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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
81-5333008
|
(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer
Identification No.)
|
Large accelerated filer
|
¨
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Accelerated filer
|
¨
|
Non-accelerated filer
|
x
|
|
Smaller reporting company
|
x
|
|
|
|
Emerging growth company
|
x
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.0001 per share
|
XCUR
|
The OTCQB Market
|
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•
|
the initiation, timing, progress and results of our research and development programs, preclinical studies, clinical trials and Investigational New Drug application, or IND, Investigational Medicinal Product Dossier, Clinical Trial Application, or CTA, New Drug Application, or NDA, or other regulatory submissions;
|
•
|
our receipt and timing of any milestone payments or royalties under any current or future research collaboration and license agreements or arrangements;
|
•
|
our ability to identify and develop therapeutic candidates for treatment of additional disease indications;
|
•
|
our or a current or future collaborator’s ability to obtain and maintain regulatory approval of any of our therapeutic candidates;
|
•
|
the rate and degree of market acceptance of any approved therapeutic candidates;
|
•
|
the commercialization of any approved therapeutic candidates;
|
•
|
our ability to establish and maintain collaborations and retain commercial rights for our therapeutic candidates in the collaborations;
|
•
|
the implementation of our business model and strategic plans for our business, technologies and therapeutic candidates;
|
•
|
our estimates of our expenses, ongoing losses, future revenue and capital requirements, including our expectations relating to our need for additional financing;
|
•
|
our ability to obtain additional funds for our operations;
|
•
|
our ability to obtain and maintain intellectual property protection for our technologies and therapeutic candidates and our ability to operate our business without infringing the intellectual property rights of others;
|
•
|
the ability of third party supply and manufacturing partners to supply the materials and components for, and manufacture, our research and development, preclinical and clinical trial supplies;
|
•
|
our ability to attract and retain qualified key management and technical personnel;
|
•
|
our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act;
|
•
|
statements regarding internal controls under the section titled “Controls and Procedures” Part I Item 4;
|
•
|
our financial performance; and
|
•
|
the impact of government regulation and developments relating to our competitors or our industry.
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
22,196
|
|
|
$
|
26,268
|
|
Accounts receivable
|
3
|
|
|
—
|
|
||
Unbilled revenue receivable
|
—
|
|
|
3
|
|
||
Receivable from related party
|
3
|
|
|
10
|
|
||
Prepaid expenses and other assets
|
1,414
|
|
|
1,382
|
|
||
Total current assets
|
23,616
|
|
|
27,663
|
|
||
Property and equipment, net
|
977
|
|
|
1,061
|
|
||
Other noncurrent assets
|
591
|
|
|
32
|
|
||
Total assets
|
$
|
25,184
|
|
|
$
|
28,756
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
4,807
|
|
|
$
|
—
|
|
Accounts payable
|
848
|
|
|
500
|
|
||
Accrued expenses and other current liabilities
|
1,591
|
|
|
1,543
|
|
||
Current portion of deferred revenue
|
975
|
|
|
—
|
|
||
Total current liabilities
|
8,221
|
|
|
2,043
|
|
||
Long-term debt, net
|
—
|
|
|
4,925
|
|
||
Common stock warrant liability
|
428
|
|
|
797
|
|
||
Other noncurrent liabilities
|
380
|
|
|
39
|
|
||
Total liabilities
|
$
|
9,029
|
|
|
$
|
7,804
|
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.0001 par value per share; 200,000,000 shares authorized, 44,358,000 issued and outstanding, March 31, 2019 and December 31, 2018
|
4
|
|
|
4
|
|
||
Additional paid-in capital
|
76,431
|
|
|
75,942
|
|
||
Accumulated deficit
|
(60,280
|
)
|
|
(54,994
|
)
|
||
Total stockholders' equity
|
16,155
|
|
|
20,952
|
|
||
Total liabilities and stockholders’ equity
|
$
|
25,184
|
|
|
$
|
28,756
|
|
|
Three Months Ended,
March 31, |
||||||
|
2019
|
|
2018
|
||||
Revenue:
|
|
|
|
||||
Collaboration revenue
|
$
|
25
|
|
|
$
|
36
|
|
Total revenue
|
25
|
|
|
36
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development expense
|
3,395
|
|
|
3,275
|
|
||
General and administrative expense
|
2,208
|
|
|
2,045
|
|
||
Total operating expenses
|
5,603
|
|
|
5,320
|
|
||
Operating loss
|
(5,578
|
)
|
|
(5,284
|
)
|
||
Other income (expense), net:
|
|
|
|
||||
Interest expense
|
(183
|
)
|
|
(161
|
)
|
||
Other income (loss), net
|
475
|
|
|
(64
|
)
|
||
Total other income (loss), net
|
292
|
|
|
(225
|
)
|
||
Net loss
|
$
|
(5,286
|
)
|
|
$
|
(5,509
|
)
|
|
|
|
|
||||
Basic and diluted loss per common share
|
$
|
(0.12
|
)
|
|
$
|
(0.14
|
)
|
Basic and diluted weighted-average common shares outstanding
|
44,358,000
|
|
|
39,357,289
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Common Stock
|
|
|
|
|
|
|
|||||||||||
|
Shares
|
|
$
|
|
Additional Paid-in- Capital
|
|
Accumulated Deficit
|
|
Total Stockholders’ Equity
|
|||||||||
Balance at December 31, 2018
|
44,358,000
|
|
|
$
|
4
|
|
|
$
|
75,942
|
|
|
$
|
(54,994
|
)
|
|
$
|
20,952
|
|
Equity-based compensation
|
—
|
|
|
—
|
|
|
489
|
|
|
—
|
|
|
489
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,286
|
)
|
|
(5,286
|
)
|
||||
Balance at March 31, 2019
|
44,358,000
|
|
|
$
|
4
|
|
|
$
|
76,431
|
|
|
$
|
(60,280
|
)
|
|
$
|
16,155
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Common Stock
|
|
|
|
|
|
|
|||||||||||
|
Shares
|
|
$
|
|
Additional Paid-in- Capital
|
|
Accumulated Deficit
|
|
Total Stockholders’ Equity
|
|||||||||
Balance at December 31, 2017
|
39,300,823
|
|
|
$
|
4
|
|
|
$
|
53,586
|
|
|
$
|
(33,615
|
)
|
|
$
|
19,975
|
|
Adoption of new accounting standard - ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
1,034
|
|
|
1,034
|
|
||||
Balance at January 1, 2018
|
39,300,823
|
|
|
$
|
4
|
|
|
$
|
53,586
|
|
|
$
|
(32,581
|
)
|
|
$
|
21,009
|
|
Exercise of options
|
8,532
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
365
|
|
|
—
|
|
|
365
|
|
||||
Issuance of common stock, net
|
145,466
|
|
|
—
|
|
|
436
|
|
|
—
|
|
|
436
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,509
|
)
|
|
(5,509
|
)
|
||||
Balance at March 31, 2018
|
39,454,821
|
|
|
$
|
4
|
|
|
$
|
54,394
|
|
|
$
|
(38,090
|
)
|
|
$
|
16,308
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(5,286
|
)
|
|
$
|
(5,509
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
87
|
|
|
86
|
|
||
Equity-based compensation
|
489
|
|
|
365
|
|
||
Amortization of long-term debt issuance costs and fees
|
34
|
|
|
24
|
|
||
Other
|
36
|
|
|
73
|
|
||
Change in fair value of warrant liabilities
|
(369
|
)
|
|
128
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Unbilled revenue receivable and accounts receivable
|
—
|
|
|
8
|
|
||
Receivable from related party
|
7
|
|
|
(4
|
)
|
||
Prepaid expenses and other current assets
|
(69
|
)
|
|
311
|
|
||
Other noncurrent assets
|
(559
|
)
|
|
—
|
|
||
Accounts payable
|
354
|
|
|
(120
|
)
|
||
Accrued expenses and other current liabilities
|
(52
|
)
|
|
(8
|
)
|
||
Deferred revenue
|
975
|
|
|
—
|
|
||
Other noncurrent liabilities
|
341
|
|
|
(1
|
)
|
||
Net cash used in operating activities
|
(4,012
|
)
|
|
(4,647
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(8
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(8
|
)
|
|
—
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from exercise of common stock options
|
—
|
|
|
7
|
|
||
Payment of long-term debt fees and issuance costs
|
(52
|
)
|
|
—
|
|
||
Net cash (used in) provided by financing activities
|
(52
|
)
|
|
7
|
|
||
Net decrease in cash and cash equivalents
|
(4,072
|
)
|
|
(4,640
|
)
|
||
Cash and cash equivalents - beginning of period
|
26,268
|
|
|
25,764
|
|
||
Cash and cash equivalents - end of period
|
$
|
22,196
|
|
|
$
|
21,124
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information
|
|
|
|
||||
Non-cash financing activities:
|
|
|
|
||||
Issuance of common stock for professional services
|
$
|
—
|
|
|
$
|
436
|
|
Debt fees (accrued expenses)
|
100
|
|
|
—
|
|
||
Non-cash investing activities:
|
|
|
|
||||
Capital expenditures (accounts payable and accrued expenses)
|
8
|
|
|
45
|
|
|
As Previously Reported
December 31, 2018
|
|
ASC 842 Adoption Adjustment
|
|
As Reported Under ASC 842 January 1, 2019
|
||||||
Prepaid expenses and other current assets
|
$
|
1,382
|
|
|
$
|
(28
|
)
|
|
$
|
1,354
|
|
Other noncurrent assets
|
32
|
|
|
613
|
|
|
645
|
|
|||
Accrued expenses and other current liabilities
|
1,543
|
|
|
243
|
|
|
1,786
|
|
|||
Other noncurrent liabilities
|
39
|
|
|
342
|
|
|
381
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Prepaid clinical, contract research and manufacturing costs
|
$
|
559
|
|
|
$
|
293
|
|
Prepaid insurance
|
250
|
|
|
353
|
|
||
Other
|
605
|
|
|
736
|
|
||
Prepaid expenses and other current assets
|
$
|
1,414
|
|
|
$
|
1,382
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Scientific equipment
|
$
|
1,991
|
|
|
$
|
1,979
|
|
Leasehold improvements
|
192
|
|
|
192
|
|
||
Furniture and fixtures
|
41
|
|
|
41
|
|
||
Computers and software
|
26
|
|
|
26
|
|
||
Construction in process
|
3
|
|
|
12
|
|
||
Property and equipment, gross
|
2,253
|
|
|
2,250
|
|
||
Less: accumulated depreciation
|
(1,276
|
)
|
|
(1,189
|
)
|
||
Property and equipment, net
|
$
|
977
|
|
|
$
|
1,061
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Operating lease asset, noncurrent
|
$
|
552
|
|
|
$
|
—
|
|
Other
|
39
|
|
|
32
|
|
||
Other noncurrent assets
|
$
|
591
|
|
|
$
|
32
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Accrued payroll-related expenses
|
$
|
388
|
|
|
$
|
899
|
|
Accrued loan fees
|
333
|
|
|
231
|
|
||
Operating lease liability
|
179
|
|
|
—
|
|
||
Accrued legal expenses
|
352
|
|
|
189
|
|
||
Accrued clinical, contract research and manufacturing costs
|
103
|
|
|
102
|
|
||
Accrued other expenses
|
236
|
|
|
122
|
|
||
Accrued expenses and other current liabilities
|
$
|
1,591
|
|
|
$
|
1,543
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Operating lease liability, noncurrent
|
$
|
380
|
|
|
$
|
—
|
|
Other
|
—
|
|
|
39
|
|
||
Other noncurrent liabilities
|
$
|
380
|
|
|
$
|
39
|
|
|
March 31,
2019
|
||
2019
|
$
|
—
|
|
2020
|
4,999
|
|
|
Principal balance outstanding
|
4,999
|
|
|
less: unamortized discount
|
(189
|
)
|
|
less: unamortized debt issuance costs
|
(3
|
)
|
|
Long-term debt
|
4,807
|
|
|
Current portion
|
4,807
|
|
|
Noncurrent portion
|
$
|
—
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Research and development expense
|
$
|
121
|
|
|
$
|
96
|
|
General and administrative expense
|
368
|
|
|
269
|
|
||
|
$
|
489
|
|
|
$
|
365
|
|
|
Three Months Ended
March 31,
|
||||
|
2019
|
|
2018
|
||
Expected term
|
6.0 to 6.1 years
|
|
|
5.9 to 6.0 years
|
|
Risk-free interest rate
|
2.56%
|
|
|
2.72%
|
|
Expected volatility
|
83.2% to 83.4%; weighted avg. 83.4%
|
|
|
82.4%
|
|
Forfeiture rate
|
5
|
%
|
|
5
|
%
|
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
Common Stock Options Granted During Period Ended:
|
Fair Value of Underlying Common Stock
|
|
Exercise Price of Common Stock Option
|
Three months ended March 31, 2019
|
$2.80
|
|
$2.80
|
Three months ended March 31, 2018
|
$3.00
|
|
$3.00
|
|
Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term (years)
|
|
Aggregate Intrinsic Value (thousands)
|
|||||
Outstanding - December 31, 2018
|
4,891,588
|
|
|
$
|
2.22
|
|
|
7.3
|
|
$
|
7,330
|
|
Granted
|
297,500
|
|
|
2.80
|
|
|
|
|
|
|||
Exercised
|
—
|
|
|
—
|
|
|
|
|
|
|||
Forfeited
|
(63,429
|
)
|
|
2.10
|
|
|
|
|
|
|||
Outstanding - March 31, 2019
|
5,125,659
|
|
|
$
|
2.26
|
|
|
7.0
|
|
$
|
3,226
|
|
Exercisable - March 31, 2019
|
3,505,249
|
|
|
$
|
1.80
|
|
|
6.2
|
|
$
|
3,177
|
|
Vested and Expected to Vest -
March 31, 2019
|
5,025,692
|
|
|
$
|
2.24
|
|
|
7.0
|
|
$
|
3,225
|
|
|
Three Months Ended
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net loss
|
$
|
(5,286
|
)
|
|
$
|
(5,509
|
)
|
Weighted-average basic and diluted common shares outstanding
|
44,358,000
|
|
|
39,357,289
|
|
||
Loss per share - basic and diluted
|
$
|
(0.12
|
)
|
|
$
|
(0.14
|
)
|
|
|
March 31,
|
||||
|
|
2019
|
|
2018
|
||
Options to purchase common stock
|
|
5,125,659
|
|
|
4,335,729
|
|
Warrants to purchase common stock
|
|
413,320
|
|
|
413,320
|
|
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
||
|
Common Stock Warrant Liability
|
||
Balance at January 1, 2019
|
$
|
797
|
|
Gain included in other income (expense), net
|
(369
|
)
|
|
Balance at March 31, 2019
|
$
|
428
|
|
|
March 31,
2019 |
||
Assets:
|
|
||
Operating lease asset
|
$
|
552
|
|
Liabilities:
|
|
||
Operating lease liability
|
$
|
179
|
|
Operating lease liability, noncurrent
|
380
|
|
|
Total operating lease liability
|
$
|
559
|
|
|
March 31, 2019
|
|
Remaining lease term
(1)
|
1.9 years
|
|
Discount rate
|
16.1
|
%
|
|
Three Months Ended
March 31,
|
||
|
2019
|
||
Operating lease costs
|
$
|
84
|
|
Short term lease costs
|
6
|
|
|
Variable lease costs
|
84
|
|
|
Total lease costs
|
$
|
174
|
|
Years Ending December 31,
|
|
Operating Leases
|
||
2019 (remaining nine months)
|
|
$
|
231
|
|
2020
|
|
353
|
|
|
2021
|
|
59
|
|
|
Total
|
|
$
|
643
|
|
Less: imputed interest
|
|
(84
|
)
|
|
Total lease liability
|
|
$
|
559
|
|
|
|
|
||
Current operating lease liability
|
|
$
|
179
|
|
Noncurrent operating lease liability
|
|
380
|
|
|
Total lease liability
|
|
$
|
559
|
|
|
Three Months Ended
March 31,
|
||
|
2018
|
||
Straight-line rent expense
|
$
|
83
|
|
Contingent rent expense
|
89
|
|
|
Total rent expense
|
$
|
172
|
|
Years Ending December 31,
|
|
Operating Leases
|
||
2019
|
|
$
|
347
|
|
2020
|
|
353
|
|
|
2021
|
|
59
|
|
|
Total
|
|
$
|
759
|
|
•
|
advance SNA platform in dermatological indications;
|
•
|
add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; and
|
|
Three Months Ended
March 31, |
|
|
|
|
|||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Change
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
Collaboration revenue
|
$
|
25
|
|
|
$
|
36
|
|
|
$
|
(11
|
)
|
|
(31
|
)%
|
Total revenue
|
25
|
|
|
36
|
|
|
(11
|
)
|
|
(31
|
)%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Research and development expense
|
3,395
|
|
|
3,275
|
|
|
120
|
|
|
4
|
%
|
|||
General and administrative expense
|
2,208
|
|
|
2,045
|
|
|
163
|
|
|
8
|
%
|
|||
Total operating expenses
|
5,603
|
|
|
5,320
|
|
|
283
|
|
|
5
|
%
|
|||
Operating loss
|
(5,578
|
)
|
|
(5,284
|
)
|
|
(294
|
)
|
|
6
|
%
|
|||
Other income (expense), net:
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
(183
|
)
|
|
(161
|
)
|
|
(22
|
)
|
|
14
|
%
|
|||
Other income (loss), net
|
475
|
|
|
(64
|
)
|
|
539
|
|
|
n/m
|
|
|||
Total other income (loss), net
|
292
|
|
|
(225
|
)
|
|
517
|
|
|
n/m
|
|
|||
Net loss
|
$
|
(5,286
|
)
|
|
$
|
(5,509
|
)
|
|
$
|
223
|
|
|
(4
|
)%
|
|
Three Months Ended
March 31, |
|
|
|||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Change
|
|||||||||
Collaboration revenue
|
$
|
25
|
|
|
$
|
36
|
|
|
$
|
(11
|
)
|
|
(31
|
)%
|
Total revenue
|
$
|
25
|
|
|
$
|
36
|
|
|
$
|
(11
|
)
|
|
(31
|
)%
|
|
Three Months Ended
March 31, |
|
|
|||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Change
|
|||||||||
Clinical development programs expense
|
$
|
935
|
|
|
$
|
1,276
|
|
|
$
|
(341
|
)
|
|
(27
|
)%
|
Platform and discovery-related expense
|
1,137
|
|
|
915
|
|
|
222
|
|
|
24
|
%
|
|||
Employee-related expense
|
1,026
|
|
|
831
|
|
|
195
|
|
|
23
|
%
|
|||
Facilities, depreciation, and other expenses
|
297
|
|
|
253
|
|
|
44
|
|
|
17
|
%
|
|||
Total research and development expense
|
$
|
3,395
|
|
|
$
|
3,275
|
|
|
$
|
120
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|||||||
Full time employees
|
19
|
|
|
17
|
|
|
2
|
|
|
|
|
Three Months Ended
March 31, |
|
|
|||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Change
|
|||||||||
General and administrative expense
|
$
|
2,208
|
|
|
$
|
2,045
|
|
|
$
|
163
|
|
|
8
|
%
|
Full time employees
|
7
|
|
|
8
|
|
|
(1
|
)
|
|
|
|
|
Three Months Ended
March 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
|
|
(unaudited)
|
|
(unaudited)
|
||||
Net cash used in operating activities
|
|
$
|
(4,012
|
)
|
|
$
|
(4,647
|
)
|
Net cash used in investing activities
|
|
(8
|
)
|
|
—
|
|
||
Net cash (used in) provided by financing activities
|
|
(52
|
)
|
|
7
|
|
||
Net decrease in cash and cash equivalents
|
|
$
|
(4,072
|
)
|
|
$
|
(4,640
|
)
|
•
|
the initiation, progress, timing and completion of preclinical studies and clinical trials for our potential therapeutic candidates;
|
•
|
unknown legal, administrative, regulatory, accounting, and information technology costs as well as additional costs associated with operating as a public company;
|
•
|
the costs of filing and prosecuting intellectual property rights and enforcing and defending any intellectual property-related claims;
|
•
|
negative or inconclusive results from our clinical trials or the clinical trials of others for therapeutic candidates similar to ours, leading to a decision or requirement to conduct additional preclinical testing or clinical trials or abandon a program;
|
•
|
therapeutic-related side effects experienced by participants in our clinical trials or by individuals using therapeutics similar to our therapeutic candidates;
|
•
|
delays in submitting INDs or CTAs, or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators or IRBs to commence a clinical trial, or a suspension or termination of a clinical trial once commenced;
|
•
|
conditions imposed by the FDA or comparable foreign authorities, such as the European Medicines Agency (“EMA”), or European Union national competent authorities, regarding the scope or design of our clinical trials;
|
•
|
delays in enrolling research subjects in clinical trials;
|
•
|
high drop-out rates of research subjects;
|
•
|
inadequate supply or quality of therapeutic candidate components or materials or other supplies necessary for the conduct of our clinical trials;
|
•
|
greater than anticipated clinical trial costs;
|
•
|
poor effectiveness of our therapeutic candidates during clinical trials;
|
•
|
unfavorable FDA or other regulatory agency inspection and review of a clinical trial site;
|
•
|
failure of our third party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner, or at all;
|
•
|
delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our technology in particular, especially in light of the novelty of our therapeutic candidates;
|
•
|
varying interpretations of data by the FDA and similar foreign regulatory agencies; or
|
•
|
refusal of the FDA to accept data from clinical trials conducted outside the United States, or acceptance of these data subject to certain conditions by the FDA.
|
•
|
to obtain the human and financial resources necessary to develop, test, obtain regulatory approval for, manufacture and market our therapeutic candidates;
|
•
|
to build and maintain a strong intellectual property portfolio and avoid infringing the intellectual property of third parties;
|
•
|
to establish and maintain successful licenses, collaborations and alliances;
|
•
|
to satisfy the requirements of clinical trial protocols, including patient enrollment;
|
•
|
to establish and demonstrate the clinical efficacy and safety of our therapeutic candidates;
|
•
|
to obtain regulatory approvals;
|
•
|
to manage our spending as costs and expenses increase due to preclinical studies and clinical trials, regulatory approvals, and commercialization;
|
•
|
to obtain additional capital to support and expand our operations; and
|
•
|
to market our products to achieve acceptance and use by the medical community in general.
|
•
|
variations in the level of expense related to our therapeutic candidates or future development programs;
|
•
|
results of clinical trials, or the addition or termination of clinical trials or funding support by us, or a future collaborator or licensing partner;
|
•
|
our execution of any collaboration, licensing or similar arrangement, and the timing of payments we may make or receive under such existing or future arrangements or the termination or modification of any such existing or future arrangements;
|
•
|
any intellectual property infringement lawsuit or opposition, interference or cancellation proceeding in which we may become involved;
|
•
|
additions and departures of key personnel;
|
•
|
strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;
|
•
|
whether or not any of our therapeutic candidates receives regulatory approval, market acceptance and demand for such therapeutic candidates;
|
•
|
regulatory developments affecting our therapeutic candidates or those of our competitors; and
|
•
|
changes in general market and economic conditions.
|
•
|
an inability to initiate or continue preclinical studies or clinical trials of our therapeutic candidates under development;
|
•
|
delay in submitting regulatory applications, or receiving regulatory approvals, for therapeutic candidates;
|
•
|
loss of the cooperation of a future collaborator;
|
•
|
subjecting manufacturing facilities of our therapeutic candidates to additional inspections by regulatory authorities;
|
•
|
requirements to cease distribution or to recall batches of our therapeutic candidates; and
|
•
|
in the event of approval to market and commercialize a therapeutic candidate, an inability to meet commercial demands for our therapeutics.
|
•
|
the timing of our receipt of any marketing and commercialization approvals;
|
•
|
the terms of any approvals and the countries in which approvals are obtained;
|
•
|
the safety and efficacy of our therapeutic candidates;
|
•
|
the prevalence and severity of any adverse side effects associated with our therapeutic candidates;
|
•
|
limitations or warnings contained in any labeling approved by the FDA or other regulatory authority;
|
•
|
relative convenience and ease of administration of our therapeutic candidates;
|
•
|
the willingness of patients to accept any new methods of administration;
|
•
|
the success of our physician education programs;
|
•
|
the availability of adequate government and third party payor reimbursement;
|
•
|
the pricing of our products, particularly as compared to alternative treatments; and
|
•
|
availability of alternative effective treatments for indications our therapeutic candidates are intended to treat and the relative risks, benefits and costs of those treatments.
|
•
|
Others will not or may not be able to make, use or sell compounds that are the same as or similar to our therapeutic candidates but that are not covered by the claims of the patents that we own or license.
|
•
|
We or our licensors, or any current or future collaborators, are the first to make the inventions covered by each of our issued patents and pending patent applications that we own or license.
|
•
|
We or our licensors, or any current or future collaborators, are the first to file patent applications covering certain aspects of our inventions.
|
•
|
Others will not independently develop similar or alternative technologies or duplicate any of our technology without infringing our intellectual property rights.
|
•
|
A third party will not challenge our patents and, if challenged, a court may not hold that our patents are valid, enforceable and infringed.
|
•
|
Any issued patents that we own or have licensed will provide us with any competitive advantages, or will not be challenged by third parties.
|
•
|
We will develop additional proprietary technologies that are patentable.
|
•
|
The patents of others will not have an adverse effect on our business.
|
•
|
Our competitors will not conduct research and development activities in countries where we lack enforceable patent rights and then use the information learned from such activities to develop competitive therapeutics for sale in our major commercial markets.
|
•
|
the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons from soliciting, receiving, offering or providing remuneration, directly or indirectly, to induce either the referral of an individual for a healthcare item or service, or the purchasing or ordering of an item or service, for which payment may be made, in whole or in part, under a federal healthcare program, such as Medicare or Medicaid;
|
•
|
the U.S. federal False Claims Act, which imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;
|
•
|
HIPAA includes a fraud and abuse provision referred to as the HIPAA All-Payor Fraud Law, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program (i.e., not just federal healthcare programs), or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; similar to 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;
|
•
|
HIPAA, as amended by HITECH, and its implementing regulations, which impose obligations on certain covered entity healthcare providers, health plans, and healthcare clearinghouses as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information;
|
•
|
the federal Physician Payment Sunshine Act and the implementing regulations, also referred to as “Open Payments,” issued under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively, the ACA, which require that manufacturers of pharmaceutical and biological drugs reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program report to the Department of Health and Human Services all consulting fees, travel reimbursements, research grants, and other payments, transfers of value or gifts made to U.S.-licensed physicians and U.S. teaching hospitals with limited exceptions; and
|
•
|
analogous state laws and regulations, such as, state anti-kickback and false claims laws potentially applicable to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and state transparency laws that require the reporting of certain pricing information; among other state laws.
|
•
|
adverse regulatory inspection findings;
|
•
|
warning or untitled letters;
|
•
|
voluntary product recalls or public notification or medical product safety alerts to healthcare professionals;
|
•
|
restrictions on, or prohibitions against, marketing our therapeutics;
|
•
|
restrictions on, or prohibitions against, importation or exportation of our therapeutics;
|
•
|
suspension of review or refusal to approve pending applications or supplements to approved applications;
|
•
|
exclusion from participation in government-funded healthcare programs;
|
•
|
exclusion from eligibility for the award of government contracts for our therapeutics;
|
•
|
FDA debarment;
|
•
|
suspension or withdrawal of therapeutic approvals;
|
•
|
seizures or administrative detention of therapeutics;
|
•
|
injunctions; and
|
•
|
civil and criminal penalties and fines.
|
•
|
the product is reasonable and necessary for the diagnosis or treatment of the illness or injury for which the product is administered according to accepted standards of medical practice;
|
•
|
the product is typically furnished incident to a physician’s services;
|
•
|
the product has been approved by the FDA.
|
•
|
Increases to pharmaceutical manufacturer rebate liability under the Medicaid Drug Rebate Program due to an increase in the minimum basic Medicaid rebate on most branded prescription drugs and the application of Medicaid rebate liability to drugs used in risk-based Medicaid managed care plans.
|
•
|
The expansion of the 340B Drug Pricing Program to require discounts for “covered outpatient drugs” sold to certain children’s hospitals, critical access hospitals, freestanding cancer hospitals, rural referral centers, and sole community hospitals.
|
•
|
Requirements imposed on pharmaceutical companies to offer discounts on brand-name drugs to patients who fall within the Medicare Part D coverage gap, commonly referred to as the “Donut Hole.” In February 2018, Congress passed the Bipartisan Budget Act of 2018, which, beginning in 2019, increased the discount to be paid by pharmaceutical companies from 50% to 70% of a brand-name drug’s negotiated price and added biosimilars to the coverage gap discount program.
|
•
|
Requirements imposed on pharmaceutical companies to pay an annual non-tax-deductible fee to the federal government based on each company’s market share of prior year total sales of branded drugs to certain federal healthcare programs, such as Medicare, Medicaid, Department of Veterans Affairs, and Department of Defense. Since we currently expect our branded pharmaceutical sales to constitute a small portion of the total federal healthcare program pharmaceutical market, we do not currently expect this annual assessment to have a material impact on our financial condition.
|
•
|
For therapeutic candidates classified as biologics, marketing approval for a follow-on biologic therapeutic may not become effective until 12 years after the date on which the reference innovator biologic therapeutic was first licensed by the FDA, with a possible six-month extension for pediatric therapeutics. After this exclusivity ends, it may be possible for biosimilar manufacturers to enter the market, which is likely to reduce the pricing for such therapeutics and could affect our profitability if our therapeutics are classified as biologics.
|
•
|
regulatory authorities may withdraw their approval of the therapeutic or seize the therapeutic;
|
•
|
we may need to recall the therapeutic or change the way the therapeutic is administered to patients;
|
•
|
additional restrictions may be imposed on the marketing of the particular therapeutic or the manufacturing processes for the therapeutic or any component thereof;
|
•
|
we may be subject to fines, restitution or disgorgement of profits or revenues, injunctions, or the imposition of civil penalties or criminal prosecution;
|
•
|
regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;
|
•
|
regulatory authorities may require us to implement a REMS, or to conduct post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the therapeutic;
|
•
|
we may be required to create a Medication Guide outlining the risks of such side effects for distribution to patients;
|
•
|
we could be sued and held liable for harm caused to patients;
|
•
|
the therapeutic may become less competitive; and
|
•
|
our reputation may suffer.
|
•
|
the success of competitive therapeutics or technologies;
|
•
|
results of our preclinical studies and clinical trials of our therapeutic candidates, or those of our competitors, or any current or future collaborators;
|
•
|
regulatory or legal developments in the U.S. and other countries, especially changes in laws or regulations applicable to our therapeutics;
|
•
|
introductions and announcements of new therapeutics by us, our future commercialization partners, or our competitors, and the timing of these introductions or announcements;
|
•
|
actions taken by regulatory agencies with respect to our therapeutics, clinical studies, manufacturing process or sales and marketing terms;
|
•
|
actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us;
|
•
|
the success of our efforts to acquire or in-license additional technologies, therapeutics or therapeutic candidates;
|
•
|
developments concerning any current or future collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners;
|
•
|
announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
|
•
|
developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our therapeutics;
|
•
|
our ability or inability to raise additional capital and the terms on which we raise it;
|
•
|
the recruitment or departure of key personnel;
|
•
|
changes in the structure of healthcare payment systems;
|
•
|
market conditions in the pharmaceutical and biotechnology sectors;
|
•
|
actual or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally;
|
•
|
our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;
|
•
|
fluctuations in the valuation of companies perceived by investors to be comparable to us;
|
•
|
announcement and expectation of additional financing efforts;
|
•
|
speculation in the press or investment community;
|
•
|
trading volume of our common stock;
|
•
|
sales of our common stock by us or our stockholders;
|
•
|
the concentrated ownership of our common stock;
|
•
|
changes in accounting principles;
|
•
|
terrorist acts, acts of war or periods of widespread civil unrest;
|
•
|
natural disasters and other calamities; and
|
•
|
general economic, industry and market conditions.
|
•
|
limit our flexibility in planning for the development, clinical testing, approval and marketing of our products;
|
•
|
place us at a competitive disadvantage compared to any of our competitors that are less leveraged than we are;
|
•
|
increase our vulnerability to both general and industry-specific adverse economic conditions; and
|
•
|
limit our ability to obtain additional funds.
|
•
|
stagger the terms of our board of directors and require 66 and 2/3% stockholder voting to remove directors, who may only be removed for cause;
|
•
|
authorize our board of directors to issue “blank check” preferred stock and to determine the rights and preferences of those shares, which may be senior to our common stock, without prior stockholder approval;
|
•
|
establish advance notice requirements for nominating directors and proposing matters to be voted on by stockholders at stockholders’ meetings;
|
•
|
prohibit our stockholders from calling a special meeting and prohibit stockholders from acting by written consent;
|
•
|
require 66 and 2/3% stockholder voting to effect certain amendments to our certificate of incorporation and bylaws; and
|
•
|
prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates.
|
EXICURE, INC.
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By:
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/s/ David S. Snyder
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David S. Snyder
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Chief Financial Officer
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(Principal Financial Officer and Principal Accounting Officer)
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If to Exicure, then to:
Exicure, Inc.
8045 Lamon Avenue
Suite 410
Skokie, IL 60077
Attn: Matthias Schroff, Chief Operating Officer
Fax: 847-556-6411
Email:[***]
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If to Dermelix, then to:
Dermelix, LLC
275 7th Avenue, Suite 710
New York, NY 10011
Attn: Nicholas France, Chief Executive Officer
Fax: ______________________
Email:[***]
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No.
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Commercial Event Milestone for
Net Sales of Each Licensed Product: |
Milestone Payment (U.S. Dollars)
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1.
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[***]
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[***]
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2.
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[***]
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[***]
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3.
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[***]
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[***]
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4.
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[***]
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[***]
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5.
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[***]
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[***]
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6.
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[***]
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[***]
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Worldwide Net Sales of Each Licensed Product
per Calendar Year (in U.S. Dollars)
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Incremental
Royalty Rate
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For that portion of aggregate annual Net Sales of each Licensed Product from [***] to [***]
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[***]
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For that portion of aggregate annual Net Sales of each Licensed Product that is greater than [***]
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[***]
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[***]
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[***]
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[***]
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[***]
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Total Royalties:
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[***]
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If the Effective Date
of the Sublicense is:
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Then Exicure Receives the Following Percentage of the Sublicense Upfront Fee:
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[***]
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[***]
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[***]
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[***]
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[***]
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[***]
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If to Dermelix, addressed to:
Dermelix, LLC
275 7th Avenue, Suite 710
New York, NY 10011
Attn: Nicholas France, Chief Executive Officer
Email:[***]
Fax: ______________________
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with copies, sent as provided herein, to:
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[***]
Fox Rothschild LLP
2000 Market Street
20th Floor
Philadelphia, PA 19103-3222
Email: [***]
Fax: 215-299-2150
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If to Exicure, addressed to:
|
|
Exicure, Inc.
8045 Lamon Avenue
Suite 410
Skokie, IL 60077
Attn: Matthias Schroff, Chief Operating Officer
Email:[***]
Fax: 847-556-6411
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with copies, sent as provided herein, to:
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[***]
Faber Daeufer & Itrato PC
890 Winter Street
Suite 315
Waltham, MA 02451
Email: [***]
Fax: 781-795-4747
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EXICURE, INC.
By:
/s/ David Giljohann
Name:
David Giljohann
[Print/Type]
Title:
CEO
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DERMELIX, LLC, d/b/a Dermelix Biotherapeutics
By:
/s/ Nicholas P. France
Name:
Nicholas P. France
[Print/Type]
Title:
C.E.O.
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Filing Date
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[***]
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/s/ David A. Giljohann, Ph.D.
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David A. Giljohann, Ph.D.
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President and Chief Executive Officer
|
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/s/ David S. Snyder
|
David S. Snyder
|
Chief Financial Officer
|
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/s/ David A. Giljohann, Ph.D.
|
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/s/ David S. Snyder
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David A. Giljohann, Ph.D.
|
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David S. Snyder
|
President and Chief Executive Officer
|
|
|
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Chief Financial Officer
|
*
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This certification accompanies the Quarterly Report on Form 10-Q, to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.
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