-110 is an inhibitor of microRNA-92, or miR-92, a microRNA that is expressed in endothelial cells and has been shown to accelerate the formation of new blood vessels in preclinical models of heart failure, peripheral ischemia, and dermal wounding. MRG-110 is being developed for use in various indications in which enhanced vascular density is expected to provide clinical benefit. We retain all commercial rights to MRG-110 in the United States and Japan, and Servier has commercial rights in the rest of the world.

In addition to these programs, we continue to develop a pipeline of wholly-owned preclinical product candidates. We believe that our preclinical product candidates offer the potential to treat a number of indications including oncology, visual pathologies, neurodegeneration, and hearing loss. The goal of our translational medicine strategy is to progress rapidly to first-in-human trials once we have adequately established the pharmacokinetics (the movement of a drug into, through, and out of the body), pharmacodynamics (the effect and mechanism of action of a drug), safety, and manufacturability of the product candidate in preclinical studies.

We believe our experience in microRNA biology and chemistry, drug discovery, bioinformatics, and translational medicine allows us to identify and develop mircroRNA-targeted drugs that are designed to regulate gene pathways to return diseased tissues to a healthy state. We believe that our drug discovery and development strategy will enable us to progress our product candidates from preclinical discovery to confirmation of mechanism of action in humans quickly and efficiently. The elements of this strategy include identification of biomarkers that may predict clinical benefit and monitoring outcomes in early-stage clinical trials to help guide later clinical development.

The following table summarizes our most advanced programs:

Anticipated Milestones

Cobomarsen (blood cancers)

MRG-201 (pathologic fibrosis)

MRG-110 (ischemic disease)

 

Our Strategy

 

We seek to use our expertise and understanding of microRNA biology, oligonucleotide chemistry, and product development to create novel products that have the potential to transform the treatment of patients with serious diseases. The key components of our strategy are as follows:

chronic lymphocytic leukemia. We plan to release interim data during the second half of 2018 in at least one of these additional indications.

Our Product Candidates

 

Cobomarsen

 

Cobomarsen is an inhibitor of miR-155. Data reported in the scientific literature identifies miR-155 as a cancer-causing microRNA, or oncomiR, with a role in the development of multiple blood cancers. Based on this literature, miR-155 is implicated in the expression of a number of validated cancer-related disease targets, including Bruton’s tyrosine kinase, or BTK, and nuclear factor kappa-light-chain-enhancer of activated B-cells, or NFĸB. In certain B-cell lymphomas, improvement of clinical outcomes has been associated with normalization of miR-155 levels, while poor prognosis, resistance to treatment, and recurrence of the disease are associated with elevated levels of miR-155. In addition to playing a role in B-cell malignancies, miR-155 is elevated in another group of malignant white blood cells, called T-cells, found in skin lesions of patients with MF. We screened a library of locked nucleic acid modified oligonucleotides and identified cobomarsen as having what we believed was the best potential efficacy and drug-like properties, including improved pharmacodynamics in human T-cell and B-cell lymphoma cell lines. We are conducting a Phase 1 clinical trial of cobomarsen in patients with MF, adult T-cell leukemia/lymphoma, diffuse large B-cell lymphoma, and chronic lymphocytic leukemia. In 26 of 29 evaluable patients with MF, or 90%, cobomarsen treatment demonstrated improvement in mSWAT score, which is a measurement of the severity of skin disease over a patient’s entire body. Four of five MF patients, or 80%, who were treated with 300 mg IV infusion achieved

a 50% or greater mSWAT reduction, which we believe represents an important beneficial clinical response. Based on these results and our meeting with the FDA, we anticipate initiating the Phase 2 clinical trial of cobomarsen via 300 mg IV infusion in 2018. We retain worldwide rights for cobomarsen.

 

Mycosis Fungoides

 

MF is the most common form of a type of blood cancer called CTCL. CTCL occurs when certain types of T-cells become cancerous. These malignant T-cells then form specific types of skin lesions. Although the skin is involved, the skin cells themselves are not cancerous. According to the National Institutes of Health, or NIH, MF usually occurs in adults over age 50, although the disease may occur at any age.

 

We believe the total population of patients with CTCL in the United States and Canada is approximately 30,000. The Lymphoma Research Foundation estimated the prevalence of MF to be 16,000-20,000 cases in the United States. According to the Leukemia and Lymphoma Society in a 2014 publication, approximately 70% to 80% of patients are diagnosed with early-stage MF that impacts only the skin. In these patients, the disease typically has a slow progression, but is accompanied by serious quality of life detriments such as severe itchiness, pain, and disfiguration. The five-year survival rate for newly diagnosed patients with CTCL is approximately 90%. As CTCL progresses, the cancer may involve the lymph nodes, blood, and internal organs. The five-year survival rate in later stage patients with CTCL (stages IIB, III, IV) is approximately 20-60% depending on the stage.

 

There are currently no curative therapies for CTCL, and concurrent and consecutive treatments, many with significant adverse effects, tend to be given until loss of response. Most drugs for CTCL have response rates between 30% and 40%, and response durations tend to be less than a year. We believe there is a need for new and improved therapies in CTCL to treat the disease and reduce symptoms, such as itchiness and painful skin lesions, and to prolong survival in patients with aggressive disease.

 

There is no universally accepted standard of care for treatment of MF. Treatment is dependent on stage of disease and responsiveness to previous therapy and is divided into skin-directed therapy and whole-body treatments. For certain patients with advanced disease, allogeneic stem cell transplantation may offer prolonged survival, but the five-year survival rate is approximately 50%.

 

In addition to CTCL, elevation of miR-155 has been associated with several other blood cancers and certain solid tumors. We believe there is a potential opportunity to develop a companion diagnostic that could detect and quantify levels of miR-155 in circulating blood or malignant cells. We believe this approach may then allow for the selection of patients with elevated miR-155 levels who may be more likely to benefit from cobomarsen treatment and allow the drug to be used selectively in multiple cancers, if approved. There are several types of cancer in which high levels of miR-155 have been observed, including subsets of diffuse large B-cell lymphoma, acute myeloid leukemia, certain virally-induced lymphomas such as HTLV-1 associated lymphoma and Burkitt’s lymphoma, Down Syndrome-associated acute lymphocytic leukemia, and other types of cancer. We are evaluating cobomarsen in additional types of lymphoma and leukemia in our Phase 1 clinical trial and intend to explore other potential applications for cobomarsen through additional clinical studies in other tumor types.

 

Cobomarsen Phase 1 Clinical Trial

 

Trial Design

 

We are conducting a multi-site, open-label, dose-ranging Phase 1 clinical trial of cobomarsen for the treatment of MF at 13 U.S.-based clinical sites. This clinical trial consists of two parts and is expected to enroll up to 50 patients with MF. Patients may be allowed to be on other medications or background therapies so long as they have had no change in treatment regimen for MF, including drug and dose, for more than four weeks prior to enrollment and, in the opinion of the investigator, the patient is currently clinically stable and is likely to remain clinically stable for a minimum of three months after screening.

 

The primary objectives of this clinical trial are safety and tolerability. Secondary objectives include pharmacokinetic assessments, including measurement of absorption and clearance of cobomarsen from the blood. Additionally, there are several exploratory measures to assess any changes in lesion severity before and after treatment, as well as pharmacodynamic and histology assessments. The clinical trial utilizes two validated measures of lesion severity: (i) Composite Assessment of Index Lesion Severity Score, or CAILS, which is a composite measure that assesses the severity of one or more lesions on a patient and (ii) mSWAT, which is an assessment tool that is used to analyze the disease severity over a patient’s entire body.

 

Part A of the clinical trial tested the effect of direct intratumoral injections of 75 mg of cobomarsen and enrolled six patients, five of whom completed dosing. One patient discontinued the trial due to baseline disease that exceeded trial entry criteria,

which was discovered during the first week of the trial, and the decision was made to withdraw the patient. In four patients, saline placebo was injected into a separate skin lesion at the same time as cobomarsen treatment. After eight to 14 days of treatment, injections sites were biopsied in five patients and analyzed for drug concentration, molecular evidence of drug activity on target gene expression, and histological evidence of alterations in malignant cell numbers and other immune cell populations. Additionally, as an exploratory endpoint, CAILS scoring was used to assess clinical response.

 

Part B of the clinical trial is enrolling patients and is designed to assess whole-body administration of cobomarsen. The first group, or cohort, of patients in Part B started receiving doses of cobomarsen in August 2016. Cohorts were dosed by multiple routes of administration, including subcutaneous injection, or SC injection or IV infusion, and intravenous bolus injection, or IV bolus. Efficacy and tolerability were assessed at doses of 300 mg, 600 mg, and 900 mg for SC injection and IV infusion and at 300 mg for IV bolus. Patients received six doses in the first 26 days of the study, followed by weekly or bi-weekly doses. In addition to safety, tolerability, and pharmacokinetics, exploratory pharmacodynamic endpoints are being assessed and clinical scoring using CAILS and mSWAT is being performed.

 

Efficacy

 

All patients who received cobomarsen in Part A of the clinical trial demonstrated a beneficial clinical response. Intratumoral injection was observed to result in significant absorption into the systemic circulation. Exploratory assessment of clinical response to therapy was performed for both cobomarsen-treated and saline-treated lesions based on the change from baseline in the CAILS scores. In Part A, four of the five patients who completed dosing had their scores evaluated in the cobomarsen-treated lesions. In the fifth patient, CAILS scores were monitored in two untreated lesions, instead of the treated lesions. The treated lesions in the four patients showed a 50% or greater reduction in the baseline CAILS score, which was maintained to the end of study visit (either 28 days or 35 days after the first dose). A greater than 50% reduction was observed in one saline-injected lesion.

 

In Part A, examination of pre-treatment and post-treatment tumor biopsies of the same lesion injected with cobomarsen was conducted in five patients. After treatment, histology revealed fewer cancerous cells or a reduction in cancer cell density or depth in most patients.

 

In Part B of the clinical trial, efficacy was assessed at doses of 300 mg, 600 mg, and 900 mg for SC injection and IV infusion and at 300 mg for IV bolus. Durable partial responses were observed at all dose levels tested. Based on the mSWAT score, 26 of 29 patients (90%) showed improvements in mSWAT scores. These improvements were observed as early as 17 days after a patient’s first dose (the first post-treatment assessment), with the greatest improvement in mSWAT scores seen after one or more months of dosing. Additionally, all eight patients (100%) who achieved a 50% or greater reduction in mSWAT score and received more than two cycles of treatment maintained a durable response for greater than a four-month period. These patients were dosed either via SC injection or IV infusion at doses ranging from 300 mg to 900 mg. Cohorts that received 300 and 600 mg IV infusions had similar efficacy and tolerability profiles and provided the most consistent response rates based on skin mSWAT sores. Six of eight patients (75%) initially assigned to these cohorts achieved a 50% or greater mSWAT score reduction. The overall skin response in patients who received cobomarsen as monotherapy or cobomarsen with concurrent stable therapy were not significantly different. Reductions in the Skindex-29 total score that measures patients’ quality of life correlated to reductions in mSWAT score, suggesting cobomarsen may be improving patients’ quality of life as their skin disease improves.

Biomarker Analysis

 

Biomarkers were analyzed to assess the potential ability of cobomarsen to regulate the expression of gene pathways that are associated with elevated levels of miR-155 in MF. We identified a set of biomarkers based on cobomarsen activity in cell lines derived from MF patients. In Part A of the clinical trial, we assessed the expression of these biomarker genes in lesions before and after treatment with cobomarsen. Retrospective analysis of a subset of the genes from the cell line data indicated that cobomarsen treatment was correlated with the expression of some genes associated with cellular proliferation and potentially increased expression of some genes associated with cell death. The expression of these genes appears to correspond to the level of drug measured in the lesion biopsy. We also believe these data illustrate the potential of our approach to identify molecular biomarkers that translate from preclinical studies to predict product candidate activity in clinical trials.

Safety, Pharmacokinetics, and Pharmacodynamics

 

Cobomarsen has been generally well tolerated at all dose levels and routes of administration tested as of January 25, 2018, with multiple patients receiving more than a year of therapy (over 40 grams cumulative dose) and no serious adverse events, or AEs, attributed to cobomarsen. The maximally tolerated dose level has not been determined.

 

Six patients in Part A were administered cobomarsen intratumorally, with up to five 75 mg doses of cobomarsen administered to the same tumor over a period of up to two weeks. Four of these patients were simultaneously treated in a second lesion with a saline placebo solution. All patients who received cobomarsen generally tolerated the administrations well with only minimal redness of the skin at the site of injection noted in one patient. One patient was discontinued from the trial after receiving three doses of cobomarsen due to rapid progression of disease, which began shortly before the initiation of dosing and was considered unrelated to cobomarsen. The remaining five patients have completed the dosing and follow-up periods. AEs for these patients noted by the treating physician as possibly or definitely related to cobomarsen, included redness of the skin, pain, burning or tingling at the injection site, skin inflammation, and a hand sore. All possibly- or definitely-related AEs were judged as mild or moderate in severity. Abnormal lab values possibly related to use of cobomarsen were observed in two patients and included moderate neutropenia and prolonged partial thromboplastin time, both of which resolved while continuing cobomarsen.

 

In Part B of the clinical trial, as of January 25, 2018, 29 patients have been on study for up to approximately 16 months. Patients’ disease stages ranged from Stage 1A to Stage IIIB. The median baseline mSWAT score was 45 (range 2 to 180). All dose levels were generally well tolerated. The most common related AEs observed in ≥ 15% of subjects were: fatigue, neutropenia, lymphopenia, and injection site pain. Most of the AEs were transient, of mild to moderate severity, and had resolved during the course of dosing. Subcutaneous administration of large volumes (≥ 600 mg dose levels) correlated with higher incidence of injection site reactions. Two AEs were deemed dose-limiting toxicities in two patients during their initial cycle: Grade 3 worsening itchiness (900 mg SC injection cohort), which recurred when the patient was dosed again at a lower dose level (300 mg IV infusion) and Grade 3 tumor flare (300 mg IV bolus cohort). These two patients experienced additional

Grade 3/4 AEs, including decreased lymphocytes, neutrophils and white blood cell counts, hyperuricaemia, rash, itchiness, and/or hypertension during the presumed disease flares. The only other Grade 3/4 AE reported in the trial that was possibly- or definitely-related to the administration of cobomarsen was neutropenia in a patient (300 mg IV infusion cohort) who was on concomitant bexarotene. This patient’s neutropenia had resolved before the end of the dosing period.

 

In Part A of the clinical trial, high levels of cobomarsen (48-204 µg per gram of tissue) were detected in injected tumors 24 hours after the last dose. We also observed accumulation of cobomarsen in a lesion distant from the site of injection at low levels (4 µg per gram of tissue). Analysis of injected tumors also indicated an increased expression of several direct targets of miR-155, suggesting that the drug may be inhibiting its intended molecular target. A similar pattern of gene regulation was observed in a lesion not directly injected with drug that had 4 µg cobomarsen per gram of tissue, suggesting the minimum effective dose level in skin lesions may be near this level. Cobomarsen was measured in skin biopsies collected from systemically-treated patients in Part B. Levels measured showed a mean of 12 µg per gram of tissue. Similar patterns of cobomarsen target-gene expression changes were observed in patient biopsies after systemic dosing as were seen in the Part A lesions.

Data from clinical trial patients injected with cobomarsen indicate that the route of administration may affect the maximum plasma concentration, or C _max , and the time required to reach that concentration, or T _max , in the systemic circulation (approximately 10 minutes to one hour for intratumoral dosing, three to six hours for SC injection, two hours for IV infusion, and five minutes for IV bolus administration). However, dose-normalized systemic exposure (drug exposure/dose given) for all doses and routes of administration were similar, demonstrating good dose proportionality. The dose-normalized systemic exposure for the 300 mg IV bolus cohort indicated proportionally increased systemic exposure as compared to the other routes. Mean C _max values after the first 300 mg IV bolus injection were approximately six times the mean C _max observed for the 300 mg 2-hour IV infusion cohort. Plasma samples, evaluated for cobomarsen that were taken before weekly dosing, indicate that consistent plasma concentrations appear to be reached after approximately 12-16 weeks of weekly dosing, suggesting a half-life of approximately 2.5 to 3 weeks.

Expansion Indications

We are currently evaluating a 600 mg IV infusion of cobomarsen in our Phase 1 clinical trial in additional oncology indications in which the disease process appears to be related to abnormally high miR-155 levels, including chronic lymphocytic leukemia, diffuse large B-cell lymphoma, and adult T-cell leukemia/lymphoma. In the second half of 2018, we anticipate reporting interim safety and efficacy data for cobomarsen in at least one of these expansion indications.

Cobomarsen Phase 2 Clinical Trial

Based on the results of our Phase 1 clinical trial, we plan to initiate a Phase 2 clinical trial for cobomarsen in patients with MF. We met with the FDA in January 2018 to discuss our trial design, and we anticipate that our Phase 2 clinical trial, called SOLAR, will employ an open-label, parallel-group, randomized design to evaluate the safety and efficacy of 300 mg of cobomarsen given by IV infusion, versus an active control. The SOLAR clinical trial is intended to enroll patients with moderate to severe MF (stages Ib-III). The primary endpoint is planned to be a comparison of the numbers of responders in each treatment group with response defined as a 50% or greater improvement in the patient’s mSWAT score maintained for at least four consecutive months, or ORR4, with no evidence of disease progression in the blood, lymph nodes, or viscera. Secondary endpoints are planned to include progression-free survival and patient-reported outcomes measuring improvements in quality of life and in symptoms, such as pain and itching. We anticipate enrollment to be approximately 65 patients per treatment group. Based on the discussions with the FDA, we believe that a successful outcome for the primary endpoint of this Phase 2 clinical trial may allow us to apply for accelerated approval of cobomarsen in the U.S.

MRG-201

MRG-201 is a replacement for, or mimic of, miR-29, which is found at abnormally low levels in a number of pathological fibrotic conditions, including cutaneous, cardiac, renal, hepatic, pulmonary, and ocular fibrosis, as well as in systemic sclerosis. MRG-201 is intended to increase miR-29-like activity in the setting of fibrotic conditions. miR-29 is believed to negatively regulate the expression of collagen and other proteins that are involved in fibrous scar formation and may be a regulator of extracellular matrix production. As such, we believe that increasing miR-29 to normal levels could be beneficial in the treatment of several pathological fibrotic conditions.

In 2017, we announced the data from a single-center, Phase 1, double-blind, placebo-controlled, single and multiple dose-escalation clinical trial for MRG-201 that enrolled 54 healthy volunteers. In the trial, we observed mechanistic proof-of-concept for MRG-201, based on a statistically-significant reduction in fibroplasia, or scar tissue deposition, with no adverse

effects on incisional wound healing when MRG-201 was given. We plan to initiate a double-blinded, randomized Phase 2 clinical trial to evaluate MRG-201 in subjects with a predisposition for keloid formation in the first half of 2018. Keloids are a common condition that is disfiguring and can be painful, itchy, and emotionally troubling to those that experience them. They are typically smooth, hard, benign growths that form when scar tissue grows excessively. We retain worldwide rights for MRG-201.

We believe that the miR-29 family of miRNAs is consistently present at abnormally low levels during fibrotic disease progression. We initially discovered the role of miR-29 in pathological cardiac fibrosis. Since this initial discovery, miR-29 has been implicated in pathological fibrosis in multiple organs including the skin, eye, lung, liver, tendon, and kidney. miR-29 is understood by the scientific community to play a role in the regulation of certain processes that contribute to fibrosis, including the initiation and maintenance of fibrosis through transforming growth factor beta, or TGF-ß, signaling and the deposition of the components that make up fibrotic tissue, including collagen and extracellular matrix, or ECM, proteins. Furthermore, both fibrotic ECM and TGF-ß are believed to down-regulate miR-29 levels, leading to continuously increased TGF-ß expression and uncontrolled ECM production. miR-29 levels are abnormally low in multiple fibrotic indications, and lower levels of miR-29 are correlated with increased severity of fibrosis. Although various fibrotic indications are potentially distinct, they share a number of features, including the activation of the cells that initiate the deposition of fibrotic tissue or fibroblast activation, excessive deposition of collagen and other fibrosis-associated pathways, and resulting organ dysfunction. We believe the functions and biomarkers regulated by miR-29 might be shared among multiple fibrotic indications and that increasing miR-29-like activity may provide potential benefit in any of these.

 

To demonstrate mechanistic proof-of-concept and as a potential initial indication, we initially focused on skin fibrosis. However, we believe data derived from skin fibrosis trials may facilitate development of a product candidate intended for the treatment of patients who suffer from Idiopathic Pulmonary Fibrosis, or IPF, ocular fibrosis, tendon fibrosis, and other major organ pathological fibrosis. We anticipate releasing preclinical in vivo data from studies in ocular and lung fibrosis this year and expect data from these studies to inform our future clinical development strategies in these expansion indications.

 

Pathological Fibrosis

 

Fibrosis describes the development of fibrous connective tissue as a response to injury or damage. Fibrosis may refer to the deposition of connective tissue that occurs as part of normal healing or to the excess tissue deposition that occurs as a disease process. When fibrosis occurs in response to injury, the term “scarring” is used. Pathological fibrosis can occur in many tissues of the body, either as a primary event or as a result of inflammation or damage. In every case, regardless of the trigger, collagen build up occurs, which can result in scarring of vital organs such as the skin, lung, liver, eye, kidney, tendon, and heart, leading to irreparable damage and eventual organ failure. In addition, fibrosis prevents the normal healing of the organs and further perpetuates the fibrotic process. We believe there is a significant need for additional clinical therapeutic approaches to treating pathological fibrosis.

 

Below is a description of several types of pathological fibrosis for which we may seek to develop a product candidate based on a replacement for miR-29:

  

MRG-201 Phase 1 Clinical Trial

 

Trial Design

 

We conducted a single-center Phase 1, double-blind, placebo-controlled, single and multiple dose-escalation clinical trial of MRG-201. In addition to safety, kinetics, and tolerability, MRG-201 was studied to determine if it can limit the formation of fibrous scar tissue. This four-part clinical trial enrolled 54 healthy volunteers in which:

The primary objectives in this clinical trial were safety and tolerability of MRG-201 injected into the skin via intradermal injections. A secondary objective was to characterize local skin and systemic exposure to MRG-201 following intradermal injection. Exploratory endpoints included the pharmacodynamic effects of MRG-201 on the expression of miR-29 gene targets in skin wound biopsies and to evaluate changes in histology from skin wounds treated with MRG-201.

 

Safety and Pharmacokinetics

 

The clinical trial enrolled 54 volunteers, 47 of whom were administered MRG-201 and seven of whom were incised without receiving a dose of MRG-201.

 

Nineteen volunteers in Part B received a single dose of 0.5 mg, 1 mg, 2 mg, 4 mg, 7 mg, or 14 mg of MRG-201 in un-incised skin. In these volunteers, MRG-201 was generally well tolerated. Three incidents of injection site reactions were reported, which were generally moderate. Additional adverse events of mild severity were reported as possibly related to receiving MRG-201 and included redness of the skin, a tingling sensation and sensations of warmth at a patient’s injection site, and sensations of warmth on a patient’s limbs and back, all of which resolved within 24 hours, as well as fatigue, which resolved in less than a week.

 

Nine volunteers in Part C received a single dose of either 4 mg, 7 mg, or 14 mg of MRG-201 around an incision (three volunteers per dose level). In these volunteers, MRG-201 was generally well tolerated at all dose levels evaluated. One incident of injection site reaction was reported, which was moderate and resolved within approximately 48 hours.

 

Nine volunteers in the dose-escalation portion of Part D received six total doses each of 4 mg, 7 mg, or 14 mg of MRG-201 around an incision. In these volunteers, MRG-201 was generally well tolerated at all dose levels evaluated. There were two injection site reactions of moderate severity reported. Five adverse events of mild severity reported by the treating physician as possibly or definitely related to MRG-201 included itching or pain at the injection site, fatigue, headache, and microscopic hematuria (blood in the urine), which had all resolved by the end of the study.

 

An additional 10 volunteers were enrolled in Part D to understand drug diffusion. Volunteers received six total doses each of 14 mg of MRG-201 at one end of a 4 cm incision. The other end of the incision was untreated. Both ends of the incision were biopsied to measure the potential for diffusion and pharmacodynamic activity of MRG-201 away from the site of injection. In these volunteers, MRG-201 was generally well tolerated at all dose levels evaluated. One volunteer had an injection site reaction of mild severity and one had an injection site reaction of moderate severity. Three adverse events of mild severity reported by the treating physician as possibly related to MRG-201 included chills, weakness, and localized edema and itchiness around a patient’s injection site. 

Systemic exposure of MRG-201 was minimal and pharmacokinetic analysis was limited as the level of drug in the blood was often lower than the assay could detect. The high number of samples that were unmeasurable was due to the low dose concentrations used (maximum deliverable dose of 14 mg/dose) and the presumed metabolism/degradation of the parent drug into undetectable metabolites. Overall, T _max ranged from 0.25 to 6.2 hours with more variable data from cohorts dosed into incised skin, as compared to intact skin. There were no significant findings in any study part when assessing dose proportionality or when assessing accumulation of MRG-201 in multiple dose cohorts, although statistical assessments were confounded by the small number of observations and inter-subject variability of the bioanalytical data. Biodistribution testing of skin tissue biopsies showed low levels of full-length drug at 24 hours after dosing, with diffusion of drug into adjacent, un-injected skin at least one cm away from the site of injection.

 

Biomarker Analysis and Histopathology

 

In Part A of the clinical trial in which volunteers were incised without receiving any MRG-201 or placebo, molecular analysis confirmed that miR-29 expression decreased in incised skin compared to un-incised skin, as expected for fibrosis. In addition, gene expression of miR-29/MRG-201 biomarkers, including collagens and fibrosis-related genes, was increased approximately two-to-20-fold in incised skin and was correlated with the decrease in miR-29 expression. The magnitude of the change in the expression of miR-29 and the biomarker genes was approximately 30-85% greater 16 days after administration than it was nine days after administration, indicating a time-dependent effect on gene expression. We believe these data indicate the role of miR-29 in potentially regulating the biological pathways implicated in fibrosis in human skin.

 

In Part C of the clinical trial, biomarkers were analyzed to assess the ability of MRG-201 to regulate the expression of genes that are associated with reduced miR-29 expression in human skin. We identified a set of biomarkers based on MRG-201 activity in preclinical models of skin fibrosis, including mouse, rat, and rabbit skin in vivo, as well as human skin fibroblasts in vitro. The biomarker panel consists of direct targets for miR-29 and downstream genes we believe are indicative of an impact on miR-29 expression in wound healing and fibrosis, particularly collagens and other genes important in fibrosis. We assessed the expression of these biomarkers in healthy subject’s biopsies taken from the site of the incision 24 hours after a single MRG-201 dose compared to saline-treated lesions. Analysis of the biomarker data indicated that MRG-201 decreased expression of collagens and fibrosis-associated genes, consistent with the role we believe miR-29 plays in regulating these fibrosis-related genes. The change in expression of collagens and fibrosis-related genes appeared to be correlated with the amount of MRG-201 administered. We believe these data demonstrate an effect of MRG-201 on fibrosis-associated genes and provide an indication that MRG-201 has the potential to reduce fibrosis and scar formation in human skin. We also believe these data highlight the potential of our approach to identify molecular biomarkers that translate from preclinical studies to assessing the activity of MRG-201 in human clinical trials.

 

In Part D of the clinical trial, three cohorts of three volunteers each received six total doses of 4 mg, 7 mg, or 14 mg of MRG-201 and have completed dosing and the follow-up process, and a final cohort of 10 volunteers was dosed at the 14 mg dose level. MRG-201 administration did not appear to adversely affect wound healing in any cohort evaluated. Based on biomarker analysis, the collagen and fibrosis-related genes were decreased in the majority of drug-treated incisions compared to the saline control. Additionally, histological analysis indicated that incisions treated with multiple administrations of MRG-201 showed a statistically significant reduction in the area and depth of fibroplasia, a marker of fibrosis or scar formation. Furthermore, we observed that the magnitude of fibroplasia prevention corresponded to the magnitude of biomarker regulation. Multiple administrations of MRG-201, administered either starting on Day 1 or on Day 4, appeared to result in pharmacodynamic biomarker regulation (e.g. repression of collagen expression) and repression of fibroplasia at both the site of dosing and in at least half of subjects, at a distal site at least 1 cm from the site of injection. We believe these data may suggest that MRG-201 has the potential to reduce fibrosis and scar formation in human skin. The collagens and extracellular matrix genes regulated by MRG-201 in human skin have also been implicated in pulmonary fibrosis, including IPF. We believe the molecular and histological data for MRG-201 in human skin support additional development of a miR-29 mimic for IPF and additional fibrotic indications.

 

MRG-201 Preclinical Activities

 

Correlation of Biological Pathways Between Skin Fibrosis and Other Major Organ Fibrosis

 

The biomarkers that we believe are regulated by MRG-201 in human skin represent biological pathways that are associated with skin fibrosis but are also fundamental processes involved in pathologic fibrosis in general. Increased expression of collagens and additional fibrosis-associated genes that we believe are down-regulated by MRG-201 have been associated with multiple fibrotic indications, including scleroderma, keloids, hypertrophic scarring, IPF, systemic sclerosis, pulmonary fibrosis, fibrosis of the eye (retinal and corneal fibrosis), kidney fibrosis, tendon fibrosis, and cardiac fibrosis. We believe that the documented ability of MRG-201 to reduce the expression of these fibrosis-associated biomarkers in human skin suggests that a miR-29 mimic could also provide anti-fibrotic activity in multiple fibrotic indications.

 

Work done by us, as well as published data, indicate that a set of biomarkers showing increased expression in response to incision-induced fibrosis in human skin also show increased expression in multiple fibrotic indications including pulmonary fibrosis.

 

Delivery of miR-29 Mimic to the Lung

 

Together with Yale University and Lovelace Respiratory Research Institute, we were awarded a Centers for Advanced Diagnostics and Experimental Therapeutics in Lung Disease Stage II Grant from the NIH in 2014. The objective of the grant is to develop miR-29 mimicry as an efficient and personalized anti-fibrotic therapy. The collaboration is currently in year four of the five-year grant. During the first three years of the grant, the group used preclinical models to compare intravenous and aerosolized delivery routes for the amount of miR-29 mimic that enters circulation, distribution, pharmacokinetics, pharmacodynamics, and efficacy. Recent studies have been focused on dose-schedule optimization of inhaled delivery, as well as good manufacturing practice, or GMP, manufacture of the product candidate. In one of its laboratories, Yale University also established a blood assay for miR-29 detection in IPF patients. During years four and five of the grant, we plan to perform potential IND-enabling activities including additional development of an aerosolized formulation, dose-range finding studies in multiple species, and initiation of good laboratory practice, or GLP, toxicology studies. In addition, the collaboration plans to further develop its blood miR-29 diagnostic and assess correlations to tissue and lung cells collected through a procedure called bronchoalveolar lavage. 

 

Delivery of miR-29 Mimic to the Eye

 

We are exploring miR-29 replacement as a therapeutic for ocular indications including ocular fibrosis. RNA-based therapeutics can be administered to the eye via eye drops for diseases affecting the front of the eye (e.g., the cornea and anterior chamber), and via injection into the eye for diseases affecting the back of the eye. Both routes of administration have been established to be generally well-tolerated for oligonucleotide therapeutics. We believe that the direct application of our microRNA therapeutic candidate into the posterior compartment of the eye may have the advantage of a greater than one-week duration of effect, as the posterior chamber of the eye is a closed compartment and is devoid of the usual clearance mechanisms present in the rest of the body. Historically, this mode of drug delivery has allowed infrequent dosing and also provided the advantage of reduced systemic exposure. Preliminary preclinical studies investigated delivery of MRG-201 via topical drops for corneal administration or direct injection into the eye for retinal administration. Both routes of administration were observed to produce functional uptake of MRG-201 into the target cells as evidenced by decreased expression of collagens and extracellular matrix

genes. Topical administration of MRG-201 appeared to reduce fibrosis and enhanced healing in a preclinical model of corneal injury.

 

Delivery of miR-29 Mimic to the Liver

miR-29 family members are expressed at less than normal levels in preclinical models of liver fibrosis as well as in biopsies from human fibrotic livers. Delivery of miR-29 to liver cells using adeno-associated virus, or AAV, has been shown to reverse liver fibrosis induced by carbon tetrachloride in a rodent model. We are currently assessing liver delivery of several miR-29 replacements with varying conjugates. Initial data from such assessments have shown liver delivery in rodent models. We have studied multiple compounds in efficacy studies in rodents with the AAV-delivered miR-29 in a carbon tetrachloride model of liver fibrosis. These preclinical studies to date have guided potential future efforts to identify a lead compound intended for the treatment of liver fibrosis.

MRG-110

The primary product candidate under our amended Servier Collaboration Agreement is MRG-110 (or S95010 per Servier). MRG-110 is a locked nucleic acid modified oligonucleotide that appears to accelerate the formation of new blood vessels in preclinical models of heart failure, peripheral ischemia, and dermal wounding. MRG-110 is an inhibitor of miR-92a, a microRNA that is expressed in endothelial cells and has been shown to be integral in the direct control of new blood vessel growth in response to injury or tissue compromise as well as in the biology of tissue healing. The compound is being developed for potential use in various indications in which enhanced vascular density is expected to provide clinical benefit. Several preclinical studies indicated that tissue expression of miR-92a is increased in cardiovascular diseases. miR-92a was elevated in heart samples after myocardial infarction in multiple preclinical models, as well as in atherosclerotic lesions and neointima samples.

In preclinical testing, the inhibition of miR-92a by MRG-110 resulted in improved cardiac function following myocardial infarction in multiple species, with stimulatory effects on neovascularization. Improvements in neovascularization as well as accelerated healing rates were observed in models of acute excisional cutaneous wounds, as well as chronic non-healing cutaneous wounds. Initially, the collaboration intends to study MRG-110 for the treatment of chronic heart failure and in the healing of acute as well as chronic cutaneous wounds; however, other indications may be pursued later.

In the first half of 2018, Servier plans to initiate a Phase 1 clinical trial for MRG-110 evaluating the safety and tolerability of MRG-110 in a systemic dosing protocol intended to support further clinical studies for the potential treatment of heart failure. The Phase 1 clinical trial is planned to enroll 49 male subjects aged 18 to 45, and the trial results will be analyzed for biomarkers that may provide mechanistic proof-of-concept and support further potential clinical trials of MRG-110 in the treatment of cardiovascular disease and certain other conditions where vascular flow is compromised. We believe there is a significant need for medical advances in the treatment of heart failure, as over one third of the adult U.S. population suffers from at least one form of cardiovascular disease.

Also in the first half of 2018, we plan to initiate a separate Phase 1 clinical trial assessing the safety and tolerability of MRG-110 after intradermal administration in healthy volunteers. This clinical trial will include several exploratory endpoints that are intended to provide mechanistic proof-of-concept and biomarker validation to support potential use in patients at high risk for complications after surgical incisions or chronic wounds. The intradermal administration clinical trial is intended to support additional clinical studies in other diseases, including dermatologic applications, where increased vascularity may result in better healing and better outcomes. Under the Servier Collaboration Agreement, we granted Servier exclusive licenses to commercialize MRG-110 and one additional to be named product candidate in the field of cardiovascular disease in all countries except the United States and Japan. We retain all rights to these programs in the United States and Japan.

Chronic Heart Failure Physiopathology

The imbalance between oxygen demand and supply of cardiomyocytes plays an important role in the pathophysiology of heart failure. Chronic Heart Failure, or CHF, is associated with a decrease of myocardial blood flow that begins at the early stages of the heart failure. A preserved coronary microcirculation is able to increase blood flow in case of increased demand. In CHF, this Coronary Flow Reserve was shown to be reduced secondary to capillary dysfunction and rarefaction limiting oxygen supply to cardiomyocytes. Analysis of heart tissue from patients suffering CHF revealed a reduction of coronary microvascular density, or MVD. Sixty percent of cases of CHF patients with reduced ejection fraction, or HFrEF, have an ischemic origin. Progressive loss of cardiomyocytes and increase in fibrosis decrease capillary density. Compensatory elongation and hypertrophy of remaining cardiomyocytes further increase capillary length and inter-capillary distance reducing oxygenation.

CHF is one of the leading causes of mortality and morbidity in the world. The prognosis remains poor with 45-60% mortality five years after diagnosis. Quality of life in patients is impaired, from mild to severe limitations in daily life. To date, standard of care treatment slows down the progression of disease by inhibiting the neuro-hormonal activation and reducing vascular bed congestion. Coronary revascularization, with percutaneous coronary intervention, or PCI, or coronary arterial bypass grafting, or CABG, have been chosen to improve patient prognosis when the obstruction is located in the epicardial coronaries but is generally of no benefit in cases when the flow is limited downstream in the microcirculatory network. We believe that new reparative/regenerative solutions are needed for improving patient cardiac function that could consequently make a difference in daily quality of life with a further reduction in morbidity and mortality. The restoration of the microcirculation appears to be a potentially innovative therapeutic way to improve cardiac function.

In preclinical data, MRG-110 was observed to reduce infarct size in both rat and pig models of acute myocardial infarction, leading to an improved cardiac function. The cardioprotective effects were correlated with reduced cell death, reduced inflammation, and improved neovascularization of the affected myocardium. Similar effects were also observed in pig hibernating myocardium, a model of chronic ischemia, thought to be more representative of human cardiomyopathies.

Cutaneous wounds

In preclinical studies, we recently observed MRG-110 improving wound healing in normal, healthy farm pigs. In induced excisional wounds in healthy, normal farm pigs, MRG-110 appeared to result in increased perfusion, measured by laser Doppler imaging on Day 14, and more rapid wound closure compared to wounds in control animals treated similarly with vehicle control or standard of care, or SOC. Within the dermal portion of the wound bed, there was a dose dependent increase in granulation tissue and in vascularization on Day 49, 5 weeks after the last dose, in the wounds treated with MRG-110 compared with SOC-treated wounds. We believe the effects on wound healing in mice and pigs support further evaluation of MRG-110 for its potential to accelerate revascularization and granulation tissue formation, and ultimately wound closure in acute settings such as laparotomy or sternotomy incisions in patients with high risk of poor wound closure and incisional hernia.

Other Preclinical Programs

 

In 2016, we were awarded a milestone-driven grant by The ALS Association of up to $0.4 million to advance the development of MRG-107. MRG-107 is an inhibitor of miR-155 intended to be developed for the treatment of amyotrophic lateral sclerosis, or ALS. We are exploring miR-155 inhibition as a potential treatment to reduce neuronal degeneration in ALS and other neurodegenerative indications, including spinal cord injury. In preclinical studies of acute spinal cord injury, miR-155 inhibition appeared to: reduce tissue damage, reduce neuron degeneration, decrease fibrosis, increase axonal growth, and result in improved mobility and autonomic function.

 

We are also evaluating and developing additional microRNA-targeted, preclinical product candidates in a variety of disease indications where an abnormal level of one or more microRNAs has been implicated in disease pathology. Our inhibitor programs, including these product candidates, were created using the locked nucleic acid technology that we exclusively licensed from Santaris Pharma A/S, which subsequently changed its name to Roche Innovation Center Copenhagen A/S, or RICC, which was acquired by F. Hoffmann-La Roche Ltd, or Roche, in 2014 and subsequently changed its name to RICC, on a target-by-target basis. We believe combining this technology with our internal expertise may allow us to create unique product candidates that possess desirable drug-like properties capable of entering diseased cells without the need for additional delivery technologies. We have a broad patent portfolio intended to protect these product candidates.

 

Background on microRNAs

 

microRNAs are transcribed from the genome and unlike messenger RNA, or mRNA, they do not encode proteins. microRNAs function by preventing the translation of mRNAs into proteins and/or by triggering degradation of these mRNAs. Studies have shown that microRNA gene regulation is often not a decisive on and off switch but a subtle function that fine-tunes cellular phenotypes that becomes more pronounced during stress or disease conditions. microRNAs were first discovered in 1993 and have since been found in nearly every biological system examined since that time. They are highly conserved across species, demonstrating their importance to biological functions and cellular processes. According to the Sanger Institute, over 1,000 microRNAs have been identified in humans.

 

A body of evidence has shown that inappropriate levels of particular microRNAs are directly linked to a range of serious diseases, many of which are poorly served by existing therapies. microRNAs can affect the balance of protein expression and serve as “command and control” nodes that directly coordinate multiple critical systems simultaneously. This effect on systems biology is a naturally occurring homeostatic process that becomes disrupted in certain disease states. As a result, developing

microRNA-based therapeutics is fundamentally different from the single-protein, single-target approach that is the foundation of traditional small and large molecule drugs. 

 

Our Approach to Drug Discovery and Development

 

Our research and development strategy is designed to accelerate timelines and reduce development risk. The goal of our translational medicine strategy is to progress rapidly to first-in-human trials once we have adequately established mechanistic proof-of-concept, consisting of pharmacokinetics, pharmacodynamics, safety, and manufacturability of the product candidate in preclinical studies. Programs that progress into human trials are designed to be accompanied by a validated set of pharmacodynamic biomarkers that allow us to verify the mechanism of drug action in humans and to potentially stratify and enrich the study population. Through this approach, we seek to reduce the risk of our programs by quantifying target engagement and identifying the likely efficacious dose prior to progression to Phase 2 clinical trials.

 

Discovery

 

Although there are over 1,000 identified human microRNAs, not all of them have been shown to be causal in disease. Our approach to drug discovery and development begins with the identification of potentially pathological microRNAs.

 

We apply three general approaches to the identification of potentially pathological, or disease-causing, microRNAs: (i) profiling of microRNA expression in diseased tissue versus normal tissue to identify microRNAs that are found at abnormally high or low levels; (ii) identification of microRNAs that are located within genes (typically in non-protein coding segments) of validated disease-relevant genes and thus simultaneously expressed with the disease associated gene; and (iii) evaluation of microRNAs that are predicted to directly modulate the expression of specific, disease-relevant genes.

 

We believe that the microRNA inhibitor candidates face lower delivery hurdles compared to microRNA mimics and have better drug-like properties in regard to affinity to their targets, stability, drug distribution, and pharmacodynamics. To improve their therapeutic potential, we chemically modify these compounds with changes such as locked nucleic acid (known as LNA) substitution of the ribose sugar in many of the nucleosides and deoxyribonucleoside (known as DNA).

 

In conditions where a deficit in microRNA expression has been identified as disease causing, microRNA replacements, which are modified, double-stranded RNA structures that are recognized by the RNA-induced silencing complex, or RISC, can serve as chemically-synthesized replacements for microRNAs.

 

Historically, the delivery of double stranded RNAs, such as microRNA replacements, has been a significant hurdle to overcome for drug development because these molecules are very rapidly degraded and because uptake into cells can be inefficient. Our delivery approach for double-stranded microRNA replacements is to append a conjugate to the molecule to enhance cellular uptake. The selection of the conjugate is dependent upon the intended therapeutic use. We have deployed hydrophobic conjugates, such as cholesterol, that are able to improve pharmacokinetics and allow for enhanced cellular uptake. We are also exploring a range of conjugates that help in targeting specific tissues and cells. Our strategy with microRNA replacements has centered on opportunities for efficient delivery of the molecules with an emphasis on local and topical applications, such as injections in the skin, eye, or lung. For organs where topical or local applications are not feasible, such as the liver, we have employed conjugates that have demonstrated successful delivery after systemic administration.

 

Development

 

Our approach to translational medicine is focused on rapidly testing the molecular hypothesis in human cell lines and animal models to demonstrate safety and measure pharmacokinetics and pharmacodynamics, and finally designing and conducting small, efficient, and targeted human Phase 1 clinical trials. We typically select an initial indication that is genetically defined or is a rare disease where abnormal levels of a microRNA have been implicated. These early-stage Phase 1 clinical trials are designed to test the mechanistic relevance and develop mechanistic proof-of-concept in humans in a setting that provides the opportunity to develop a biomarker toolkit for a mechanism of action that we believe has broader disease relevance.

 

The mechanistic proof-of-concept studies are designed to provide relevant information that helps to reduce development risks in humans. Our aim is to demonstrate that the expression levels of the microRNA could potentially serve as a diagnostic indicator that allows for better patient selection for later clinical trials and in additional indications. At the same time, we seek to confirm molecular activity of the drug.

 

By measuring the pharmacodynamics of target engagement, we are able to show that the product candidate effectively enters the appropriate cell and binds to its intended target. This process is particularly important for oligonucleotide drugs. We can

also measure the effects on a series of downstream genes that create a plausible link between target engagement and a mechanism of disease.

 

For some diseases, we believe that local administration allows us to achieve a variety of concentrations of drug at the site of action and facilitates the development of dose / response relationships. We believe understanding the dose necessary to show target engagement, while concomitant surrogate marker alterations provide the basis for which a systemic dose can be defined that will be necessary to potentially achieve a therapeutic effect. 

 

Exploratory endpoints can provide us with verification of the pharmacodynamic effects of the drug based on biomarker readouts and morphological alterations. This translational strategy allows us to answer many questions about the drug target pair and provides improved confidence that the molecular basis of drug action is relevant in humans. Having built confidence in the drug mechanism and demonstrated an acceptable safety profile, later-stage clinical trials will be designed to establish appropriate dose and therapeutic efficacy.

 

Our Strategic Collaborations and License Agreements

 

Strategic Alliance and Collaboration with Servier

 

In October 2011, we entered into the Servier Collaboration Agreement with Servier for the research, development, and commercialization of RNA-targeting therapeutics in cardiovascular disease, or the Servier Collaboration Agreement. Under the Servier Collaboration Agreement, as amended, we granted Servier an exclusive license to research, develop, manufacture, and commercialize RNA-targeting therapeutics for certain microRNA targets in the cardiovascular field. In 2017, the Servier Collaboration Agreement was amended to remove all existing targets, add one new target (microRNA-92), and grant Servier with the right to add one additional target through September 2019. Under the terms of the amended agreement, the term of the research collaboration under the Servier Collaboration Agreement has been extended through September 2019.

Servier’s rights to each of the targets are limited to therapeutics in the field of cardiovascular disease, as defined, and in Servier’s territory, which is worldwide except for the United States and Japan. We retain all other rights including commercialization of therapeutics developed under the Servier Collaboration Agreement in the field of cardiovascular disease in the United States and Japan.

We are eligible to receive development milestone payments of €5.8 million to €13.8 million ( $6.9 million to $16.5 million as of December 31, 2017 ) and regulatory milestone payments of €10.0 million to €40.0 million ( $12.0 million to $47.9 million as of December 31, 2017 ) for each target. Additionally, we may receive up to €175.0 million ( $209.6 million as of December 31, 2017 ) in commercialization milestones, as well as quarterly royalty payments expressed in percentages ranging from the low-double digits to the mid-teens (subject to reductions for patent expiration, generic competition, third-party royalty, and costs of goods) on the net sales of any licensed product commercialized by Servier. Servier is obligated to make royalty payments for a specified period under the Servier Collaboration Agreement.

As part of the Servier Collaboration Agreement, we established a multiple-year research collaboration, under which we jointly perform agreed upon research activities directed to the identification and characterization of named targets and oligonucleotides in the cardiovascular field, which we refer to as the Research Collaboration. The current term of the Research Collaboration extends through September 2019. Servier is responsible for funding all of the costs of the Research Collaboration, as defined under the Servier Collaboration Agreement. During the years ended December 31, 2017 and 2016 , we recognized as revenue amounts reimbursable to us under the Servier Collaboration Agreement of $3.1 million and $2.3 million , respectively.

The development of each product candidate (commencing with registration enabling toxicology studies) under the Servier Collaboration Agreement is performed pursuant to a mutually agreed upon development plan to be conducted by the parties as necessary to generate data useful for both parties to obtain regulatory approval of such product candidates. Servier is responsible for a specified percentage of the cost of research and development activities under the development plan through the completion of one or more Phase 2 clinical trials and will reimburse us for a specified portion of such costs that we incur. The costs of Phase 3 clinical trials for each product candidate will be allocated between the parties at one of several specified percentages of costs. The applicable percentage for each product candidate will be based upon whether certain events under the Servier Collaboration Agreement occur, including if we enter into a third-party agreement for the development and/or commercialization of the product in the United States at least 180 days before the initiation of the first Phase 3 clinical trial, or if we subsequently enter into a U.S. partner agreement, or if we do not enter into a U.S. partner agreement but file for approval in the United States using data from the Phase 3 clinical trial. We are responsible, by ourselves or through a third-party manufacturer, for the manufacture and supply of all licensed oligonucleotides during the preclinical phase of development under the Servier Collaboration Agreement while Servier is primarily responsible for manufacture and supply of all licensed

oligonucleotides and product during the clinical phase of development under the Servier Collaboration Agreement. Each party is responsible for the commercial supply of any licensed product to be sold in its territory under the Servier Collaboration Agreement.

Under the Servier Collaboration Agreement, we also granted Servier a royalty-free, non-exclusive license to develop a companion diagnostic for any therapeutic product which may be developed by Servier under the Servier Collaboration Agreement. We also granted Servier an exclusive, royalty-free license to commercialize such a companion diagnostic in our territory for use in connection with the development and commercialization of such therapeutic product in Servier’s territory.

 

The Servier Collaboration Agreement will expire as to each underlying product candidate when Servier’s royalty obligations as to such product candidate have expired. Servier may also terminate the Servier Collaboration Agreement for: (i) convenience upon a specified number of days’ prior notice to us or (ii) upon determination of a safety issue relating to development under the agreement upon a specified number of days’ prior notice to us. Either party may terminate the Servier Collaboration Agreement upon a material breach by the other party which is not cured within a specified number of days. We may also terminate the agreement if Servier challenges any of the patents licensed by us to Servier. 

License Agreements with the University of Texas

 

As of December 31, 2017 , we had five exclusive patent license agreements, or the UT License Agreements, with the Board of Regents of The University of Texas System, or the University of Texas. Under each of the UT License Agreements, the University of Texas granted us exclusive and nonexclusive licenses to certain patent and technology rights. The University of Texas is one of our minority stockholders.

In consideration of rights granted by the University of Texas, we agreed to: (i) pay a nonrefundable upfront license documentation fee in the amount of $10 thousand per license; (ii) pay an annual license maintenance fee in the amount of $10 thousand per license starting one year from the date of each agreement; (iii) reimburse the University of Texas for actual costs incurred in conjunction with the filing, prosecution, enforcement, and maintenance of patent rights prior to the effective date; and (iv) bear all future costs of and manage the filing, prosecution, and maintenance of patent rights. During the years ended December 31, 2017 and 2016, we incurred immaterial upfront and maintenance fees, which were recorded as research and development expense. All costs related to the filing, prosecution, and maintenance of patent and technology rights are recorded as general and administrative expense when incurred.

Under the terms of the UT License Agreements, we may be obligated to make the following future milestone payments for each licensed product candidate: (i) up to approximately $0.6 million upon the initiation of defined clinical trials; (ii) $2.0 million upon regulatory approval in the United States; and (iii) $0.5 million per region upon regulatory approval in other specified regions. Additionally, if we or any of our sublicensees successfully commercialize any product candidate subject to the UT License Agreements, we are responsible for royalty payments in the low-single digits based upon net sales of such licensed products and payments at a percentage in the mid-teens of any sublicense income, subject to specified exceptions. The University of Texas’s right to the royalty payments will expire as to each license agreement upon the expiration of the last patent claim subject to the applicable UT License Agreement.

The license term extends on a product-by-product and country-by-country basis until the expiration of the last to expire of the licensed patents that covers such product in such country. Upon expiration of the royalty payment obligation, we will have a fully paid license in such country. We may also terminate each UT License Agreement for convenience upon a specified number of days’ prior notice to the University of Texas. The University of Texas also has the right to earlier terminate the UT License Agreements after a defined date under specified circumstances where we have effectively abandoned our research and development efforts or have no sales. The UT License Agreements will terminate under customary termination provisions including automatic termination upon our bankruptcy or insolvency, upon notice of an uncured material breach, and upon mutual written consent. We have expensed all charges incurred under the UT License Agreements to date, due to the uncertainty as to future economic benefit from the acquired rights.

License Agreement with RICC

 

In June 2010, we entered into a license agreement with RICC. The agreement was amended in October 2011 and amended and restated in December 2012, or the RICC License Agreement. 

Under the RICC License Agreement, we received exclusive and nonexclusive licenses from RICC to use specified technology of RICC, or the RICC Technology, for specified uses including research, development, and commercialization of pharmaceutical products using this technology worldwide. Under the RICC License Agreement, we have the right to develop

and commercialize the RICC Technology directed to four specified targets and the option to obtain exclusive product licenses for up to six additional targets. The acquisition of Santaris Pharma A/S by Roche was considered a change-of-control under the RICC License Agreement, and as such, certain terms and conditions of the RICC License Agreement changed, as contemplated and in accordance with the RICC License Agreement. These changes primarily relate to milestone payments reflected in the disclosures below. As consideration for the grant of the license and option, we previously paid RICC $2.3 million and issued RICC 856,806 shares of our Series A convertible preferred stock, which were subsequently transferred to Roche Finance Ltd, an affiliate of Roche, and, in 2017, were converted into 602,420 shares of our common stock as a result of the Merger. If we exercise our option to obtain additional product licenses or to replace the target families, we will be required to make additional payments to RICC.

Under the terms of the RICC License Agreement, milestone payments were previously decreased by a specified percentage as a result of the change of control by RICC referenced above. We are obligated to make future milestone payments for each licensed product of up to $5.2 million, which is inclusive of a potential product license option fee. Certain of these milestones will be increased by a specified percentage if we undergo a change in control during the term of the RICC License Agreement. If we grant a third party a sublicense to the RICC Technology, we are required to remit to Roche a specified percentage of the upfront and milestone and other specified payments that we receive under its sublicense, and if such sublicense covers use of the RICC Technology in the United States or the entire European Union, we will not have any further obligation to pay the fixed milestone payments noted above. 

If we or our sublicensee successfully commercializes any product candidate subject to the RICC License Agreements, then RICC is entitled to royalty payments in the mid-single digits on the net sales of such product, provided that if such net sales are made by a sublicensee under the RICC License Agreement, RICC is entitled to royalty payments equal to the lesser of a percentage in the mid-single digits on the net sales of such product or a specified percentage of the royalties paid to us by such sublicensee, subject to specified restrictions. We are obligated to make any such royalty payments until the later of: (i) a specified anniversary of the first commercial sale of the applicable product or (ii) the expiration of the last valid patent claim licensed by RICC under the RICC License Agreement underlying such product. Upon the occurrence of specified events, the royalty owed to RICC will be decreased by a specified percentage.

The RICC License Agreement will terminate upon the latest of the expiration of all of RICC’s royalty rights, the termination of the last Miragen target or the expiration of its right to obtain a product license for a new target under the RICC License Agreement. We may also terminate the RICC License Agreement for convenience upon a specified number of days’ prior notice to RICC, subject to specified terms and conditions. Either party may terminate the RICC License Agreement upon an uncured material breach by the other party and RICC may terminate the RICC License Agreement upon the occurrence of other specified events immediately or after such event is not cured within a specified number of days, as applicable.

License Agreements with the t2cure GmbH

 

In October 2010, we entered into a license and collaboration agreement, or the t2cure Agreement, with t2cure GmbH, or t2cure, which was subsequently amended. Under the t2cure Agreement, we received a worldwide, royalty bearing, and exclusive license to specified patent and technology rights to develop and commercialize product candidates targeted at miR-92.

In consideration of rights granted by t2cure, we paid a onetime upfront fee of $46 thousand and agreed to: (i) pay an annual license maintenance fee in the amount of €3 thousand ( $3 thousand as of December 31, 2017 ) and (ii) reimburse t2cure for costs incurred in conjunction with the filing, prosecution, enforcement, and maintenance of patent rights. All costs related to the filing, prosecution, enforcement, and maintenance of patent and technology rights are recorded as general and administrative expense when incurred.

Under the terms of the t2cure Agreement, we are obligated to make the following future milestone payments for each licensed product: (i) up to approximately $0.7 million upon the initiation of certain defined clinical trials; (ii) $2.5 million upon regulatory approval in the United States; and (iii) up to $1.5 million per region upon regulatory approval in the European Union or Japan. Additionally, if we or any of our sublicensees successfully commercializes any product candidate subject to the t2cure Agreement, we are responsible for royalty payments in the low-single digits upon net sales of licensed products and sublicense fees equal to a percentage in the low-twenties of sublicense income received by us. We are obligated to make any such royalty payment until the later of: (i) the tenth anniversary of the first commercial sale of the applicable product or (ii) the expiration of the last valid claim to a patent licensed by t2cure under the t2cure Agreement covering such product. If such patent claims expire prior to the end of the ten -year term, then the royalty owed to t2cure will be decreased by a specified percentage. We also have the right to decrease our royalty payments by a specified percentage for royalties paid to third parties for licenses to certain third-party intellectual property.

The license term extends on a country-by-country basis until the later of: (i) the tenth anniversary of the first commercial sale of a licensed product in a country, and (ii) the expiration of the last to expire valid claim that claims such licensed product in such country. Upon expiration of the royalty payment obligation, we will have a fully paid license in such country. We have the right to terminate the t2cure Agreement at will, on a country-by-country basis, after 60 days’ written notice. The t2cure Agreement will also automatically terminate upon our bankruptcy or insolvency or upon notice of an uncured material breach.

License Agreement with The Brigham and Women’s Hospital

 

In May 2016, we entered into an exclusive patent license agreement, or the BWH License Agreement, with The Brigham and Women’s Hospital, or BWH. Under the BWH License Agreement, we have an exclusive, worldwide license, including a right to sublicense, to specified patent rights and a nonexclusive, worldwide license, including a right to sublicense, to specified technology rights of BWH, each related to certain microRNAs believed to be involved in various neurodegenerative disorders. As consideration for these rights, we are obligated to pay a specified annual license fee. BWH is also entitled to milestone payments of up to approximately $2.6 million for each of our product candidates developed based on the patent rights subject to the BWH License Agreement plus a one-time sales milestone payment of $0.3 million for all product candidates developed based on the patent rights subject to the BWH License Agreement. If we successfully commercialize any product candidate subject to the BWH License Agreement, then BWH is entitled to royalty payments in the low-single digits on the net sales of such product. BWH’s right to these royalty payments will expire on a product-by-product and country-by-country basis upon the expiration of the last patent claim in such country that is subject to BWH License Agreement and covers the product, and our license to such product in such country will become fully paid at such time. BWH is also entitled to a percentage in the low-double digits of any sublicense income from such product, subject to specified exceptions. We are also responsible for all costs associated with the preparation, filing, prosecution, and maintenance of the patent rights subject to the BWH License Agreement. Additionally, we are obligated to use commercially reasonable efforts to develop a product under the BWH License Agreement and to meet specified diligence milestones thereunder.

The BWH License Agreement will terminate upon the expiration of all issued patents and patent applications subject to the patent rights under the agreement. We may also terminate the BWH License Agreement for convenience upon a specified number of days’ prior notice to BWH. BWH may terminate the BWH License Agreement upon a breach by us of our payment obligations and upon the occurrence of other specified events that are not cured within a specified number of days, provided that such termination is automatic upon our bankruptcy or insolvency.

 

Subcontract Agreement with Yale University

 

In October 2014, together with Yale University, or Yale, we entered into a subcontract agreement and into a subaward agreement in March 2015, or the Yale Agreements, which was subsequently amended. Under the Yale Agreements, we are providing specified services regarding the development of a proprietary compound that targets miR-29 in the indication of idiopathic pulmonary fibrosis. Yale entered into the Yale Agreements in connection with a grant that Yale received from the NIH for the development a miR-29 mimicry as a potential therapy for pulmonary fibrosis.

In consideration of our services under the Yale Agreements, Yale has agreed to pay us up to $1.1 million over five years , subject to the availably of funds under the grant and continued eligibility. Under the terms of the Yale Agreements, we retain all rights to any and all intellectual property developed solely by us in connection with the Yale Agreements. Yale has also agreed to provide us with an exclusive option to negotiate in good faith for an exclusive, royalty-bearing license from Yale for any intellectual property developed by Yale or jointly by the parties under the Yale Agreements. Yale is responsible for filing, prosecuting, and maintaining foreign and domestic patent applications and patents on all inventions jointly developed by the parties under the Yale Agreements.

 

The Yale Agreements terminates automatically on the date that Yale delivers its final research report to the NIH under the terms of the grant underlying the Yale Agreements. Each party may also terminate the Yale Agreements upon a specified number of days’ notice if the NIH’s grant funding is reduced or terminated or upon material breach by the other party.

 

Manufacturing

 

We do not own or operate manufacturing facilities for the production of cobomarsen, MRG-201, MRG-110, or other product candidates that we develop, nor do we have plans to develop our own manufacturing operations in the foreseeable future. We currently depend on third-party contract manufacturers for all of our required raw materials, active pharmaceutical ingredients, and finished product candidates for our clinical trials. We do not have any current contractual arrangements for the manufacture of commercial supplies of cobomarsen, MRG-201, MRG-110, or any other product candidates that we develop. We currently employ internal resources and third-party consultants to manage our manufacturing contractors.

 

Sales and Marketing

 

We have not yet defined our sales, marketing, or product distribution strategy for cobomarsen, MRG-201, MRG-110, or any of our other product candidates because our product candidates are still in preclinical or early-stage clinical development. Our commercial strategy may include the use of strategic partners, distributors, a contract sale force, or the establishment of our own commercial and specialty sales force. We plan to further evaluate these alternatives as we approach approval for one of our product candidates.

 

Intellectual Property

 

We are actively building an intellectual property portfolio around our clinical-stage product candidates and discovery programs. A key component of this portfolio strategy is to seek patent protection in the United States and in major market countries that we consider important to the development of our business worldwide. As of March 1, 2018 , we have a portfolio of 295 patents and applications of which 172 are issued or allowed and 123 are pending applications. This portfolio includes methods of use and composition patents, and patent applications on our three lead product candidates, cobomarsen, MRG-201, and MRG-110. Our success depends in part on our ability to obtain and maintain proprietary protection for our product candidates and other discoveries, inventions, trade secrets and know-how that are critical to our business operations. Our success also depends in part on our ability to operate without infringing the proprietary rights of others, and in part, on our ability to prevent others from infringing our proprietary rights. A comprehensive discussion on risks relating to intellectual property is provided under “ Risk Factors ” under the subsection “ Risks Related to our Intellectual Property ”. 

We have filed patent applications directed to compositions of matter and methods of use covering cobomarsen in the United States and under the Patent Cooperation Treaty, or PCT, to access foreign countries. A U.S. patent application issued as U.S. 9,771,585 on September 26, 2017, which will expire in June of 2036 if we continue to pay the maintenance fees and annuities when due, with the possibility of Patent Term Extension that may be granted by the USPTO due to administrative delays in the FDA. Prior to the issue of this application, we filed a continuation application in August 2017 directed to methods of treatment, as U.S. 15/677,818, and this application is currently pending. We also filed an U.S. application directed to compositions of matter through the PCT, as U.S. 15/714,671, and this application is currently pending.

 

We expect these pending applications will issue as U.S. patents in the next two to three years, with a projected expiration year of 2036 if we continue to pay the maintenance fees and annuities when due, with the possibility of additional terms from the USPTO prosecution delays and from patent term extensions that may be granted due to administrative delays in the FDA. We also have pending applications that cover methods of use of cobomarsen and related compositions. Collectively, these applications, if they issue, would have patent expirations from 2036 if we continue to pay the maintenance fees and annuities when due, not including any possible additional terms for patent term adjustments or patent term extensions. We do not know if any patent will issue from any of these applications and, if any issue, we do not know whether the issued patents will provide significant proprietary protection or commercial advantage against our competitors or generics. Even if they are issued, our patents may be circumvented, challenged, opposed, and found to be invalid or unenforceable.

 

We have filed patent applications directed to compositions of matter and methods of use covering MRG-110 in the U.S. and under the PCT, to access foreign countries. A patent directed to compositions of matter and methods of use of MRG-110 issued as U.S. 9,803,202, on October 31, 2017, and will expire in June 2033 if we continue to pay the maintenance fees and annuities when due, with the possibility of Patent Term Extension that may be granted by the USPTO due to administrative delays in the FDA. We also have issued patents and pending applications that cover various therapeutic uses and generic compositions of matter comprising MRG-110. Collectively, these patents and patent applications, if they issue, would have patent expirations ranging from 2028 to 2036 if we continue to pay the maintenance fees and annuities when due, not including any possible additional terms for patent term adjustments or patent term extensions. We do not know if any patent will issue from any of the pending applications and, if any issue, we do not know whether the issued patents will provide significant proprietary protection or commercial advantage against our competitors or generics. Even if they are issued, our patents may be circumvented, challenged, opposed, and found to be invalid or unenforceable.

We have filed patent applications directed to compositions of matter and methods of use covering MRG-201 in the United States and under the PCT to access foreign countries. A U.S. patent application issued as U.S. 9,376,681 on June 28, 2016, which will expire in September of 2035 if we continue to pay the maintenance fees and annuities when due, with the possibility of Patent Term Extension that may be granted by the USPTO due to administrative delays in the FDA. Prior to the issue of this application, we filed a continuation application in June 2016 also directed to compositions of matter in the United States, as U.S. 15/175,636, and this application has been allowed, with a projected expiration date of September 2035, if we continue to pay the maintenance fees and annuities when due, not including any possible additional terms for patent term adjustments or

patent term extensions. We also have issued patents and pending applications that cover various therapeutic uses and generic compositions comprising MRG-201. Collectively, these patents and patent applications, if they issue, would have patent expirations ranging from 2028 to 2035 if we continue to pay the maintenance fees and annuities when due, not including any possible additional terms for patent term adjustments or patent term extensions. We do not know if any patent will issue from any of the pending applications and, if any issue, we do not know whether the issued patents will provide significant proprietary protection or commercial advantage against our competitors or generics. Even if they are issued, our patents may be circumvented, challenged, opposed, and found to be invalid or unenforceable.

 

For our earlier stage product candidates, we have filed compositions of matter and methods of use patent applications in the United States, and under the PCT to access foreign countries.

 

In addition to patent protection, we seek to rely on trade secret protection, trademark protection and know-how to expand our proprietary position around our chemistry, technology and other discoveries and inventions that we consider important to our business. We also seek to protect our intellectual property in part by entering into confidentiality agreements with our employees, consultants, scientific advisors, clinical investigators, and other contractors and also by requiring our employees, commercial contractors, and certain consultants and investigators, to enter into invention assignment agreements that grant us ownership of any discoveries or inventions made by them. Further, we seek trademark protection in the United States and internationally where available and when we deem appropriate. We have obtained registrations for the Miragen trademark, which we use in connection with our pharmaceutical research and development services as well as our clinical-stage product candidates. We currently have such registrations for Miragen in the United States, Canada, Japan, and the European Union.

Competition

 

The biotechnology and pharmaceutical industries are characterized by intense and rapidly changing competition to develop new technologies and proprietary products. Our clinical and preclinical product candidates may address multiple markets. Ultimately, the diseases our product candidates target for which we may receive marketing authorization will determine our competition. We believe that for most or all of our product development programs, there will be one or more competing programs under development by other companies. Any products that we may commercialize will have to compete with existing therapies and new therapies that may become available in the future. We face potential competition from many different sources, including larger and better-funded biotechnology and pharmaceutical companies. In many cases, the companies with competing programs will have access to greater resources and expertise than we do and may be more advanced in those programs.

 

We believe that our current and future competition for resources and eventually for customers can be grouped into three broad categories:

The following companies have therapeutics marketed or in development for CTCL: Actelion Ltd, Argenx, Bristol-Myers Squibb Company, Celgene Corporation, innate Pharma, Kyowa Hakko Kirin, Merck & Co., Inc., Mylan Pharmaceuticals Inc., Novartis International AG, Spectrum Pharmaceuticals, Inc., Seattle Genetics, Inc., Takeda Pharmaceutical Company Ltd, and Valeant Pharmaceuticals International, Inc.

 

The following companies have marketed therapeutics for pulmonary fibrosis: Boehringer Ingelheim GmbH, F. Hoffmann-La Roche Ltd.

 

We believe that the key competitive factors that will affect the success of any of our product candidates, if commercialized, are likely to be their efficacy, safety, convenience, price, and the availability of reimbursement from government and other third-party payors relative to such competing products. Our commercial opportunity could be reduced or eliminated if our competitors have products that are superior in one or more of these categories.

 

Government Regulation

 

FDA Drug Approval Process

 

In the United States, pharmaceutical products are subject to extensive regulation by the FDA. The Federal Food, Drug, and Cosmetic Act, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products. Failure to comply with applicable U.S. requirements at any time during the product development process may subject a company to a variety of administrative or judicial sanctions, such as imposition of clinical hold, FDA refusal to approve pending new drug applications, or NDAs, warning or untitled letters, withdrawal of approval, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.

 

We cannot market a drug product candidate in the United States until the drug has received FDA approval. The steps required before a drug may be marketed in the United States generally include the following:

Satisfaction of FDA pre-market approval requirements typically takes many years, and the actual time required may vary substantially based upon the type, complexity, and novelty of the product or disease.

 

Preclinical tests include laboratory evaluation of product chemistry, formulation, and toxicity, as well as animal trials to assess the characteristics and potential safety and efficacy of the product. The conduct of the preclinical tests must comply with federal regulations and requirements, including GLP. An IND sponsor must submit the results of preclinical testing to the FDA as part of an IND along with other information, including information about product chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long-term preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.

 

A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin if all other requirements, including IRB review and approval, have been met. If the FDA raises concerns or questions about the conduct of the trial, such as whether human research subjects will be exposed to an unreasonable health risk, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can proceed.

 

Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted in compliance with federal regulations, including GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial. Clinical trials are conducted under protocols detailing the objectives of the trial, the

parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. Each protocol and subsequent protocol amendments must be submitted to the FDA as part of the IND. 

 

The FDA may order the temporary or permanent discontinuation of a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. The study protocol and informed consent information for patients in clinical trials must also be submitted to an IRB for approval at each site at which the clinical trial will be conducted. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or may impose other conditions. Information about certain clinical trials must be submitted within specific timeframes to the NIH for public dissemination on their www.clinicaltrials.gov website.

 

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In Phase 1, the initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess pharmacological actions, side effects associated with increasing doses and, if possible, early evidence of effectiveness. Phase 2 usually involves trials in a limited patient population to study metabolism of the drug, pharmacokinetics, the effectiveness of the drug for a particular indication, dosage tolerance and optimum dosage, and to identify common adverse effects and safety risks. If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 clinical trials, also called pivotal trials, are undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug. In most cases, the FDA requires two adequate and well controlled Phase 3 clinical trials to demonstrate the efficacy of the drug. A single Phase 3 clinical trial with other confirmatory evidence may be sufficient in rare instances where the study is a large multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity, or prevention of a disease with a potentially serious outcome, and confirmation of the result in a second trial would be practically or ethically impossible.

 

After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. FDA approval of the NDA is required before marketing of the product may begin in the United States. The NDA must include the results of all preclinical, clinical, and other testing, and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting an NDA is substantial. The submission of most NDAs is additionally subject to a substantial application user fee, and the manufacturer and/or sponsor under an approved NDA are also subject to annual program fees. These fees are typically increased annually. Under the Prescription Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission. This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA may request additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged, or held meets standards designed to assure the product’s continued safety, quality, and purity.

 

The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an advisory committee, which is typically a panel that includes clinicians and other experts-for review, evaluation, and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not approve the product unless compliance with cGMPs is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.

 

After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included.

 

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings, or precautions be included in the product labeling, require that post-approval studies, including Phase 4 clinical trials,

be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a Risk Evaluation and Mitigation Strategy, or REMS, to ensure that the benefits of the drug outweigh the potential risks. 

 

A REMS can include a medication guide, a communication plan for healthcare professionals and elements to assure safe use, such as special training and certification requirements for individuals who prescribe or dispense the drug, requirements that patients enroll in a registry, and other measures that the FDA deems necessary to assure the safe use of the drug. The requirement for a REMS can materially affect the potential market and profitability of the drug. The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

 

Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs. Such supplements are typically reviewed within 10 months of receipt by the FDA.

 

Expedited Development and Review Programs

 

The FDA has a Fast Track program that is intended to expedite or facilitate the process for development and review of new drug products that meet certain criteria. Specifically, new drug products are eligible for Fast Track designation if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new drug may request that the FDA designate the drug as a Fast Track product at any time during the clinical development of the product. For a Fast Track-designated product, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted. If the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.

 

Any product submitted to the FDA for marketing, including under a Fast Track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. Any product is eligible for priority review if it has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment, diagnosis, or prevention of a disease compared to marketed products. The FDA will attempt to direct additional resources to the evaluation of an application for a new drug product designated for priority review in an effort to facilitate the review. Additionally, a product may be eligible for accelerated approval. Drug products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may be eligible for accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical trials establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug product subject to accelerated approval perform adequate and well-controlled post-marketing clinical trials. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

 

In addition, the Breakthrough Therapy Designation is intended to expedite the development and review of products that treat serious or life-threatening diseases or conditions. A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, where preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The designation includes all of the features of Fast Track designation, as well as more intensive FDA interaction and guidance. The Breakthrough Therapy Designation is distinct from both accelerated approval and priority review, but these can also be granted to the same product candidate if the relevant criteria are met. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy. Requests for breakthrough therapy designation will be reviewed within 60 days of receipt, and the FDA will either grant or deny the request.

 

Fast Track designation, priority review, accelerated approval, and breakthrough therapy designation do not change the standards for approval but may expedite the development or approval process by allowing for approval based on a surrogate endpoint likely to predict clinical benefit of the underlying drug, rather than through a direct measure of clinical benefit. Even if we receive one of these designations for our product candidates, the FDA may later decide that our product candidates no longer meet the conditions for qualification. In addition, these designations may not provide us with a material commercial advantage. 

 

Post-Approval Requirements

 

Once an NDA is approved, a product may be subject to certain post-approval requirements. For instance, the FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities, and promotional activities involving the internet and social media. Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling.

 

Adverse event reporting and submission of periodic reports is required following FDA approval of an NDA. The FDA also may require post-approval testing, known as Phase 4 testing, REMS, surveillance to monitor the effects of an approved product, or restrictions on the distribution or use of the product. In addition, quality control, drug manufacture, packaging, and labeling procedures must continue to conform to cGMPs after approval. Drug manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies. Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency inspects manufacturing facilities to assess compliance with cGMPs. Accordingly, manufacturers must continue to expend time, money, and effort in the areas of production and quality control to maintain compliance with cGMPs. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or failure to comply with regulatory requirements may result in mandatory revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical trials to assess new safety risks, or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

The FDA strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

 

Foreign Regulation

 

In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety, and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales, and distribution of our products. Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatory authorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions.

 

Some countries outside of the United States have a similar process that requires the submission of a clinical trial application, or CTA, much like the IND prior to the commencement of human clinical trials. In Europe, for example, a CTA must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, a clinical trial may proceed in that country. To obtain regulatory approval to commercialize a new drug under European Union regulatory systems, we must submit a marketing authorization application, or MAA. The MAA is similar to the NDA, with the exception of, among other things, country-specific document requirements.

 

In Canada, biopharmaceutical product candidates are regulated by the Food and Drugs Act and the rules and regulations promulgated thereunder, which are enforced by the Therapeutic Products Directorate of Health Canada, or TPD. Before commencing clinical trials in Canada, an applicant must complete preclinical studies and file a CTA with the TPD. After filing a CTA, the applicant must receive different clearance authorizations to proceed with Phase 1 clinical trials, which can then lead to Phase 2 and Phase 3 clinical trials. To obtain regulatory approval to commercialize a new drug in Canada, a new drug submission, or NDS, must be filed with the TPD. If the NDS demonstrates that the product was developed in accordance with the regulatory authorities’ rules, regulations, and guidelines and demonstrates favorable safety and efficacy and receives a favorable risk/benefit analysis, the TPD issues a notice of compliance which allows the applicant to market the product. 

 

Other Healthcare Laws

 

Although we currently do not have any products on the market, our current and future business operations may be subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business. Such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, privacy and security, price reporting, and physician sunshine laws. Some of our pre-commercial activities are subject to some of these laws.

 

The federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer or a party acting on its behalf, to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is intended to induce the referral of business, including the purchase, order, lease of any good, facility, item or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. The term “remuneration” has been broadly interpreted to include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, formulary managers, and beneficiaries on the other. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases, or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the Anti-Kickback Statute has been violated. In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. Violations of this law are punishable by up to five years in prison, and can also result in criminal fines, civil money penalties, and exclusion from participation in federal healthcare programs.

 

Moreover, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

 

The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs, that are false or fraudulent or not provided as claimed. Persons and entities can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label. In addition, our future activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state, and third-party reimbursement for our products, and the sale and marketing of our products are subject to scrutiny under this law. Penalties for federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim, the potential for exclusion from participation in federal healthcare programs, and, although the federal False Claims Act is a civil statute, False Claims Act violations may also implicate various federal criminal statutes.

 

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items, or services. Like the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

 

The civil monetary penalties statute imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

 

Also, many states have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs. Additionally, to the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws.

 

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their implementing regulations, mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical, and technical safeguards to protect such information. Among other things, HITECH makes HIPAA’s security standards directly applicable to business associates, defined as independent contractors or agents of covered entities that create, receive, or obtain protected health information in connection with providing a service for or on behalf of a covered entity. HITECH also increased the civil and criminal penalties that may be imposed against covered entities and business associates and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions. In addition, certain state laws govern the privacy and security of health information in certain circumstances, some of which are more stringent than HIPAA, and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties. 

 

The Physician Payments Sunshine Act imposes, among other things, annual reporting requirements for covered manufacturers for certain payments and other transfers of value provided to physicians and teaching hospitals, as well as certain ownership and investment interests held by physicians and their immediate family members. Failure to submit timely, accurately, and completely the required information for all payments and transfers of value and ownership or investment interests may result in civil monetary penalties. Certain states also mandate implementation of compliance programs, impose restrictions on drug manufacturer marketing practices, and/or require the tracking and reporting of gifts, compensation, and other remuneration to physicians.

 

Because we intend to commercialize products that could be reimbursed under a federal healthcare program and other governmental healthcare programs, we intend to develop a comprehensive compliance program that establishes internal control to facilitate adherence to the rules and program requirements to which we will or may become subject. Although the development and implementation of compliance programs designed to establish internal control and facilitate compliance can mitigate the risk of investigation, prosecution, and penalties assessed for violations of these laws, the risks cannot be entirely eliminated.

 

If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, individual imprisonment, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, the curtailment or restructuring of our operations, and exclusion from participation in federal and state healthcare programs, any of which could adversely affect our ability to operate our business and our financial results.

 

Health Reform

 

In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes to healthcare systems that could affect our future results of operations. There have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs.

 

In particular, the Affordable Care Act has had a significant impact on the healthcare industry. The Affordable Care Act was designed to expand coverage for the uninsured while at the same time containing overall healthcare costs. With regard to pharmaceutical products, among other things, the Affordable Care Act revised the definition of “average manufacturer price” for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and imposed a significant annual fee on companies that manufacture or import certain branded prescription drug products.

 

Since its enactment, certain aspects of the Affordable Care Act have faced Congressional and judicial challenges. In January 2017, Congress voted to adopt a budget resolution for fiscal year 2017, or the Budget Resolution, that authorizes the

implementation of legislation that would repeal portions of the Affordable Care Act. The Budget Resolution is not a law; however, it is widely viewed as the first step toward the passage of repeal legislation. Further, on January 20, 2017, an Executive Order was signed, directing federal agencies with authorities and responsibilities under the Affordable Care Act to waive, defer, grant exemptions from, or delay the implementation of any provision of the Affordable Care Act that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. Congress also has considered subsequent legislation to repeal or replace elements of the Affordable Care Act. In the coming years, additional legislative and regulatory changes could be made to governmental health programs that could significantly impact pharmaceutical companies and the success of its product candidates.

 

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. In August 2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending reductions. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation’s automatic reduction to several government programs. These included reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013, and, due to subsequent legislative amendments to the statute, will stay in effect through 2025 unless additional Congressional action is taken. Additionally, in January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. 

 

Moreover, the Drug Supply Chain Security Act imposes obligations on manufacturers of pharmaceutical products, among others, related to product tracking and tracing. Among its requirements, manufacturers need to provide certain information regarding the drug product to individuals and entities to which product ownership is transferred, label drug product with a product identifier, and keep certain records regarding the drug product. The transfer of information to subsequent product owners by manufacturers will eventually be required to be done electronically. Manufacturers will also be required to verify that purchasers of the manufacturers’ products are appropriately licensed. Further, manufacturers will have drug product investigation, quarantine, disposition, and notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death.

 

Further, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been recent U.S. Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.

 

Coverage and Reimbursement

 

Sales of our product candidates, once approved, will depend, in part, on the extent to which the costs of our products will be covered by third-party payors, such as government health programs, private health insurers and managed care organizations. Third-party payors generally decide which drugs they will cover and establish certain reimbursement levels for such drugs. In particular, in the United States, private health insurers and other third-party payors often provide reimbursement for products and services based on the level at which the government (through the Medicare or Medicaid programs) provides reimbursement for such treatments. Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of such products. Sales of our product candidates, and any future product candidates, will therefore depend substantially on the extent to which the costs of our product candidates, and any future product candidates, will be paid by third-party payors. Additionally, the market for our product candidates, and any future product candidates, will depend significantly on access to third-party payors’ formularies without prior authorization, step therapy, or other limitations such as approved lists of treatments for which third-party payors provide coverage and reimbursement. Additionally, coverage and reimbursement for therapeutic products can differ significantly from payor to payor. One third-party payor’s decision to cover a particular medical product or service does not ensure that other payors will also provide coverage for the medical product or service, or will provide coverage at an adequate reimbursement rate. As a result, the coverage determination process will require us to provide scientific and clinical support for the use of our products to each payor separately and will be a costly and time-consuming process.

 

Third-party payors are developing increasingly sophisticated methods of controlling healthcare costs and increasingly challenging the prices charged for medical products and services. Additionally, the containment of healthcare costs has become a priority of federal and state governments and the prices of drugs have been a focus in this effort. The U.S. government, state

legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls and transparency requirements, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could limit our net revenue and results. If these third-party payors do not consider our products to be cost-effective compared to other therapies, they may not cover our products once approved as a benefit under their plans or, if they do, the level of reimbursement may not be sufficient to allow us to sell our products on a profitable basis. Decreases in third-party reimbursement for our products once approved or a decision by a third-party payor to not cover our products could reduce or eliminate utilization of our products and have an adverse effect on our sales, results of operations and financial condition. In addition, state and federal healthcare reform measures have been and will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products once approved or additional pricing pressures.

 

Employees

 

As of December 31, 2017 , we employed 65 employees, of which 63 were full-time employees. We have never had a work stoppage, and none of our employees is represented by a labor organization or under any collective bargaining arrangements. We consider our employee relations to be good. 

 

Corporate Information

 

In February 2017, Signal merged with and into Private Miragen and changed its name to Miragen Therapeutics, Inc. Our principal executive offices are located at 6200 Lookout Road, Boulder, CO 80301, and our telephone number is (720) 643-5200. Our corporate website address is http://www.miragen.com . Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, will be made available free of charge on our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S. Securities and Exchange Commission, or the SEC. The contents of our website are not incorporated into this Annual Report and our reference to the URL for our website is intended to be an inactive textual reference only.

 

This Annual Report contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Annual Report, including logos, artwork, and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company.

 

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering in June 2014, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeded $700.0 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We refer to the Jumpstart Our Business Startups Act of 2012 in this Annual Report as the “JOBS Act,” and references to “emerging growth company” have the meaning associated with it in the JOBS Act.