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FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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81-5333008
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Common Stock, par value $0.0001 per share
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XCUR
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The Nasdaq Stock Market LLC
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(Title of each class)
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(Trading symbol(s))
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(Name of each exchange on which registered)
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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Smaller reporting company
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x
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Emerging growth company
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PART I
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PART II
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PART III
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PART IV
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the initiation, timing, progress and results of our research and development programs, preclinical studies, clinical trials and Investigational New Drug, or IND, application, Investigational Medicinal Product Dossier, or IMPD, Clinical Trial Application, or CTA, New Drug Application, or NDA, or other regulatory submissions;
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our dependence on current and future collaborators for developing, obtaining regulatory approval for and commercializing therapeutic candidates in the collaboration;
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our receipt and timing of any milestone payments or royalties under any current or future research collaboration and license agreements or arrangements;
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our ability to identify and develop therapeutic candidates for treatment of additional disease indications;
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our or a current or future collaborator’s ability to obtain and maintain regulatory approval of any of our therapeutic candidates;
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the rate and degree of market acceptance of any approved therapeutic candidates;
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the commercialization of any approved therapeutic candidates;
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our ability to establish and maintain collaborations and retain commercial rights for our therapeutic candidates in the collaborations;
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the implementation of our business model and strategic plans for our business, technologies and therapeutic candidates;
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our estimates of our expenses, ongoing losses, future revenue and capital requirements, including our expectations relating to our needs for additional financing;
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our ability to obtain additional funds for our operations;
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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;
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our reliance on third parties to conduct our preclinical studies and clinical trials;
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our reliance on third party supply and manufacturing partners to supply the materials and components for, and manufacture, our research and development, preclinical and clinical trial supplies;
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our ability to attract and retain qualified key management and technical personnel;
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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;
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statements regarding our internal controls;
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our financial performance;
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the impact of government regulation and developments relating to our competitors or our industry; and
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other risks and uncertainties, including those listed in Part I, Item 1A of this Annual Report on Form 10-K under the caption “Risk Factors.”
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(2)
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On October 14, 2019, the shareholders of Allergan plc voted to approve the acquisition of Allergan by AbbVie Inc., which is subject to customary regulatory approvals and other customary closing conditions.
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Resulted in a decrease in the levels of psoriasis and inflammation markers downstream of XCUR17's target, IL-17RA;
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Produced a statistically significant reduction in keratin 16 expression, a key marker of psoriasis (p=0.002);
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Resulted in reductions in the major inflammatory markers beta defensin 4A, interleukin 19, and interleukin 36A versus psoriatic skin at baseline; and
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Revealed clinical improvements that matched reductions in keratin 16 protein and epidermal thickness.
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Rapidly advance AST-008 through clinical development for select cancer indications. AST-008 is our most advanced therapeutic candidate. We are conducting a Phase 1b/2 trial to evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics and preliminary efficacy of intratumoral AST-008 injections alone and in combination with intravenous pembrolizumab in patients with advanced solid tumors. As of January 31, 2020, we have dosed 17 patients in the Phase 1b stage of the clinical trial. We have observed no treatment related serious adverse events, or SAEs, nor have we observed any dose-limiting toxicity, or DLT, among the treated subjects. The most common reported adverse event was injection site reactions. In December 2019, we received preliminary results from the Phase 1b/2 stage of the clinical trial showing potential signs of anti-tumor activity in patients with Merkel cell carcinoma. See “Recent Developments” section below for more information on these preliminary results. In the second quarter of 2020, we plan to initiate Phase 2 dose expansion for intratumoral AST-008 in combination with an approved checkpoint inhibitor for two cohorts of patients with advanced or metastatic Merkel cell carcinoma or cutaneous squamous cell carcinoma. Each cohort is expected to enroll up to 29 patients who have failed anti-PD-1/PD-L1, or programmed cell death protein 1/programmed death-ligand 1, therapy. We expect to open a total of up to 15 sites in the United States.
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Prioritize neurological disorders for near-term development efforts, proof-of-concept and commercialization. In June 2018, it was observed in a preclinical study that nusinersen in SNA format prolonged survival by four-fold as well as doubled the levels of healthy full-length SMN2 mRNA and protein in SMA patient fibroblasts when compared to nusinersen. Subsequently, in the fall of 2018, we completed a bio-distribution study comparing nusinersen to nusinersen in SNA format in rats. The concentration of nusinersen in the kidneys was significantly increased in comparison to nusinersen in SNA format while more nusinersen in SNA format was retained in the CNS (brain and spinal cord) compared to nusinersen at 24, 72 and 168 hours. Based on these results, we believe the attributes of our SNA technology may potentially lead to therapeutic and commercial advantages in neurological conditions. In December 2019, we announced Friedreich’s ataxia (FA) as the therapeutic indication for the company’s first neurology development program. We are working in collaboration with Friedreich’s Ataxia Research Alliance, or FARA, to develop XCUR-FXN, our FA therapeutic candidate. We expect to initiate IND-enabling studies for XCUR-FXN in late 2020. We are also evaluating the application of our SNA technology in additional neurological conditions with unmet medical needs, including spinocerebellar ataxia, Batten disease, amyotrophic lateral sclerosis (ALS), and Huntington’s disease.
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Use our proprietary SNA technology to develop additional therapeutic candidates. We have demonstrated in preclinical studies that in certain applications, SNAs exhibit superior biodistribution properties compared to linear oligonucleotides being both more persistent and more stable in the tissue or organ of interest. As a consequence, SNAs may have potential applications in a variety of additional organs, including the eye, gastrointestinal tract and lungs. We believe that we have the opportunity to enhance the therapeutic potential of known oligonucleotides of clinical utility by incorporating them in our SNA platform. In addition, we may be able to develop novel therapeutic candidates targeting validated therapeutic targets. We are conducting early stage research activities in ophthalmology, pulmonology, and gastroenterology.
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Advance SNA platform in dermatological indications with suitable partners. In the fourth quarter of 2018 we reported results from the Phase 1 trial of XCUR17, an SNA for the treatment of mild to moderate psoriasis.
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Enter into additional partnerships to accelerate development and commercialization of our SNA therapeutic candidates. We believe our proprietary SNA technology lends itself to license agreements or development partnerships with pharmaceutical companies that have development or commercial expertise in a particular therapeutic area of interest where it would be uneconomical or impractical for us to develop SNA therapeutics independently.
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Continue to expand our core capabilities in high throughput screening and automated analyses. We believe there may be a number of therapeutic areas where our SNA technology can be applied to bring first-in-class or best-in-class medicines to patients. Our goal is to identify and advance to clinical development therapeutic candidates for multiple different genetically-defined disorders in parallel, either on our own or with strategic collaborators. We continue to invest in critical infrastructure and know-how to execute on this goal.
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Build, enhance and protect our proprietary SNA intellectual property. We believe the three-dimensional structure of our SNAs provides novel technological and commercial opportunities. We have licensed IP from Northwestern University and have also filed patents independently to protect our IP. Our license from Northwestern University is for exclusive worldwide rights to the use of SNA technology for therapeutic applications. We will continue to protect our IP and innovations arising from our research and development efforts, and prudently in-license technologies where appropriate for protection of our therapeutic pipeline and the broader SNA technology. Any patents arising from applications covering AST-008 would expire between 2034 and 2037. Patents arising from applications covering XCUR17 and AST-005 would expire by 2037 and 2035, respectively.
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SNAs cross certain biological barriers to deliver nucleic acid therapeutics. Local delivery of nucleic acid therapeutics through biological barriers, such as the skin, has been a significant technical challenge. In a Phase 1 clinical trial of XCUR17 in patients with mild to moderate psoriasis, eleven of the twenty-one patients treated with the highest strength XCUR17 gel were observed to have a reduction in redness and improvement in healing as determined by blinded physician assessments. Further, in preclinical studies, we have demonstrated delivery and activity of our SNAs in the central nervous system, eye, lung, and gastrointestinal tract.
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SNAs potentially exhibit superior biodistribution properties compared to linear oligonucleotides. In the fall of 2018, we completed a biodistribution study in rats comparing nusinersen to nusinersen in SNA format. We found that more nusinersen in SNA format was retained in the rats’ brain and spinal cord compared to nusinersen retained in the rats’ brain and spinal cord at 24, 72 and 168 hours. We believe that we have the opportunity to enhance the therapeutic potential of known oligonucleotides of clinical utility by incorporating them in our SNA platform. In addition, we may be able to develop novel therapeutic candidates using our SNA platform.
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SNAs can potentially target multiple genes with a single therapeutic candidate. In collaboration with Dr. Amy Paller, one of our scientific advisors, at the 2019 meeting of the Society for Investigative Dermatology, we presented data demonstrating the application of our SNA technology for concurrently targeting two different genes in a single SNA compound. Further, we believe we can concurrently target three or more genes with a single SNA compound. This feature potentially allows us to identify novel therapeutic candidates to treat multiple variants of a given genetic disorder or multiple genetic targets for a single disorder with one therapeutic candidate.
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SNAs we have administered to date have been well-tolerated. In each of the Phase 1 clinical trials of AST-005 and XCUR17, we observed no drug associated adverse events when the SNA therapeutic candidate was applied topically to the skin of patients with mild to moderate psoriasis. No serious adverse events were observed in our Phase 1 trial after injecting AST-008 subcutaneously into healthy volunteers. There are three key elements to our safety strategy. First, by administering SNAs locally, we expect to minimize systemic exposure thereby decreasing safety risk. Second, because SNAs enter cells and tissues without lipid or polymer encapsulation or complexation, we expect to avoid the toxicity risks associated with these delivery systems. Finally, due to the nuclease resistance attributable to the architecture of the SNA, we use fewer chemical modifications than are customary in nucleic acid therapeutic development.
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SNAs can be administered locally into a number of different cell and tissue types. SNAs enter cells through class A scavenger receptors, which are present on the surface of many cell types. We believe that by accessing this mechanism, our SNAs could have therapeutic applications in organs beyond the liver, such as the brain, eye, gastrointestinal tract, lung, and skin. In preclinical studies, more than 50 cell lines and primary cells have been shown to internalize SNAs.
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Immuno-oncology SNAs may produce a powerful immune response against tumors. In its Phase 1 trial, AST-008 was shown to elicit high levels of certain cytokines as well as activate important effector cells of the immune system, including T cells and natural killer cells which are the main drivers of an anti-tumor response. In preclinical studies, SNAs localized to endosomes and stimulated the immune system via TLRs. We have also observed in preclinical studies that SNAs can generate a cancer-specific adaptive immune response. In addition, in preclinical studies in a variety of cancer models, SNAs, in combination with certain checkpoint inhibitors, exhibited a greater anti-tumor response and increased survival than did such checkpoint inhibitors alone. Moreover, when administered as a monotherapy, AST-008 exhibited anti-tumor activity in mouse cancer models.
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SNAs have shown greater resistance to nuclease degradation. Nucleases are proteins that degrade oligonucleotides. In preclinical studies, SNAs have been shown to have an increased nuclease resistance compared to linear oligonucleotides. We believe this is a result of our 3-D approach, and as a consequence, we believe that smaller amounts of SNAs may be required to achieve therapeutic efficacy compared to linear oligonucleotides.
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SNAs can be manufactured at commercial scale. Based on our manufacturing work to date, we believe SNAs can be made in a low cost, high-throughput, scalable, and reproducible manner using current Good Manufacturing Practices, or cGMPs.
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(2)
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On October 14, 2019, the shareholders of Allergan plc voted to approve the acquisition of Allergan by AbbVie Inc., which is subject to customary regulatory approvals and other customary closing conditions.
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Resulted in a decrease in the levels of psoriasis and inflammation markers downstream of XCUR17's target, IL-17RA;
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Produced a statistically significant reduction in keratin 16 expression, a key marker of psoriasis (p=0.002);
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Resulted in reductions in the major inflammatory markers beta defensin 4A, interleukin 19, and interleukin 36A versus psoriatic skin at baseline; and
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Revealed clinical improvements that matched reductions in keratin 16 protein and epidermal thickness.
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refusal to approve pending applications;
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license suspension or revocation;
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withdrawal of an approval;
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imposition of a clinical hold;
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warning or untitled letters;
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seizures or administrative detention of product;
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product recalls;
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total or partial suspension of production or distribution; or
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injunctions, fines, disgorgement, or civil or criminal penalties.
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completion of nonclinical laboratory tests, animal studies and formulation studies conducted according to Good Laboratory Practices, or GLPs, and other applicable regulations;
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submission to the FDA of an IND, which must become effective before human clinical trials may begin;
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performance of adequate and well-controlled human clinical trials according to Good Clinical Practices, or GCPs, to establish the safety and efficacy of the therapeutic candidate for its intended use;
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submission to the FDA of an NDA;
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satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the therapeutic candidate is produced to assess readiness for commercial manufacturing and conformance to the manufacturing-related elements of the application, to conduct a data integrity audit, and to assess compliance with cGMPs to assure that the facilities, methods and controls are adequate to preserve the therapeutic candidate’s identity, strength, quality and purity; and
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FDA review and approval of the NDA.
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Phase 1-The therapeutic candidate is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and elimination. In the case of some therapeutic candidates for severe or life-threatening diseases, such as cancer, especially when the therapeutic candidate may be inherently too toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.
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Phase 2-Clinical trials are performed on a limited patient population intended to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.
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Phase 3-Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical trial sites. These studies are intended to establish the overall risk-benefit ratio of the product and provide an adequate basis for product labeling.
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record-keeping requirements;
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reporting of adverse experiences associated with the therapeutic candidate;
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providing the FDA with updated safety and efficacy information;
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therapeutic sampling and distribution requirements;
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notifying the FDA and gaining its approval of specified manufacturing or labeling changes; and
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complying with FDA promotion and advertising requirements, which include, among other things, standards for direct-to-consumer advertising, restrictions on promoting products for uses or in patient populations that are not described in the product’s approved labeling, limitations on industry-sponsored scientific and educational activities and requirements for promotional activities involving the internet.
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Increases in 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.
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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 hospital.
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Requirements 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.”
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Requirements on manufacturers to participate in a coverage gap discount program, under which they must agree to offer point-of-sale discounts (increased to 70 percent pursuant to the Bipartisan Budget Act of 2018, effective as of January 1, 2019) off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D.
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Requirements 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.
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Establishment of the Patient-Centered Outcomes Research Institute to identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. The research conducted by the Patient-Centered Outcomes Research Institute may affect the market for certain pharmaceutical products.
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Establishment the Center for Medicare and Medicaid Innovation within the Centers for Medicare and Medicaid Services, or CMS, to test innovative payment and service delivery models to lower Medicare and
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our research and development programs;
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the design and implementation of our clinical programs;
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our patent and publication strategies;
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new technologies relevant to our research and development programs; and
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specific scientific and technical issues relevant to our business.
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Name
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Position and Institutional Affiliation
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Freddy Boey, Ph.D.
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Deputy President and Provost, Nanyang Technological University
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Sunandana (Sue) Chandra, M.D., M.S.
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Assistant Professor of Medicine (Hematology and Oncology) at the Feinberg School of Medicine at Northwestern University
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Michael Hodges, M.D., MBBS, BSc, MRCP
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Chief Medical Officer, Amplyx Pharmaceuticals
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Steven O’Day, M.D.
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Executive director of the John Wayne Cancer Institute and Cancer Clinic, director of Providence Los Angeles Regional Research and professor of medical oncology, director of immuno-oncology, director of clinical research at the John Wayne Cancer Institute at Providence Saint John’s Health Center
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Amy S. Paller, M.D.
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Walter J. Hamlin Professor and Chair Department of Dermatology at Northwestern University Feinberg School of Medicine
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Henry Paulson, M.D., Ph.D.
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Professor of neurology for Alzheimer's Disease and Related Disorders in the department of neurology at the University of Michigan
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Susan Perlman, M.D.
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Professor in the department of neurology and director of Ataxia and Neurogenetics Program and Post-polio Program at the David Geffen School of Medicine at UCLA
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Jeffrey Raizer, M.D.
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Medical director for oncology at Astellas Pharma
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Steven T. Rosen, M.D., F.A.C.P.
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Provost and Scientific Director, City of Hope
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Cy Stein, M.D.
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Professor of Medical Oncology and Molecular and Cellular Biology and the former chair of the Department of Medical Oncology and Therapeutics Research at City of Hope
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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;
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therapeutic-related side effects experienced by participants in our clinical trials or by individuals using therapeutics similar to our therapeutic candidates;
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delays in submitting INDs or CTAs, or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators or IRBs or ethics committees to commence a clinical trial, or a suspension or termination of a clinical trial once commenced;
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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;
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delays in enrolling research subjects in clinical trials;
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high drop-out rates of research subjects;
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inadequate supply or quality of therapeutic candidate components or materials or other supplies necessary for the conduct of our clinical trials;
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greater than anticipated clinical trial costs;
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poor effectiveness of our therapeutic candidates during clinical trials;
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unfavorable FDA or other regulatory agency inspection and review of a clinical trial site;
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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;
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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;
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varying interpretations of data by the FDA and similar foreign regulatory agencies; or
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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.
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to obtain the human and financial resources necessary to develop, test, obtain regulatory approval for, manufacture and market our therapeutic candidates;
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to build and maintain a strong intellectual property portfolio and avoid infringing the intellectual property of third parties;
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to establish and maintain successful licenses, collaborations and alliances;
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to satisfy the requirements of clinical trial protocols, including patient enrollment;
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to establish and demonstrate the clinical efficacy and safety of our therapeutic candidates;
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to obtain regulatory approvals;
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to manage our spending as costs and expenses increase due to preclinical studies and clinical trials, regulatory approvals, and commercialization;
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to obtain additional capital to support and expand our operations; and
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to market our products to achieve acceptance and use by the medical community in general.
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variations in the level of expense related to our therapeutic candidates or future development programs;
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results of clinical trials, or the addition or termination of clinical trials or funding support by us, or a future collaborator or licensing partner;
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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;
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any intellectual property infringement lawsuit or opposition, interference or cancellation proceeding in which we may become involved;
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additions and departures of key personnel;
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strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;
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whether or not any of our therapeutic candidates receives regulatory approval, market acceptance and demand for such therapeutic candidates;
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regulatory developments affecting our therapeutic candidates or those of our competitors; and
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changes in general market and economic conditions.
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an inability to initiate or continue preclinical studies or clinical trials of our therapeutic candidates under development;
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delay in submitting regulatory applications, or receiving regulatory approvals, for therapeutic candidates;
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loss of the cooperation of a future collaborator;
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subjecting manufacturing facilities of our therapeutic candidates to additional inspections by regulatory authorities;
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requirements to cease distribution or to recall batches of our therapeutic candidates; and
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in the event of approval to market and commercialize a therapeutic candidate, an inability to meet commercial demands for our therapeutics.
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the timing of our receipt of any marketing and commercialization approvals;
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the terms of any approvals and the countries in which approvals are obtained;
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the safety and efficacy of our therapeutic candidates;
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the prevalence and severity of any adverse side effects associated with our therapeutic candidates;
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limitations or warnings contained in any labeling approved by the FDA or other regulatory authority;
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relative convenience and ease of administration of our therapeutic candidates;
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the willingness of patients to accept any new methods of administration;
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the success of our physician education programs;
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the availability of adequate government and third-party payor reimbursement;
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the pricing of our products, particularly as compared to alternative treatments; and
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availability of alternative effective treatments for indications our therapeutic candidates are intended to treat and the relative risks, benefits and costs of those treatments.
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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.
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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.
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We or our licensors, or any current or future collaborators, are the first to file patent applications covering certain aspects of our inventions.
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Others will not independently develop similar or alternative technologies or duplicate any of our technology without infringing our intellectual property rights.
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A third-party will not challenge our patents and, if challenged, a court may not hold that our patents are valid, enforceable and infringed.
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Any issued patents that we own or have licensed will provide us with any competitive advantages, or will not be challenged by third parties.
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We will develop additional proprietary technologies that are patentable.
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The patents of others will not have an adverse effect on our business.
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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.
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the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons from soliciting, receiving, offering or providing remuneration (including any kickback, bribe, or certain rebate), 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. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand, and prescribers, purchasers and formulary managers, among others, on the other. A person or entity does not need to have actual knowledge pf the statute or specific intent to violate it in order to have committed a violation;
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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. For example, pharmaceutical companies have been prosecuted under the False Claims Act in connection with their alleged off-label promotion of drugs, purportedly concealing price concessions in the pricing information submitted to the government for government price reporting purposes, and allegedly providing free product to customers with the expectation that the customers would bill federal health care programs for the product. 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;
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federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;
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federal price reporting laws, which require manufacturers to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on approved products;
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the federal Health Insurance Portability and Accountability Act of 1996, or 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
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•
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or 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. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to 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 attorneys’ fees and costs associated with pursuing federal civil actions;
|
•
|
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 (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and U.S. teaching hospitals with limited exceptions. Effective January 1, 2022, these reporting obligations will extend to include transfers of value made to certain non-physician providers such as physician assistants and nurse practitioners; 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.
|
•
|
a limited availability of market quotations for our common stock;
|
•
|
reduced liquidity with respect to the market for our common stock;
|
•
|
a determination that our common stock is a “penny stock,” which will require brokers trading in our common stock to adhere to different rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;
|
•
|
a limited amount of news and analyst coverage; and
|
•
|
decreased ability to issue additional shares of our common stock or obtain additional financing in the future.
|
•
|
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.
|
|
December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
48,460
|
|
|
$
|
26,268
|
|
|
$
|
25,764
|
|
|
$
|
19,623
|
|
|
$
|
18,731
|
|
Short-term investments
|
62,326
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Current assets
|
112,776
|
|
|
27,663
|
|
|
27,638
|
|
|
20,041
|
|
|
19,204
|
|
|||||
Total assets
|
115,263
|
|
|
28,756
|
|
|
28,987
|
|
|
20,576
|
|
|
19,621
|
|
|||||
Current portion of long-term debt
|
4,965
|
|
|
—
|
|
|
—
|
|
|
1,213
|
|
|
—
|
|
|||||
Current liabilities
|
31,087
|
|
|
2,043
|
|
|
3,356
|
|
|
12,158
|
|
|
1,343
|
|
|||||
Long-term debt, net
|
—
|
|
|
4,925
|
|
|
4,855
|
|
|
4,454
|
|
|
—
|
|
|||||
Preferred stock warrant liability
|
—
|
|
|
—
|
|
|
—
|
|
|
201
|
|
|
—
|
|
|||||
Common stock warrant liability
|
414
|
|
|
797
|
|
|
523
|
|
|
—
|
|
|
—
|
|
|||||
Total liabilities
|
34,516
|
|
|
7,804
|
|
|
9,012
|
|
|
18,128
|
|
|
1,391
|
|
|||||
Non-redeemable preferred stock
|
|
|
|
|
|
|
|
|
|
||||||||||
Series C
|
—
|
|
|
—
|
|
|
—
|
|
|
33,483
|
|
|
33,039
|
|
|||||
Series B-2
|
—
|
|
|
—
|
|
|
—
|
|
|
3,641
|
|
|
3,641
|
|
|||||
Series B-1
|
—
|
|
|
—
|
|
|
—
|
|
|
5,371
|
|
|
5,371
|
|
|||||
Series A
|
—
|
|
|
—
|
|
|
—
|
|
|
135
|
|
|
135
|
|
|||||
Common stock
|
9
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|||||
Additional paid-in capital
|
162,062
|
|
|
75,942
|
|
|
53,586
|
|
|
(17,578
|
)
|
|
(18,293
|
)
|
|||||
Accumulated deficit
|
(81,297
|
)
|
|
(54,994
|
)
|
|
(33,615
|
)
|
|
(22,604
|
)
|
|
(5,663
|
)
|
|||||
Total stockholders’ equity
|
80,747
|
|
|
20,952
|
|
|
19,975
|
|
|
2,448
|
|
|
18,230
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
(in thousands except share and per share data)
|
|
|
|
|
|
|
|
|
|
||||||||||
Statement of Operations Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Collaboration revenue
|
$
|
1,296
|
|
|
$
|
118
|
|
|
$
|
9,719
|
|
|
$
|
690
|
|
|
$
|
—
|
|
Grant income
|
—
|
|
|
—
|
|
|
—
|
|
|
346
|
|
|
2,388
|
|
|||||
Total revenue
|
1,296
|
|
|
118
|
|
|
9,719
|
|
|
1,036
|
|
|
2,388
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development expense
|
19,340
|
|
|
14,119
|
|
|
13,080
|
|
|
13,659
|
|
|
10,124
|
|
|||||
General and administrative expense
|
8,573
|
|
|
7,818
|
|
|
7,046
|
|
|
3,539
|
|
|
5,408
|
|
|||||
Total operating expenses
|
27,913
|
|
|
21,937
|
|
|
20,126
|
|
|
17,198
|
|
|
15,532
|
|
|||||
Operating loss
|
(26,617
|
)
|
|
(21,819
|
)
|
|
(10,407
|
)
|
|
(16,162
|
)
|
|
(13,144
|
)
|
|||||
Other income (expense), net:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(786
|
)
|
|
(672
|
)
|
|
(795
|
)
|
|
(724
|
)
|
|
—
|
|
|||||
Other income (loss), net
|
1,100
|
|
|
78
|
|
|
191
|
|
|
(55
|
)
|
|
(7
|
)
|
|||||
Total other income (loss), net
|
314
|
|
|
(594
|
)
|
|
(604
|
)
|
|
(779
|
)
|
|
(7
|
)
|
|||||
Net loss attributable to members of AuraSense Therapeutics, LLC
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,488
|
)
|
|||||
Net loss attributable to stockholders of Exicure, Inc.
|
(26,303
|
)
|
|
(22,413
|
)
|
|
(11,011
|
)
|
|
(16,941
|
)
|
|
(5,663
|
)
|
|||||
Net loss attributable to members of AuraSense Therapeutics, LLC/stockholders of Exicure, Inc.
|
$
|
(26,303
|
)
|
|
$
|
(22,413
|
)
|
|
$
|
(11,011
|
)
|
|
$
|
(16,941
|
)
|
|
$
|
(13,151
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic and diluted loss per common share
|
$
|
(0.46
|
)
|
|
$
|
(0.54
|
)
|
|
$
|
(1.09
|
)
|
|
$
|
(149.37
|
)
|
|
$
|
(244.13
|
)
|
Basic and diluted weighted-average common shares outstanding
|
57,671,734
|
|
|
41,189,177
|
|
|
10,119,569
|
|
|
113,418
|
|
|
53,870
|
|
(2)
|
On October 14, 2019, the shareholders of Allergan plc voted to approve the acquisition of Allergan by AbbVie Inc., which is subject to customary regulatory approvals and other customary closing conditions.
|
•
|
Resulted in a decrease in the levels of psoriasis and inflammation markers downstream of XCUR17's target, IL-17RA;
|
•
|
Produced a statistically significant reduction in keratin 16 expression, a key marker of psoriasis (p=0.002);
|
•
|
Resulted in reductions in the major inflammatory markers beta defensin 4A, interleukin 19, and interleukin 36A versus psoriatic skin at baseline; and
|
•
|
Revealed clinical improvements that matched reductions in keratin 16 protein and epidermal thickness.
|
•
|
advance SNA platform in dermatological indications with suitable partners;
|
•
|
add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; and
|
•
|
AST-008 administration, alone or in combination with pembrolizumab, produced cytokine and chemokine expression and immune cell activation in patient blood indicative of desired immune activation;
|
•
|
Of the four MCC patients, one patient, which had previously progressed on anti-PD-1 antibody therapy, has confirmed stable disease with decreased target lesion diameters for a period in excess of 12 weeks, while a second MCC patient experienced a target lesion complete response and a confirmed overall partial response longer than 24 weeks; and
|
•
|
Nine patients had progressive disease, two patients have not yet been evaluated and one is not evaluable.
|
1.
|
Identify the contract with the customer. A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the related payment terms, (ii) the contract has commercial substance, and (iii) the Company determines that collection of substantially all consideration for goods and services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s intent and ability to pay, which is based on a variety of factors including the customer’s historical payment experience, or in the case of a new customer, published credit and financial information pertaining to the customer.
|
2.
|
Identify the performance obligations in the contract. Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other available resources, and are distinct in the context of the contract, whereby the transfer of the good or service is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods and services, the Company must apply judgment to determine whether promised goods and services are both capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation.
|
3.
|
Determine the transaction price. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes. Determining the transaction price requires significant judgment.
|
4.
|
Allocate the transaction price to performance obligations in the contract. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance
|
5.
|
Recognize revenue when or as the Company satisfies a performance obligation. The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized over time if either (i) the customer simultaneously receives and consumes the benefits provided by the entity’s performance, (ii) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. If the entity does not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring the control of a promised good or service to a customer. Examples of control are using the asset to produce goods or services, enhance the value of other assets, or settle liabilities, and holding or selling the asset.
|
•
|
employee-related expenses, including salaries, bonuses, benefits and equity-based compensation expense;
|
•
|
early research and development expenses incurred under arrangements with third parties, such as contract research organizations, contract manufacturing organizations, and consultants;
|
•
|
preclinical and clinical development expenses with third parties such as contract research organizations, contract manufacturing organizations, and consultants;
|
•
|
costs of maintaining and protecting our intellectual property portfolio, including legal advisory fees, license fees, sublicense fees, patent maintenance and other similar fees;
|
•
|
laboratory materials and supplies;
|
•
|
facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment and laboratory and other supplies.
|
|
Year Ended
December 31, |
|
|
|
|
|||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Change
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
Collaboration revenue
|
$
|
1,296
|
|
|
$
|
118
|
|
|
$
|
1,178
|
|
|
998
|
%
|
Total revenue
|
1,296
|
|
|
118
|
|
|
1,178
|
|
|
998
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Research and development expense
|
19,340
|
|
|
14,119
|
|
|
5,221
|
|
|
37
|
%
|
|||
General and administrative expense
|
8,573
|
|
|
7,818
|
|
|
755
|
|
|
10
|
%
|
|||
Total operating expenses
|
27,913
|
|
|
21,937
|
|
|
5,976
|
|
|
27
|
%
|
|||
Operating loss
|
(26,617
|
)
|
|
(21,819
|
)
|
|
(4,798
|
)
|
|
22
|
%
|
|||
Other income (expense), net:
|
|
|
|
|
|
|
|
|||||||
Dividend income
|
543
|
|
|
323
|
|
|
220
|
|
|
68
|
%
|
|||
Interest income
|
178
|
|
|
4
|
|
|
174
|
|
|
4,350
|
%
|
|||
Interest expense
|
(786
|
)
|
|
(672
|
)
|
|
(114
|
)
|
|
17
|
%
|
|||
Other income (loss), net
|
379
|
|
|
(249
|
)
|
|
628
|
|
|
n/m
|
|
|||
Total other income (loss), net
|
314
|
|
|
(594
|
)
|
|
908
|
|
|
n/m
|
|
|||
Net loss
|
$
|
(26,303
|
)
|
|
$
|
(22,413
|
)
|
|
$
|
(3,890
|
)
|
|
17
|
%
|
|
Year Ended
December 31, |
|
|
|||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Change
|
|||||||||
Collaboration revenue:
|
|
|
|
|
|
|
|
|||||||
Dermelix Collaboration Agreement
|
$
|
1,125
|
|
|
$
|
—
|
|
|
$
|
1,125
|
|
|
n/m
|
|
Allergan Collaboration Agreement
|
171
|
|
|
—
|
|
|
171
|
|
|
n/m
|
|
|||
Purdue Collaboration Agreement
|
—
|
|
|
118
|
|
|
(118
|
)
|
|
n/m
|
|
|||
Total collaboration revenue
|
$
|
1,296
|
|
|
$
|
118
|
|
|
$
|
1,178
|
|
|
998
|
%
|
Total revenue
|
$
|
1,296
|
|
|
$
|
118
|
|
|
$
|
1,178
|
|
|
998
|
%
|
|
Year Ended
December 31, |
|
|
|||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Change
|
|||||||||
Platform and discovery-related expense
|
$
|
8,442
|
|
|
$
|
3,764
|
|
|
$
|
4,678
|
|
|
124
|
%
|
Clinical development programs expense
|
5,025
|
|
|
5,607
|
|
|
(582
|
)
|
|
(10
|
)%
|
|||
Employee-related expense
|
4,677
|
|
|
3,751
|
|
|
926
|
|
|
25
|
%
|
|||
Facilities, depreciation, and other expenses
|
1,196
|
|
|
997
|
|
|
199
|
|
|
20
|
%
|
|||
Total research and development expense
|
$
|
19,340
|
|
|
$
|
14,119
|
|
|
$
|
5,221
|
|
|
37
|
%
|
|
|
|
|
|
|
|
|
|||||||
Full time employees
|
29
|
|
|
20
|
|
|
9
|
|
|
|
|
Year Ended
December 31, |
|
|
|||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Change
|
|||||||||
General and administrative expense
|
$
|
8,573
|
|
|
$
|
7,818
|
|
|
$
|
755
|
|
|
10
|
%
|
Full time employees
|
7
|
|
|
7
|
|
|
—
|
|
|
|
|
|
Years Ended
December 31,
|
||||||
(in thousands)
|
|
2019
|
|
2018
|
||||
Net cash provided by (used in) operating activities
|
|
$
|
1,317
|
|
|
$
|
(19,487
|
)
|
Net cash used in investing activities
|
|
(63,432
|
)
|
|
(94
|
)
|
||
Net cash provided by financing activities
|
|
84,307
|
|
|
20,085
|
|
||
Net increase in cash and cash equivalents
|
|
$
|
22,192
|
|
|
$
|
504
|
|
•
|
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;
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than 1
Year
|
|
1-3 Years
|
|
3-5 Years
|
|
After 5 Years
|
||||||||||
Long-term debt (1)
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating lease obligations (2)
|
|
383
|
|
|
324
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|||||
Interest payments on long-term debt
|
|
142
|
|
|
142
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
5,525
|
|
|
$
|
5,466
|
|
|
$
|
59
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Includes principal only, which we paid at maturity on March 2, 2020.
|
(2)
|
Future minimum lease payments under our non-cancelable operating lease for our current office and lab space in Skokie, Illinois that expires in February 2021.
|
|
PAGE
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
48,460
|
|
|
$
|
26,268
|
|
Short-term investments
|
62,326
|
|
|
—
|
|
||
Accounts receivable
|
16
|
|
|
—
|
|
||
Unbilled revenue receivable
|
19
|
|
|
3
|
|
||
Prepaid expenses and other assets
|
1,955
|
|
|
1,392
|
|
||
Total current assets
|
112,776
|
|
|
27,663
|
|
||
Property and equipment, net
|
2,099
|
|
|
1,061
|
|
||
Other noncurrent assets
|
388
|
|
|
32
|
|
||
Total assets
|
$
|
115,263
|
|
|
$
|
28,756
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
4,965
|
|
|
$
|
—
|
|
Accounts payable
|
1,814
|
|
|
500
|
|
||
Accrued expenses and other current liabilities
|
2,435
|
|
|
1,543
|
|
||
Current portion of deferred revenue
|
21,873
|
|
|
—
|
|
||
Total current liabilities
|
31,087
|
|
|
2,043
|
|
||
Long-term debt, net
|
—
|
|
|
4,925
|
|
||
Common stock warrant liability
|
414
|
|
|
797
|
|
||
Deferred revenue non-current
|
2,956
|
|
|
—
|
|
||
Other noncurrent liabilities
|
59
|
|
|
39
|
|
||
Total liabilities
|
$
|
34,516
|
|
|
$
|
7,804
|
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.0001 par value per share; 200,000,000 shares authorized, 86,069,263 issued and outstanding, December 31, 2019; 44,358,000 shares issued and outstanding, December 31, 2018
|
9
|
|
|
4
|
|
||
Additional paid-in capital
|
162,062
|
|
|
75,942
|
|
||
Accumulated other comprehensive loss
|
(27
|
)
|
|
—
|
|
||
Accumulated deficit
|
(81,297
|
)
|
|
(54,994
|
)
|
||
Total stockholders' equity
|
80,747
|
|
|
20,952
|
|
||
Total liabilities and stockholders’ equity
|
$
|
115,263
|
|
|
$
|
28,756
|
|
|
Year Ended
December 31, |
||||||
|
2019
|
|
2018
|
||||
Revenue:
|
|
|
|
||||
Collaboration revenue
|
$
|
1,296
|
|
|
$
|
118
|
|
Total revenue
|
1,296
|
|
|
118
|
|
||
Operating expenses:
|
|
|
|
||||
Research and development expense
|
19,340
|
|
|
14,119
|
|
||
General and administrative expense
|
8,573
|
|
|
7,818
|
|
||
Total operating expenses
|
27,913
|
|
|
21,937
|
|
||
Operating loss
|
(26,617
|
)
|
|
(21,819
|
)
|
||
Other income (expense), net:
|
|
|
|
||||
Dividend income
|
543
|
|
|
323
|
|
||
Interest income
|
178
|
|
|
4
|
|
||
Interest expense
|
(786
|
)
|
|
(672
|
)
|
||
Other income (loss), net
|
379
|
|
|
(249
|
)
|
||
Total other income (loss), net
|
314
|
|
|
(594
|
)
|
||
Net loss
|
$
|
(26,303
|
)
|
|
$
|
(22,413
|
)
|
|
|
|
|
||||
Basic and diluted loss per common share
|
$
|
(0.46
|
)
|
|
$
|
(0.54
|
)
|
Basic and diluted weighted-average common shares outstanding
|
57,671,734
|
|
|
41,189,177
|
|
|
Year Ended
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Net loss
|
$
|
(26,303
|
)
|
|
$
|
(22,413
|
)
|
Other comprehensive loss, net of taxes
|
|
|
|
||||
Unrealized losses on available for sale securities, net of tax
|
(27
|
)
|
|
—
|
|
||
Other comprehensive loss
|
(27
|
)
|
|
—
|
|
||
Comprehensive loss
|
$
|
(26,330
|
)
|
|
$
|
(22,413
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Common Stock
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Shares
|
|
$
|
|
Additional Paid-in- Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
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
|
22,494
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
1,809
|
|
|
—
|
|
|
—
|
|
|
1,809
|
|
|||||
Issuance of common stock to consultants, net
|
145,466
|
|
|
—
|
|
|
436
|
|
|
—
|
|
|
—
|
|
|
436
|
|
|||||
Issuance of common stock in private placement, net
|
4,889,217
|
|
|
—
|
|
|
20,070
|
|
|
—
|
|
|
—
|
|
|
20,070
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,413
|
)
|
|
—
|
|
|
(22,413
|
)
|
|||||
Balance at December 31, 2018
|
44,358,000
|
|
|
$
|
4
|
|
|
$
|
75,942
|
|
|
$
|
(54,994
|
)
|
|
$
|
—
|
|
|
$
|
20,952
|
|
Exercise of options
|
86,263
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
|
|
75
|
|
||||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
1,840
|
|
|
—
|
|
|
—
|
|
|
1,840
|
|
|||||
Issuance of common stock in August 2019 Offering, net
|
31,625,000
|
|
|
4
|
|
|
58,862
|
|
|
—
|
|
|
—
|
|
|
58,866
|
|
|||||
Issuance of common stock in December 2019 Offering, net
|
10,000,000
|
|
|
1
|
|
|
25,343
|
|
|
—
|
|
|
—
|
|
|
25,344
|
|
|||||
Other comprehensive loss, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
(27
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,303
|
)
|
|
—
|
|
|
(26,303
|
)
|
|||||
Balance at December 31, 2019
|
86,069,263
|
|
|
$
|
9
|
|
|
$
|
162,062
|
|
|
$
|
(81,297
|
)
|
|
$
|
(27
|
)
|
|
$
|
80,747
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(26,303
|
)
|
|
$
|
(22,413
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
392
|
|
|
358
|
|
||
Equity-based compensation
|
1,840
|
|
|
1,809
|
|
||
Amortization of operating lease asset
|
332
|
|
|
—
|
|
||
Amortization of long-term debt issuance costs and fees
|
192
|
|
|
96
|
|
||
Other
|
36
|
|
|
400
|
|
||
Change in fair value of warrant liabilities
|
(383
|
)
|
|
274
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Unbilled revenue receivable and accounts receivable
|
(32
|
)
|
|
10
|
|
||
Prepaid expenses and other current assets
|
(631
|
)
|
|
505
|
|
||
Accounts payable
|
789
|
|
|
(557
|
)
|
||
Accrued expenses and other current liabilities
|
578
|
|
|
270
|
|
||
Deferred revenue
|
24,829
|
|
|
—
|
|
||
Other noncurrent liabilities
|
(322
|
)
|
|
(239
|
)
|
||
Net cash provided by (used in) operating activities
|
1,317
|
|
|
(19,487
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of available for sale securities
|
(62,350
|
)
|
|
—
|
|
||
Capital expenditures
|
(1,082
|
)
|
|
(94
|
)
|
||
Net cash used in investing activities
|
(63,432
|
)
|
|
(94
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from common stock offering
|
90,750
|
|
|
22,001
|
|
||
Proceeds from exercise of common stock options
|
75
|
|
|
41
|
|
||
Payment of long-term debt fees and issuance costs
|
(283
|
)
|
|
(26
|
)
|
||
Payment of common stock financing costs
|
(6,235
|
)
|
|
(1,931
|
)
|
||
Net cash provided by financing activities
|
84,307
|
|
|
20,085
|
|
||
Net increase in cash and cash equivalents
|
22,192
|
|
|
504
|
|
||
Cash and cash equivalents - beginning of period
|
26,268
|
|
|
25,764
|
|
||
Cash and cash equivalents - end of period
|
$
|
48,460
|
|
|
$
|
26,268
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information
|
|
|
|
||||
Non-cash financing activities:
|
|
|
|
||||
Issuance of common stock for professional services
|
$
|
—
|
|
|
$
|
436
|
|
Debt fees (accrued expenses)
|
100
|
|
|
—
|
|
||
Common stock issuance costs (accounts payable and accrued expenses)
|
305
|
|
|
—
|
|
||
Non-cash investing activities:
|
|
|
|
||||
Capital expenditures (accounts payable and accrued expenses)
|
348
|
|
|
8
|
|
1.
|
Identify the contract with the customer. A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the related payment terms, (ii) the contract has commercial substance, and (iii) the Company determines that collection of substantially all consideration for goods and services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s intent and ability to pay, which is based on a variety of factors including the customer’s historical payment experience, or in the case of a new customer, published credit and financial information pertaining to the customer.
|
2.
|
Identify the performance obligations in the contract. Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other available resources, and are distinct in the context of the contract, whereby the transfer of the good or service is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods and services, the Company must apply judgment to determine whether promised goods and services are both capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation.
|
3.
|
Determine the transaction price. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Any estimates, including the effect of the constraint on variable consideration, are evaluated at each reporting period for any changes. Determining the transaction price requires significant judgment.
|
4.
|
Allocate the transaction price to performance obligations in the contract. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The consideration to be received is allocated among the separate performance obligations based on relative standalone selling prices.
|
5.
|
Recognize revenue when or as the Company satisfies a performance obligation. The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized over time if either (i) the customer simultaneously receives and consumes the benefits provided by the entity’s performance, (ii) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. If the entity does not satisfy a performance obligation over time, the related performance obligation is satisfied at a point in time by transferring the control of a promised good or service to a customer. Examples of control are using the asset to produce goods or services, enhance the value of other assets, or settle liabilities, and holding or selling the asset.
|
|
As Previously Reported
December 31, 2018
|
|
ASC 842 Adoption Adjustment
|
|
As Reported Under ASC 842 January 1, 2019
|
||||||
Prepaid expenses and other current assets
|
$
|
1,392
|
|
|
$
|
(28
|
)
|
|
$
|
1,364
|
|
Other noncurrent assets
|
32
|
|
|
613
|
|
|
645
|
|
|||
Accrued expenses and other current liabilities
|
1,543
|
|
|
243
|
|
|
1,786
|
|
|||
Other noncurrent liabilities
|
39
|
|
|
342
|
|
|
381
|
|
|
December 31
|
||||||
|
2019
|
|
2018
|
||||
Prepaid insurance
|
$
|
533
|
|
|
$
|
353
|
|
Prepaid clinical, contract research and manufacturing costs
|
481
|
|
|
293
|
|
||
Interest receivable
|
236
|
|
|
—
|
|
||
Other
|
705
|
|
|
746
|
|
||
Prepaid expenses and other current assets
|
$
|
1,955
|
|
|
$
|
1,392
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Scientific equipment
|
$
|
2,795
|
|
|
$
|
1,979
|
|
Leasehold improvements
|
192
|
|
|
192
|
|
||
Furniture and fixtures
|
41
|
|
|
41
|
|
||
Computers and software
|
32
|
|
|
26
|
|
||
Construction in process
|
356
|
|
|
12
|
|
||
Property and equipment, gross
|
3,416
|
|
|
2,250
|
|
||
Less: accumulated depreciation
|
(1,317
|
)
|
|
(1,189
|
)
|
||
Property and equipment, net
|
$
|
2,099
|
|
|
$
|
1,061
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Operating lease asset
|
$
|
356
|
|
|
$
|
—
|
|
Other
|
32
|
|
|
32
|
|
||
Other noncurrent assets
|
$
|
388
|
|
|
$
|
32
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Accrued payroll-related expenses
|
$
|
920
|
|
|
$
|
899
|
|
Accrued clinical, contract research and manufacturing costs
|
515
|
|
|
102
|
|
||
Operating lease liability
|
292
|
|
|
—
|
|
||
Accrued legal expenses
|
254
|
|
|
189
|
|
||
Other accrued expenses
|
454
|
|
|
353
|
|
||
Accrued expenses and other current liabilities
|
$
|
2,435
|
|
|
$
|
1,543
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Operating lease liability
|
$
|
59
|
|
|
$
|
—
|
|
Other
|
—
|
|
|
39
|
|
||
Other noncurrent liabilities
|
$
|
59
|
|
|
$
|
39
|
|
One year or less
|
|
57
|
%
|
After one year but within two years
|
|
43
|
%
|
Total
|
|
100
|
%
|
|
December 31, 2019
|
||||||||||||||
|
Amortized Costs
|
|
Gross Unrealized Holding Gains
|
|
Gross Unrealized Holding Losses
|
|
Fair Value
|
||||||||
Commercial paper
|
$
|
13,932
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
13,931
|
|
Corporate notes/bonds
|
36,620
|
|
|
1
|
|
|
(24
|
)
|
|
36,597
|
|
||||
U.S. Treasuries
|
4,513
|
|
|
—
|
|
|
(1
|
)
|
|
4,512
|
|
||||
U.S. Government agency securities
|
9,786
|
|
|
—
|
|
|
(2
|
)
|
|
9,784
|
|
||||
|
$
|
64,851
|
|
|
$
|
2
|
|
|
$
|
(29
|
)
|
|
$
|
64,824
|
|
|
December 31, 2019
|
||
2020
|
$
|
5,000
|
|
Principal balance outstanding
|
5,000
|
|
|
less: unamortized discount
|
(34
|
)
|
|
less: unamortized debt issuance costs
|
(1
|
)
|
|
Long-term debt
|
4,965
|
|
|
Current portion
|
4,965
|
|
|
Noncurrent portion
|
$
|
—
|
|
|
December 31,
2019 |
||
Assets:
|
|
||
Operating lease asset
|
$
|
356
|
|
Liabilities:
|
|
||
Operating lease liability
|
$
|
292
|
|
Operating lease liability, noncurrent
|
59
|
|
|
Total operating lease liability
|
$
|
351
|
|
|
December 31, 2019
|
|
Remaining lease term (1)
|
1.2 years
|
|
Discount rate
|
16.1
|
%
|
|
|
December 31,
|
||
|
|
2019
|
||
Operating lease costs
|
|
$
|
336
|
|
Short term lease costs
|
|
100
|
|
|
Variable lease costs
|
|
344
|
|
|
Total lease costs
|
|
$
|
780
|
|
Years Ending December 31,
|
|
Operating Leases
|
||
2020
|
|
$
|
324
|
|
2021
|
|
59
|
|
|
Total
|
|
$
|
383
|
|
Less: imputed interest
|
|
(32
|
)
|
|
Total lease liability
|
|
$
|
351
|
|
|
|
|
||
Current operating lease liability
|
|
$
|
292
|
|
Noncurrent operating lease liability
|
|
59
|
|
|
Total lease liability
|
|
$
|
351
|
|
|
|
December 31,
|
||
|
|
2018
|
||
Straight-line rent expense
|
|
$
|
332
|
|
Contingent rent expense
|
|
298
|
|
|
Total rent expense
|
|
$
|
630
|
|
Years Ending December 31,
|
|
Operating Leases
|
||
2019
|
|
$
|
347
|
|
2020
|
|
353
|
|
|
2021
|
|
59
|
|
|
Total
|
|
$
|
759
|
|
|
|
Unrealized gains (losses) on short-term investments
|
|
Total
|
||||
Balance at December 31, 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
Other comprehensive income (loss) before reclassifications
|
|
(27
|
)
|
|
(27
|
)
|
||
Net current period other comprehensive loss
|
|
(27
|
)
|
|
(27
|
)
|
||
Balance at December 31, 2019
|
|
$
|
(27
|
)
|
|
$
|
(27
|
)
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Research and development expense
|
$
|
535
|
|
|
$
|
485
|
|
General and administrative expense
|
1,305
|
|
|
1,324
|
|
||
|
$
|
1,840
|
|
|
$
|
1,809
|
|
|
Year Ended
December 31,
|
||||
|
2019
|
|
2018
|
||
Expected term
|
5.3 to 6.1 years
|
|
|
5.3 to 6.0 years
|
|
Risk-free interest rate
|
1.55% to 2.56%; weighted avg. 1.94%
|
|
|
2.72% to 2.87%; weighted avg. 2.78%
|
|
Expected volatility
|
80.2% to 86.7%; weighted avg. 82.6%
|
|
|
78.1% to 82.4%; weighted avg. 80.6%
|
|
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
|
Year ended December 31, 2019
|
$2.32 to $3.05; weighted avg. $2.86
|
|
$2.32 to $3.05; weighted avg. $2.86
|
Year ended December 31, 2018
|
$3.00 to $5.82; weighted avg. $3.45
|
|
$3.00 to $5.82; weighted avg. $3.45
|
|
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
|
1,244,009
|
|
|
2.86
|
|
|
|
|
|
|||
Exercised
|
(86,263
|
)
|
|
0.87
|
|
|
|
|
|
|||
Forfeited
|
(351,620
|
)
|
|
2.90
|
|
|
|
|
|
|||
Outstanding - December 31, 2019
|
5,697,714
|
|
|
$
|
2.34
|
|
|
6.7
|
|
$
|
4,625
|
|
Exercisable - December 31, 2019
|
3,972,087
|
|
|
$
|
2.01
|
|
|
5.7
|
|
$
|
4,550
|
|
Vested and Expected to Vest -
December 31, 2019
|
5,577,282
|
|
|
$
|
2.32
|
|
|
6.7
|
|
$
|
4,620
|
|
|
Year Ended
December 31,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
Federal income tax expense at statutory rate
|
$
|
(5,524
|
)
|
|
21.0
|
%
|
|
$
|
(4,707
|
)
|
|
21.0
|
%
|
State income tax expense at statutory rate
|
(1,934
|
)
|
|
7.3
|
|
|
(1,595
|
)
|
|
7.1
|
|
||
Permanent differences
|
113
|
|
|
(0.4
|
)
|
|
243
|
|
|
(1.1
|
)
|
||
Change in valuation allowance
|
7,345
|
|
|
(27.9
|
)
|
|
6,059
|
|
|
(27.0
|
)
|
||
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred Tax Assets
|
|
|
|
||||
Net operating losses
|
$
|
22,340
|
|
|
$
|
14,827
|
|
Intangibles
|
169
|
|
|
187
|
|
||
Accrued expenses
|
80
|
|
|
271
|
|
||
Operating lease liability
|
108
|
|
|
—
|
|
||
Equity-based compensation
|
1,023
|
|
|
796
|
|
||
Other
|
5
|
|
|
204
|
|
||
Less: Valuation allowance
|
(23,567
|
)
|
|
(16,225
|
)
|
||
Total deferred tax assets
|
158
|
|
|
60
|
|
||
Deferred Tax Liabilities
|
|
|
|
||||
Fixed assets and other
|
(57
|
)
|
|
(60
|
)
|
||
Operating lease asset
|
(101
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
(158
|
)
|
|
(60
|
)
|
||
Deferred taxes, net
|
$
|
—
|
|
|
$
|
—
|
|
•
|
Cumulative losses: The Company has been in a significant cumulative loss position since its inception in 2011.
|
•
|
Projected realization of net operating loss carry forward amounts: Projections of future pre-tax book loss and taxable losses based on the Company’s recent actual performance and current industry data indicate it is more likely than not that the benefits will not be recognized.
|
|
Year Ended
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Net loss
|
$
|
(26,303
|
)
|
|
$
|
(22,413
|
)
|
Weighted-average basic and diluted common shares outstanding
|
57,671,734
|
|
|
41,189,177
|
|
||
Loss per share - basic and diluted
|
$
|
(0.46
|
)
|
|
$
|
(0.54
|
)
|
|
|
December 31,
|
||||
|
|
2019
|
|
2018
|
||
Options to purchase common stock
|
|
5,697,714
|
|
|
4,891,588
|
|
Warrants to purchase common stock
|
|
413,320
|
|
|
413,320
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
31,078
|
|
|
$
|
31,078
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
2,498
|
|
|
—
|
|
|
2,498
|
|
|
—
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
11,433
|
|
|
—
|
|
|
11,433
|
|
|
—
|
|
||||
Corporate notes/bonds
|
36,597
|
|
|
—
|
|
|
36,597
|
|
|
—
|
|
||||
U.S. Treasuries
|
4,512
|
|
|
—
|
|
|
4,512
|
|
|
—
|
|
||||
U.S. Government agency securities
|
9,784
|
|
|
—
|
|
|
9,784
|
|
|
—
|
|
||||
Total financial assets
|
$
|
95,902
|
|
|
$
|
31,078
|
|
|
$
|
64,824
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Common stock warrant liability
|
$
|
414
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
414
|
|
Total financial liabilities
|
$
|
414
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
414
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
21,459
|
|
|
$
|
21,459
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total financial assets
|
$
|
21,459
|
|
|
$
|
21,459
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Common stock warrant liability
|
$
|
797
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
797
|
|
Total financial liabilities
|
$
|
797
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
797
|
|
|
December 31, 2019
|
|
Expected term
|
1.3
|
|
Risk-free interest rate
|
1.58
|
%
|
Expected volatility
|
81.84
|
%
|
Expected dividend yield
|
—
|
%
|
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
||
|
Common Stock Warrant Liability
|
||
Balance at December 31, 2017
|
$
|
523
|
|
Gain included in other income (expense), net
|
274
|
|
|
Balance at December 31, 2018
|
$
|
797
|
|
Loss included in other income (expense), net
|
(383
|
)
|
|
Balance at December 31, 2019
|
$
|
414
|
|
|
|
2019
|
||||||||||||||
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Revenue
|
|
$
|
25
|
|
|
$
|
434
|
|
|
$
|
527
|
|
|
$
|
310
|
|
Net loss (1) (2)
|
|
(5,286
|
)
|
|
(5,220
|
)
|
|
(5,816
|
)
|
|
(9,981
|
)
|
||||
Basic and diluted loss per common share
|
|
$
|
(0.12
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.13
|
)
|
|
|
2018
|
||||||||||||||
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Revenue
|
|
$
|
36
|
|
|
$
|
19
|
|
|
$
|
57
|
|
|
$
|
6
|
|
Net loss (1)
|
|
(5,509
|
)
|
|
(6,825
|
)
|
|
(5,324
|
)
|
|
(4,755
|
)
|
||||
Basic and diluted loss per common share
|
|
$
|
(0.14
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.11
|
)
|
Exhibit Number
|
|
Exhibit Description
|
|
Filed with this Report
|
|
Incorporated by Reference herein from Form or Schedule
|
|
Filing Date
|
|
SEC File/Reg. Number
|
2.1†
|
|
|
|
|
8-K (Exhibit 2.1)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
|
|
8-K (Exhibit 3.1)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
|
|
8-K (Exhibit 3.2)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
3.3
|
|
|
|
|
8-K (Exhibit 3.3)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
3.4
|
|
|
|
|
8-K (Exhibit 3.4)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
|
|
8-K (Exhibit 4.1)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
|
|
8-K (Exhibit 4.2)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
|
|
|
8-K (Exhibit 4.1)
|
|
8/28/2018
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1+
|
|
|
|
|
8-K (Exhibit 10.1)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2+
|
|
|
|
|
8-K (Exhibit 10.2)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3+
|
|
|
|
|
8-K (Exhibit 10.3)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4+
|
|
|
|
|
8-K (Exhibit 10.4)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
|
|
|
8-K (Exhibit 10.5)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6+
|
|
|
|
|
8-K (Exhibit 10.6)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7+
|
|
|
|
|
8-K (Exhibit 10.7)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8+
|
|
|
|
|
8-K (Exhibit 10.8)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9+
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10+
|
|
|
|
|
|
10-Q/A (Exhibit 10.3)
|
|
5/14/2019
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
10.11+
|
|
|
|
|
8-K (Exhibit 10.11)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
|
|
|
8-K (Exhibit 10.12)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.13
|
|
|
|
|
8-K (Exhibit 10.13)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14
|
|
|
|
|
8-K (Exhibit 10.14)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
|
|
|
8-K (Exhibit 10.15)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
|
|
|
8-K (Exhibit 10.16)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17
|
|
|
|
|
8-K (Exhibit 10.17)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17.1
|
|
|
|
|
S-1/A (Exhibit 10.17.1)
|
|
1/26/2018
|
|
333-221791
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17.2
|
|
|
|
|
10-K (Exhibit 10.18.2)
|
|
3/8/2019
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17.3
|
|
|
|
|
8-K (Exhibit 10.1)
|
|
3/14/2019
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18+
|
|
|
|
|
8-K (Exhibit 10.18)
|
|
10/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19
|
|
|
|
|
8-K (Exhibit 10.1)
|
|
6/19/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20*
|
|
|
|
|
8-K/A (Exhibit 10.20)
|
|
11/7/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21*
|
|
|
|
|
8-K/A (Exhibit 10.23)
|
|
11/7/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22*
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.23*
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24
|
|
|
X
|
|
|
|
|
|
|
10.25*
|
|
|
|
|
8-K/A (Exhibit 10.21)
|
|
11/7/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26*
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28*
|
|
|
|
|
8-K/A (Exhibit 10.22)
|
|
11/7/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.29*
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.30*
|
|
|
|
|
8-K/A (Exhibit 10.24)
|
|
11/7/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.31*
|
|
|
|
|
10-Q (Exhibit 10.2)
|
|
5/8/2019
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
|
|
|
8-K/A (Exhibit 10.25)
|
|
11/7/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.33*
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.34
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.35
|
|
|
|
|
8-K (Exhibit 10.1 )
|
|
11/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.36
|
|
|
|
|
8-K (Exhibit 10.2 )
|
|
11/2/2017
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
10.37
|
|
|
|
|
8-K (Exhibit 10.1 )
|
|
8/28/18
|
|
000-55764
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32**
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document.
|
|
X
|
|
|
|
|
|
|
|
EXICURE, INC.
|
|
|
|
|
|
By:
|
/s/ David A. Giljohann
|
|
|
David A. Giljohann, Ph.D.
|
|
|
Chief Executive Officer and Director (principal executive officer)
|
|
|
|
|
By:
|
/s/ David S. Snyder
|
|
|
David S. Snyder
|
|
|
Chief Financial Officer
(principal financial officer and principal accounting officer)
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/ David A. Giljohann
|
|
Chief Executive Officer and Director
(principal executive officer)
|
|
March 9, 2020
|
David A. Giljohann, Ph.D.
|
|
|
|
|
|
|
|
|
|
/s/ David S. Snyder
|
|
Chief Financial Officer
(principal financial officer and principal accounting officer)
|
|
March 9, 2020
|
David S. Snyder
|
|
|
|
|
|
|
|
|
|
/s/ Chad A. Mirkin
|
|
Director and Chairman of the Board of Directors
|
|
March 9, 2020
|
Chad A. Mirkin, Ph.D.
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey L. Cleland
|
|
Director
|
|
March 9, 2020
|
Jeffrey L. Cleland
|
|
|
|
|
|
|
|
|
|
/s/ Bosun Hau
|
|
Director
|
|
March 9, 2020
|
Bosun Hau
|
|
|
|
|
|
|
|
|
|
/s/ Helen S. Kim
|
|
Director
|
|
March 9, 2020
|
Helen S. Kim
|
|
|
|
|
|
|
|
|
|
/s/ Bali Muralidhar
|
|
Director
|
|
March 9, 2020
|
Bali Muralidhar, M.D., Ph.D.
|
|
|
|
|
|
|
|
|
|
/s/ Jay R. Venkatesan
|
|
Director
|
|
March 9, 2020
|
Jay R. Venkatesan, M.D.
|
|
|
|
|
|
|
|
|
|
/s/ Timothy P. Walbert
|
|
Director
|
|
March 9, 2020
|
Timothy P. Walbert
|
|
|
|
|
|
|
|
|
|
/s/ David R. Walt
|
|
Director
|
|
March 9, 2020
|
David R. Walt, Ph.D.
|
|
|
|
|
•
|
the maximum number of shares;
|
•
|
the designation of the shares;
|
•
|
the annual dividend rate, if any, whether the dividend rate is fixed or variable, the date or dates on which dividends will accrue, the dividend payment dates, and whether dividends will be cumulative;
|
•
|
the price and the terms and conditions for redemption, if any, including redemption at our option or at the option of the holders, including the time period for redemption, and any accumulated dividends or premiums;
|
•
|
the liquidation preference, if any, and any accumulated dividends upon the liquidation, dissolution or winding up of our affairs;
|
•
|
any sinking fund or similar provision, and, if so, the terms and provisions relating to the purpose and operation of the fund;
|
•
|
the terms and conditions, if any, for conversion or exchange of shares of any other class or classes of our capital stock or any series of any other class or classes, or of any other series of the same class, or any other securities or assets, including the price or the rate of conversion or exchange and the method, if any, of adjustment;
|
•
|
the voting rights; and
|
•
|
any or all other preferences and relative, participating, optional or other special rights, privileges or qualifications, limitations or restrictions.
|
•
|
before the stockholder became interested, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
|
•
|
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances, but not the outstanding voting stock owned by the interested stockholder; or
|
•
|
at or after the time the stockholder became interested, the business combination was approved by our board of directors and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.
|
•
|
any merger or consolidation involving the corporation and the interested stockholder;
|
•
|
any sale, transfer, lease, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;
|
•
|
subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
|
•
|
subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; and
|
•
|
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges, or other financial benefits provided by or through the corporation.
|
3.
|
Compensation and Benefits.
|
(c)
|
Other Benefits.
|
4.
|
Termination of Employment.
|
(g)
|
Certain Definitions.
|
(ii)
|
Executive's conviction or plea of nolo contendere for any crime involving moral turpitude or a felony;
|
(iii)
|
Executive's commission of an act of deceit or fraud intended to result in personal and unauthorized enrichment of Executive at the expense of the Company or any of its affiliates; or
|
(iv)
|
a complete liquidation or dissolution of the Company or of the sale or other disposition of all or substantially all of the assets of the Company.
|
(iv)
|
a material breach by the Company of any provision of this Agreement.
|
(i)
|
the conditions described in the preceding sentence giving rise to Executive's termination of employment must have arisen without Executive's written consent;
|
6.
|
Survival. Sections 5, 6, 8, 9 and 14 hereof shall survive and continue in full force and effect in accordance with their respective terms, notwithstanding any termination of the Employment Period.
|
11.
|
Governing Law. This Agreement shall be governed by the internal laws (as opposed to the conflicts of law provisions) of the State of Illinois.
|
/s/ David A. Giljohann, Ph.D.
|
David A. Giljohann, Ph.D.
|
President and Chief Executive Officer
|
As Authorized by the Board of Directors
|
/s/ Matthias Schroff
|
Matthias Schroff
|
Innovation and
|
Northwestern University
|
Phone 847-467-2097
|
Northwestern |INVO
|
New Ventures Office
|
1800 Sherman Ave, Suite 504
|
invo.northwestern.edu
|
Innovation and New Ventures
|
|
Evanston, IL 60201
|
|
|
1.
|
Appendix A of the Agreement is amended and incorporated herein by reference.
|
2.
|
All other terms and conditions of the Agreement shall remain in full force and effect as amended hereby.
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NORTHWESTERN UNIVERSITY
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EXICURE, INC.
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/s/ Alicia Löffler, Ph.D.
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/s/ David A. Giljohann, Ph.D.
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Alicia Löffler, Ph.D.
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David A. Giljohann, Ph.D.
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Associate Vice President for Research
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Chief Executive Officer
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and Executive Director, INVO
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Innovation and
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Northwestern University
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Phone 847-467-2097
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Northwestern |INVO
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New Ventures Office
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1800 Sherman Ave, Suite 504
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invo.northwestern.edu
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Innovation and New Ventures
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|
Evanston, IL 60201
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NORTHWESTERN UNIVERSITY
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EXICURE, INC.
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/s/ Alicia Löffler, Ph.D.
|
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/s/ David A. Giljohann, Ph.D.
|
Alicia Löffler, Ph.D.
|
|
David A. Giljohann, Ph.D.
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Associate Vice President for Research
|
|
Chief Executive Officer
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and Executive Director, INVO
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NU ID
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Filing Date
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A.
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Northwestern and Exicure are parties to that certain Restated License Agreement restated on August 15, 2015 and effective as of December 12, 2011, as amended on September 27, 2016, November 30, 2017 and January 1, 2019 (the “2011 Agreement”).
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B.
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Pursuant to the 2011 Agreement, Northwestern granted certain licenses and rights to Exicure under the Patent Rights and the Know-How.
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C.
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The parties now desire to enter into this Amendment for the purpose of amending certain terms and conditions of the 2011 Agreement.
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2.
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Amendment. Northwestern and Exicure agree to amend the 2011 Agreement as follows:
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3.
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Effect of Amendment. All of the terms and conditions of the 2011 Agreement shall continue in full force and effect except as modified by the terms of this Amendment. In the event of any inconsistency between the terms and conditions of this Amendment and the terms and conditions of the 2011 Agreement, the terms and conditions of this Amendment shall control and govern.
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4.
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Counterparts. This Amendment may be executed in two or more counterparts, each of which will
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NORTHWESTERN UNIVERSITY
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/s/ Alicia Löffler, Ph.D.
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Alicia Löffler, Ph.D.
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Assoc. Professor, Executive Director
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EXICURE, INC.
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/s/ David A. Giljohann, Ph.D.
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David A. Giljohann, Ph.D.
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Chief Executive Officer
|
Innovation and
|
Northwestern University
|
Phone 847-467-2097
|
Northwestern |INVO
|
New Ventures Office
|
1800 Sherman Ave, Suite 504
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invo.northwestern.edu
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Innovation and New Ventures
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|
Evanston, IL 60201
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|
|
1.
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Exhibit A of the License Agreement is amended and incorporated herein by reference.
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2.
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All other terms and conditions of the Agreement shall remain in full force and effect as amended hereby.
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NORTHWESTERN UNIVERSITY
|
|
EXICURE, INC.
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/s/ Alicia Löffler, Ph.D.
|
|
/s/ David A. Giljohann, Ph.D.
|
Alicia Löffler, Ph.D.
|
|
David A. Giljohann, Ph.D.
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Associate Vice President for Research
|
|
Chief Executive Officer
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and Executive Director
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|
Exicure, Inc.
|
INVO, Northwestern University
|
|
|
Innovation and
|
Northwestern University
|
Phone 847-467-2097
|
Northwestern |INVO
|
New Ventures Office
|
1800 Sherman Ave, Suite 504
|
invo.northwestern.edu
|
Innovation and New Ventures
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|
Evanston, IL 60201
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NU#
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Serial Application Number
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A.
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Northwestern and Exicure are parties to that certain License Agreement effective as of May 27, 2014, as amended on June 11, 2018 (the “2014 Agreement”).
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B.
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Pursuant to the 2014 Agreement, Northwestern granted certain licenses and rights to Exicure under the Patent Rights.
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C.
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The parties now desire to enter into this Amendment for the purpose of amending certain terms and conditions of the 2014 Agreement.
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2.
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Amendment. Northwestern and Exicure agree to amend the 2014 Agreement as follows:
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NORTHWESTERN UNIVERSITY
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/s/ Alicia Löffler, Ph.D.
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Alicia Löffler, Ph.D.
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Assoc. Professor, Executive Director
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EXICURE, INC.
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/s/ David A. Giljohann, Ph.D.
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David A. Giljohann, Ph.D.
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Chief Executive Officer
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NORTHWESTERN UNIVERSITY
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/s/ Alicia Löffler, Ph.D.
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Alicia Löffler, Ph.D.
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Executive Director, INVO, and
Associate Vice President for Research
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EXICURE, INC.
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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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ALLERGAN PHARMACEUTICALS INTERNATIONAL LIMITED
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/s/ Francis Bates
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Francis Bates
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Director
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Innovation and
|
Northwestern University
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Phone 847-467-2097
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Northwestern |INVO
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New Ventures Office
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1800 Sherman Ave, Suite 504
|
invo.northwestern.edu
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Innovation and New Ventures
|
|
Evanston, IL 60201
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1.
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Exhibits A of the License Agreement is amended and Incorporated herein by reference.
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2.
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All other terms and conditions of the Agreement shall remain in full force and effect as amended hereby.
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NORTHWESTERN UNIVERSITY
|
|
EXICURE, INC.
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/s/ Alicia Löffler, Ph.D.
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/s/ David A. Giljohann, Ph.D.
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Alicia Löffler, Ph.D.
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David A. Giljohann, Ph.D.
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Associate Vice President for Research
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Chief Executive Officer
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and Executive Director
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Exicure, Inc.
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INVO, Northwestern University
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|
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Innovation and
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Northwestern University
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Phone 847-467-2097
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Northwestern |INVO
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New Ventures Office
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1800 Sherman Ave, Suite 504
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invo.northwestern.edu
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Innovation and New Ventures
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|
Evanston, IL 60201
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NU#
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Serial Application Number
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Application Title
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Application Type
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Status
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Country Code
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File Date
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Page
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ARTICLE 1
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DEFINITIONS
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1
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ARTICLE 2
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RESEARCH AND DEVELOPMENT COLLABORATION
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21
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2.1.
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Collaboration Programs
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21
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2.2.
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Program Target Substitution
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22
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2.3.
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Conduct of Development Plans
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22
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2.4.
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Development Costs
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24
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2.5.
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Subcontracts
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24
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2.6.
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Reports
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24
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2.7.
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Research Term
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25
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2.8.
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Program Abandonment
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25
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ARTICLE 3
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OPTIONS; LICENSE GRANTS
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25
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3.1.
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Options; Option Extensions
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25
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3.2.
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Antitrust Compliance
|
27
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3.3.
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License Grant
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28
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3.4.
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Sublicenses
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28
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3.5.
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Exclusivity
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28
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3.6.
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*****
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31
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3.7.
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Additional In-Licensed Intellectual Property
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31
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3.8.
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No Implied Rights
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33
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3.9.
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Disclosure of Know-How
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33
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3.10.
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Northwestern Agreements
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34
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ARTICLE 4
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GOVERNANCE
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34
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4.1.
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Establishment of Joint Development Committee
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34
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4.2.
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Responsibilities of JDC
|
35
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4.3.
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Co-Chairs
|
36
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4.4.
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Meetings
|
36
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4.5.
|
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Minutes
|
36
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4.6.
|
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JDC Decisions
|
36
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4.7.
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Alliance Managers
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37
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4.8.
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Working Groups
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37
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ARTICLE 5
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DEVELOPMENT, COMMERCIALIZATION, AND MANUFACTURE
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37
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5.1.
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Development of Licensed Products
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37
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5.2.
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Commercialization of Licensed Products
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39
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5.3.
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Manufacturing of Licensed Products
|
39
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ARTICLE 6
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FINANCIAL PROVISIONS
|
40
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6.1.
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Upfront Payment
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40
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6.2.
|
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Option Extension Payment
|
40
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6.3.
|
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Option Exercise Payment
|
40
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6.4.
|
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Development and Regulatory Milestone Payments
|
40
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6.5.
|
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Sales Milestones
|
41
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6.6.
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Royalty Payments
|
42
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6.7.
|
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Reductions
|
43
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6.8.
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Anti-Stack
|
44
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6.9.
|
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Taxes
|
45
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6.10.
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Value Added Tax
|
45
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6.11.
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Allergan Statements and Payment
|
45
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6.12.
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Currency Exchange
|
46
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6.13.
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Payment Method
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46
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6.14.
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Records Retention; Financial Audit; Consolidation Reporting
|
46
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6.15.
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Interest on Late Payments
|
47
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6.16.
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Right to Offset
|
47
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6.17.
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Third Party Agreements
|
47
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6.18.
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Reverse Royalty
|
47
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ARTICLE 7
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CONFIDENTIALITY
|
47
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7.1.
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Protection of Confidential Information
|
47
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7.2.
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Certain Permitted Disclosures
|
48
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7.3.
|
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Return of Confidential Information
|
48
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7.4.
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Unauthorized Use
|
49
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7.5.
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Public Disclosure
|
49
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7.6.
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Publications
|
50
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ARTICLE 8
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INTELECTUAL PROPERTY
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50
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8.1.
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Collaboration Technology
|
50
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8.2.
|
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Prosecution and Maintenance of Patents
|
51
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8.3.
|
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Enforcement of Patents
|
53
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8.4.
|
|
Invalidity or Unenforceability Actions
|
56
|
8.5.
|
|
Infringement Claims by Third Parties
|
58
|
8.6.
|
|
Patent Term Extension and Supplementary Protection Certificate
|
59
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8.7.
|
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Patent Listing
|
60
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8.8.
|
|
Trademarks for Licensed Product
|
60
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|
|
ARTICLE 9
|
|
TERM AND TERMINATION
|
61
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9.1.
|
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Term
|
61
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9.2.
|
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Termination at Will by Allergan
|
61
|
9.3.
|
|
Material Breach
|
61
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9.4.
|
|
Material Breach Dispute Resolution
|
62
|
9.5.
|
|
Insolvency
|
62
|
9.6.
|
|
Termination for Patent Challenge
|
64
|
9.7.
|
|
Effect of Expiration or Termination of this Agreement
|
64
|
9.8.
|
|
Allergan Option to Continue In-Lieu of Termination
|
66
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9.9.
|
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Survival
|
66
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9.10.
|
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Effect of Termination on Sublicenses
|
67
|
|
|
|
|
ARTICLE 10
|
|
REPRESENTATION AND WARRANTIES
|
67
|
10.1.
|
|
Mutual Representations and Warranties
|
67
|
10.2.
|
|
Exicure’s Additional Representations and Warranties
|
68
|
10.3.
|
|
Mutual Covenants
|
70
|
10.4.
|
|
Additional Exicure Covenants
|
72
|
10.5.
|
|
Disclaimer
|
73
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|
|
|
|
ARTICLE 11
|
|
INDEMNIFICATION
|
73
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11.1.
|
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Exicure
|
73
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11.2.
|
|
Allergan
|
74
|
11.3.
|
|
Notice of Claim
|
75
|
11.4.
|
|
Indemnification Procedure
|
75
|
11.5.
|
|
Expenses
|
77
|
11.6.
|
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Insurance
|
77
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11.7.
|
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Consequential Damages
|
77
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|
|
|
|
ARTICLE 12
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|
MISCELLANEOUS
|
78
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12.1.
|
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Assignment
|
78
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12.2.
|
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Governing Law
|
78
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12.3.
|
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Dispute Resolution
|
78
|
12.4.
|
|
Force Majeure
|
79
|
12.5.
|
|
Expenses
|
79
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12.6.
|
|
No Agency
|
79
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12.7.
|
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No Third Party Beneficiaries
|
79
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12.8.
|
|
Entire Agreement; Amendment
|
80
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12.9.
|
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Severability
|
80
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12.10.
|
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Extension; Waiver
|
80
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12.11.
|
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Notices
|
80
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12.12.
|
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Further Assurances
|
81
|
12.13.
|
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No Strict Construction
|
81
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12.14.
|
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Headings
|
81
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12.15.
|
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Counterparts
|
81
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12.16.
|
|
Non-Exclusive Remedies
|
81
|
Timing of Option Exercise
|
Option Exercise Payment
|
During Initial Option Exercise Period
|
$10M
|
After expiration of Initial Option Exercise Period and during Extended Option Exercise Period
|
$15M
|
|
Development and Regulatory Milestone Event
|
Development and Regulatory Milestone Payment
|
1.
|
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7.
|
*****
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8.
|
*****
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|
Sales Milestone Event
|
Sales Milestone Payment
|
First Calendar Year in which aggregate global Net Sales of all Licensed Products arising out of or from the applicable Collaboration Program are greater than or equal to *****
|
*****
|
First Calendar Year in which aggregate global Net Sales of all Licensed Products arising out of or from the applicable Collaboration Program are greater than or equal to *****
|
*****
|
First Calendar Year in which aggregate global Net Sales of all Licensed Products arising out of or from the applicable Collaboration Program are greater than or equal to *****
|
*****
|
Net Sales Tranche
|
Royalty Rate
|
For that portion of aggregate global Net Sales of the applicable Licensed Product in any given Calendar Year of less than or equal to *****
|
*****
|
For that portion of aggregate global Net Sales of the applicable Licensed Product in any given Calendar Year of greater than ***** but less than or equal to *****
|
*****
|
For that portion of aggregate global Net Sales of the applicable Licensed Product in any given Calendar Year of greater than ***** but less than or equal to *****
|
*****
|
For that portion of aggregate global Net Sales of the applicable Licensed Product in any given Calendar Year of greater than ***** but less than or equal to *****
|
*****
|
For that portion of aggregate global Net Sales of the applicable Licensed Product in any given Calendar Year of greater than *****
|
*****
|
EXICURE, INC.
|
/s/ David A. Giljohann, Ph.D.
|
David A. Giljohann, Ph.D.
|
President and Chief Executive Officer
|
ALLERGAN PHARMACEUTICALS INTERNATIONAL LIMITED
|
/s/ Francis Bates
|
Francis Bates
|
Director
|
Collaboration Program
|
Targets
|
1
|
*****
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2
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Application Number
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Patent Number
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•
|
Exicure’s Chief Executive Officer or person having the equivalent position.
|
•
|
Exicure’s Chief Financial Officer or person having the equivalent position.
|
•
|
Exicure’s Chief Operating Officer or person having the equivalent position.
|
•
|
Allergan’s Global Chief Compliance Officer or person having the equivalent position.
|
•
|
Section 2.6, with respect to subcontractors of Allergan and its Affiliates
|
•
|
Section 2.7, with respect to sublicenses granted by Allergan or its Affiliates
|
•
|
Section 6.1
|
•
|
Sections 8.1 through 8.3, in the case of enforcement by Allergan or its Affiliates of any of the Patent Rights (as defined in the Northwestern 2011 Agreement) in accordance with this Agreement and the Northwestern Side Agreement
|
•
|
Section 2.6, with respect to subcontractors of Allergan and its Affiliates
|
•
|
Section 2.7, with respect to sublicenses granted by Allergan or its Affiliates
|
•
|
Section 6.1
|
•
|
Sections 8.1 through 8.3, in the case of enforcement by Allergan or its Affiliates of any of the Patent Rights (as defined in the Northwestern 2014 Agreement) in accordance with this Agreement and the Northwestern Side Agreement
|
•
|
Exicure to Receive $25 Million Upfront Payment and Up to $725 Million in potential Milestones
|
•
|
Exicure to Host Conference Call Today at 8:30am ET/7:30am CT
|
|
Investors:
Stern Investor Relations
|
Media:
MacDougall
Karen Sharma
781-235-3060
ksharma@macbiocom.com
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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
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David S. Snyder
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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
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President and Chief Executive Officer
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Chief Financial Officer
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This certification accompanies the Annual Report on Form 10-K, 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 Annual Report on Form 10-K), irrespective of any general incorporation language contained in such filing.
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