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GTx, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington,

WASHINGTON, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20182019

Commission File Number 000-50549

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromtoOncternal Therapeutics, Inc.

Commission file number 000-50549

GTx, Inc.
(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)Its Charter)

(901) 523-9700

(858) 434-1113

(Registrant's telephone number, including area code)Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes o☐    No ý☒.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes o☐    No ý☒.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý☒    No o☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ý☒    No o☐

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated filer," "smallerfiler”, “accelerated filer”, “smaller reporting company,"company”, and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o ☐

Indicate by check mark whether the registrant is a shell company (as defined inby Rule 12b-2 of the Exchange Act).      Yes o☐    No ý☒

         TheAs of June 30, 2019, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $62.4 million, based on the closing sales price of the registrant'sregistrant’s common stock on June 30, 2018 as reported on Thethe Nasdaq Capital Market was $189,830,468.on June 30, 2019 of $6.66 per share.

         There were 24,051,844The number of outstanding shares of registrant'sthe registrant’s common stock issued and outstanding as of March 12, 2019.

6, 2020 was 15,387,242.

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DOCUMENTS INCORPORATED BY REFERENCE

        Certain information required by Part III, Items 10-14Portions of this Form 10-K is incorporated by reference to the Registrant's definitive Proxy Statement for the 2019 Annual Meeting of StockholdersRegistrant’s proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the Registrant’s 2020 Annual Meeting of Stockholders, which will be filed subsequent to the date hereof, are incorporated by reference into Part III of this Form 10-K. Such proxy statement will be filed with the Securities and Exchange Commission not later than 120 days afterfollowing the end of the Registrant’s fiscal year covered by this Formended December 31, 2019.

Oncternal Therapeutics, Inc.

FORM 10-K provided that if such Proxy Statement is not filed within such period, such information will be included in an amendment to this Form 10-K to be filed within such 120-day period.

— ANNUAL REPORT

For the Fiscal Year Ended December 31, 2019

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
PART I

Forward-Looking Statements

This Annual Report on Form 10-K, contains forward-looking statements. The forward-looking statements are contained principally inor this Annual Report, including the sections entitled "Risk“Summary,” “Risk Factors," "Management's” “Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” and "Business." These“Business,” contains forward-looking statements. We may, in some cases, use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes, to identify these forward-looking statements. Any statements involve known and unknown risks, uncertainties and other factorscontained herein that are not statements of historical facts may cause our actual results, performance or achievementsbe deemed to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements in this Annual Report include, but are not limited to, statements about:

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our ability to satisfy the required conditionsobtain and otherwise completemaintain regulatory approvals for our planned merger, or the Merger, with Oncternal Therapeutics, Inc., or Oncternal, pursuant to the Agreement and Plan of Merger and Reorganization, dated March 6, 2019, or the Merger Agreement, by and among GTx, Grizzly Merger Sub, Inc., a wholly-owned subsidiary of GTx, and Oncternal, on a timely basis or at all;



•

product candidates;

the expected benefitstiming for achieving key milestones, including completing and potential value created byannouncing results of clinical trials of cirmtuzumab and TK216 and announcing the proposed Mergerfirst-in-human dosing of our Receptor tyrosine kinase-like Orphan Receptor 1, or ROR-1, chimeric antigen receptor T cell, CAR-T, product candidate currently in preclinical development;

the timing or likelihood of regulatory filings and approvals;

the estimated size of the patient population and anticipated market potential for our stockholders, including product candidates;

the ownership percentageimpact of products that compete with our stockholders in product candidates that are or may become available;

the combined organization immediately following the consummationsize and growth potential of the proposed Mergermarkets for our product candidates, and the potential value of the contingent value rights to be received by our stockholders in connection with the proposed Merger if it is completed;



•

the implementation of our business strategies, including our ability to preserve or realize any significant value from our selective androgen receptor degrader, or SARD, program and our selective androgen receptor modulators, or SARMs;



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our expectations regarding the near-term development of our SARD program, including serve those markets;

our ability to advance a SARD compound into a first-in-human clinical trial;



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obtain and maintain favorable regulatory designations for our product candidates and preclinical programs;

the therapeutic and commercial potentialscope of our SARD program;



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our abilityprotection we are able to establish and maintain potential new collaborative, partnering or other strategic arrangements for the development ofintellectual property rights covering our SARD program;



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product candidates and our ability to establish and maintain potential new collaborative, partnering or other strategic arrangements for our SARM assets, including a sale or other divestiture of our SARM assets;



•

our ability to raise additional capital, whether through potential new collaborative, partnering or other strategic arrangements or otherwise;



•

our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;



•

our projected operating

the plans and financial performance;objectives of management for future operations and



•

future results of anticipated products; and

our estimates regarding the sufficiency of our cash resources and our expenses, including those related to the consummation of the proposed Merger, capital requirements and needsneed for additional financing, and our ability to obtain additional financing and to continue as a going concern if the Merger is not completed.

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        In some cases, you can identifyThese forward-looking statements by terms such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "should," "will," "would," and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our currentmanagement’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this Annual Report and are subject to risks uncertainties and other important factors.uncertainties. We discuss many of these risks in this Annual Report on Form 10-K in greater detail under “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the section entitled "Risk Factors" under Part I, Item 1A below.impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these risks, uncertainties, and other important factors, you should not place undue reliance on these forward-looking statements. Also,

We qualify all of the forward-looking statements represent our estimates and assumptions only as of the date ofin this Annual Report on Form 10-K. You should read this Annual Report on Form 10-K and the documents that we incorporate by reference in and have filed as exhibits to this Annual Report on Form 10-K, completely and with the understanding that our actual future results may be materially different from what we expect.

these cautionary statements. Except as required by law, we assumeundertake no obligation to publicly update any forward-looking statements, publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even ifwhether as a result of new information, becomes availablefuture events or otherwise.

Overview

Oncternal Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on the development of novel oncology therapies for cancers with critical unmet medical need. Our development efforts are focused on promising, yet untapped, biological pathways implicated in cancer generation or progression. Our pipeline includes cirmtuzumab, an investigational monoclonal antibody that is designed to inhibit Receptor tyrosine kinase-like Orphan Receptor 1, or ROR1, a growth factor receptor that is widely expressed on many tumors and that activates pathways leading to increased tumor proliferation, invasiveness and drug resistance. Cirmtuzumab is being evaluated in a Phase 1/2 clinical trial in combination with ibrutinib (Imbruvica^®) for the treatment of patients with B-cell lymphoid malignancies, including mantle cell lymphoma, or MCL, and chronic lymphocytic leukemia, or CLL, and in an investigator-sponsored, Phase 1b clinical trial in combination with paclitaxel for the treatment of women with HER2-negative metastatic or locally advanced, unresectable breast cancer. We are also developing TK216, an investigational small molecule that is designed to inhibit the ETS, or E26 Transformation Specific, family of oncoproteins, which have been shown in preclinical studies to alter gene transcription and RNA processing and lead to increased cell proliferation and invasion. TK216 is being evaluated in a Phase 1 clinical trial as a single agent and in combination with vincristine in patients with relapsed or refractory Ewing sarcoma, a rare pediatric cancer. In addition, we are developing a chimeric antigen receptor T cell, or CAR-T, therapy candidate that targets ROR1, which is currently in preclinical development as a potential treatment for hematologic cancers and solid tumors.

Cirmtuzumab is an investigational, humanized, potentially first-in-class, anti-ROR1 monoclonal antibody that is designed to bind to a specific functionally important epitope of ROR1, which is a protein expressed on many tumors. ROR1 is a potentially attractive target for cancer therapy because it is an onco-embryonic antigen, which is a protein typically expressed only during embryogenesis that may confer a survival and fitness advantage when reactivated and expressed by tumor cells. ROR1 overexpression in various tumor types, including MCL, CLL and breast cancer, has been associated with more aggressive disease, resistance to therapy and shorter progression-free and overall survival. In preclinical models, inhibition of ROR1 has shown anti-tumor activity, and we believe may have additive or synergistic effects when combined with either targeted therapy or chemotherapy. Preclinical data indicated that when cirmtuzumab bound to ROR1, it blocked growth factor Wnt5a signaling, inhibited tumor cell proliferation, migration and survival, and induced differentiation of CLL tumor cells. Cirmtuzumab was developed in the future.laboratory of one of our scientific advisors, Professor Thomas Kipps, M.D., Ph.D., Professor of Medicine and Evelyn and Edwin Tasch Chair in Cancer Research at the University of California San Diego, or UC San Diego, with support from the California Institute for Regenerative Medicine, or CIRM. We have an exclusive license to cirmtuzumab for therapeutic uses from UC San Diego.

We have completed a Phase 1 study of single-agent cirmtuzumab in patients with CLL and have completed enrollment of dose-finding and expansion cohorts of a Phase 1/2 clinical study of cirmtuzumab in combination with ibrutinib in patients with CLL, as well as a dose-finding cohort of cirmtuzumab in combination with ibrutinib in patients with MCL. We are currently enrolling a Phase 1b clinical trial of cirmtuzumab in combination with ibrutinib in patients with MCL and a randomized Phase 2 clinical trial in patients with CLL. Cirmtuzumab is also being evaluated in an investigator-sponsored, Phase 1b clinical trial in combination with paclitaxel in patients with HER2 negative breast cancer. In addition, based on the high levels of ROR1 expression in multiple tumors and the importance of ROR1 for tumor proliferation and metastases, we believe that cirmtuzumab has potential as a therapeutic agent in other solid tumors and hematologic malignancies with high unmet medical need.

TK216 is an investigational, potentially first-in-class, targeted small molecule that is designed to specifically inhibit the biological activity of the ETS family of oncoproteins. Tumorigenic gene fusions involving ETS factors are frequently found in tumors such as Ewing sarcoma and prostate cancer, and ETS factors are often overexpressed in other tumors, such as acute myeloid leukemia, or AML, and diffuse large B cell lymphoma, or DLBCL. Researchers in the laboratory of Professor Jeffrey Toretsky, M.D., at Georgetown Lombardi Comprehensive Cancer Center, identified the precursor to TK216 using a novel chemical screening assay they developed based on a deep understanding of the underlying biological mechanism of ETS factors. Following this early work, TK216, which is designed to be a specific inhibitor of ETS factors, was created by us through the rational design and screening of novel small molecule inhibitors of a critical protein-protein interaction. In preclinical models, TK216 inhibited the interaction between ETS family members and RNA helicase A, or RHA, and by doing so, shut down excessive cell proliferation. We own intellectual property related to TK216 and have an exclusive license to product candidates targeting ETS oncoproteins for therapeutic, diagnostic or research tool purposes from Georgetown University.

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PART I

ITEM 1.              BUSINESS

Overview

We are evaluating TK216, as a biopharmaceutical company dedicatedsingle agent and in combination with vincristine, in a Phase 1 clinical trial in patients with relapsed or refractory Ewing sarcoma. The dose-finding portion of the study was completed in 2019, and we are enrolling patients in an expansion cohort to evaluate the discovery, development and commercializationclinical response of medicinestreatment with TK216 in combination with vincristine using the recommended Phase 2 dosing regimen. Ewing sarcoma is a rare pediatric cancer that has historically been very challenging to treat serious and/effectively, particularly for recurrent and metastatic disease. ETS fusion proteins have been shown to be present in over 90% of Ewing sarcoma cases. TK216 has received an Orphan Drug Designation and Fast Track Designation from the U.S. Food and Drug Administration, or FDA, for the treatment of patients with relapsed or refractory Ewing sarcoma.

We are also developing a ROR1-targeted CAR-T therapy based on the binding domain of cirmtuzumab as a single-chain fragment variable, or scFv, as a potential treatment for patients with aggressive hematological malignancies or solid tumors.  Because the epitope of ROR1 recognized by cirmtuzumab has appeared to be restricted to tumor cells in preclinical studies, we believe that a cirmtuzumab-based CAR-T may be selective in distinguishing cancer from normal tissues.  Our ROR1-targeted CAR-T therapy candidate is in preclinical development in collaboration with UC San Diego, supported by funding from CIRM, and with Shanghai Pharmaceuticals Holding Co., Ltd., or SPH, in China.

We have assembled a management team, board of directors and scientific founders who have significant experience in successfully developing and commercializing therapeutics in oncology and orphan diseases, having worked or served on the Board of companies such as Amgen, Inc., Bavarian Nordic, Inc. (lead cancer asset acquired by Bristol Meyers Squibb Company), Cadence Pharmaceuticals, Inc.(acquired by Mallinckrodt plc), Dynavax Technologies Corporation, Elan Corporation (acquired by Perrigo), Eli Lilly and Co., Genzyme Corporation (acquired by Sanofi S.A.), Gilead Sciences, Inc., Halozyme Therapeutics, Inc., Ignyta, Inc. (acquired by Roche Holding AG), Immune Design Corporation (acquired by Merck Co., Inc.), Janssen Pharmaceuticals, Inc., Merck & Co., Inc., Micromet, Inc. (acquired by Amgen, Inc.), Pfizer, Inc., Roche Holding AG, Sorrento Therapeutics, Inc., and Zavante Therapeutics, Inc. (acquired by Nabriva Therapeutics plc).

Our strategy

Our mission is to build a leading oncology company that creates novel and transformative treatments for a wide range of oncology indications for which there are significant unmet medical conditions. Underneeds. We believe our investigational agents target novel cancer pathways and have unique mechanisms of action. Our current pipeline is derived from our ability to identify therapeutic candidates that have generated promising, late-stage preclinical results or early clinical data, and in-license them for further development. We are particularly focused on therapeutic approaches for which there is a genetic or protein biomarker that can be used to identify populations of patients most likely to respond. We prioritize targets that we believe have the potential to transform the treatment paradigm of difficult-to-treat cancers with either single agent or combination therapy. As is the case for many oncology products, we believe that potential efficacy in one indication suggests the potential for application in other indications that carry the same target.

Key elements of our strategy are as follows:

Pipeline

The following figure summarizes our current programs:

Cirmtuzumab - monoclonal antibody targeting ROR1

Cirmtuzumab is an investigational, humanized, potentially first-in-class, anti-ROR1 monoclonal antibody that was designed to bind to a specific functionally important epitope of ROR1, which is a protein expressed on many tumors. ROR1 is a potentially attractive target for cancer therapy because it is an onco-embryonic antigen, which is a protein typically expressed only during embryogenesis that may confer a survival and fitness advantage when reactivated and expressed by tumor cells. ROR1 is over-expressed in many different cancers, including MCL, CLL and breast cancer, and has been reported to be associated with more aggressive disease, resistance to therapy and shorter progression-free and overall survival. In preclinical models, inhibition of ROR1 has shown anti-tumor activity and we believe may have additive or synergistic effects when combined with other agents.Preclinical data demonstrated that when cirmtuzumab bound to ROR1, it blocked Wnt5a signaling, inhibited tumor cell proliferation, migration and survival, and induced differentiation of CLL tumor cells. In preclinical models, cirmtuzumab showed synergy with both targeted therapy (e.g., ibrutinib and venetoclax (Venclexta^®) in CLL models) and chemotherapy (e.g., paclitaxel in breast cancer models).

Cirmtuzumab was developed in the laboratory of one of our scientific advisors, Thomas Kipps, M.D., Ph.D., Professor of Medicine and Evelyn and Edwin Tasch Chair in Cancer Research at UC San Diego with support from CIRM. We have an exclusive, worldwide license to cirmtuzumab for therapeutic uses from UC San Diego.

A Phase 1 study of single agent cirmtuzumab in patients with CLL was completed at UCSD, and a Phase 1/2 clinical study of cirmtuzumab in combination with ibrutinib in patients with MCL and CLL is ongoing. The combination therapy study was designed to evaluate the safety of cirmtuzumab plus ibrutinib, determine a recommended dosing regimen, and evaluate efficacy in a randomized comparison study. Based on completed cohorts of the study, a recommended dosing regimen was chosen and the randomized portion of the study, comparing ibrutinib alone to cirmtuzumab plus ibrutinib in patients with CLL, is now enrolling. Similarly, a recommended dose regimen has been chosen for patients with MCL and enrollment in an expansion arm of the study is ongoing. Cirmtuzumab is also being evaluated in an investigator-sponsored, Phase 1b clinical trial in combination with paclitaxel in patients with HER2 negative metastatic or locally advanced, unresectable breast cancer. In addition, high levels of ROR1 expression have been reported in multiple additional cancers, and this expression appears to be a driver for tumor proliferation and metastases. As a result, we believe that cirmtuzumab has potential as a therapeutic agent in other solid tumors and hematologic malignancies with high unmet medical need.

Cirmtuzumab scientific background: inhibition of ROR1 as a therapeutic strategy in cancer

ROR1 is an onco-embryonic protein essential for normal fetal development that is suppressed in adults unless reactivated as a survival factor by many different cancers. The switching-on of ROR1 is consistent with a typical pattern in cancer, in which normal cells lose their highly differentiated functions and return to a more primal state, where they exhibit a greatly increased capacity for invasion, metastasis and resistance to treatment. This de-differentiation activates a number of genes normally restricted to fetal development, one of which is ROR1. Cancer cells with the highest potential for self-renewal are sometimes referred to as tumor-initiating cells or cancer stem cells and are capable of invading other tissues or metastasizing to disseminate tumors to distant sites in the body. These tumor-initiating cells are also the cells that have been found to be the most resistant to current therapies including chemotherapy and radiation therapy. Expression of ROR1 in ovarian cancer, for example, appears highest in a subpopulation of tumor cells that also have other markers of cancer stem cells. Cells that overexpress ROR1 show increased survival, migration, and resistance to chemotherapy.

Over-expression of ROR1 has been reported in multiple hematological and solid tumor types. Histological staining of over 350 human tumor samples identified that a majority expressed ROR1, including 90% or more of uterine cancers, lymphomas, and prostate cancers.

High ROR1 expression on patients’ tumor cells in a variety of cancers is associated with early relapse after therapy or the development of metastases. ROR1 expression levels on patients’ tumor cells is substantially higher in cancers that are more advanced and that contain poorly differentiated cells. Whereas Grade 1 or 2 ovarian tumors have been found to be 21% positive for ROR1, Grade 3 or 4 tumors have been found to be 62% positive for ROR1. Similar patterns in the percentage of ROR1-positive tumors were seen in pancreatic cancers, with 54% of Grade 1 or 2 tumors and 100% of Grade 3 or 4 tumors testing positive for ROR1 by immunohistochemistry. High expression of ROR1 has been associated with more aggressive disease and shorter patient survival in multiple tumor types, including CLL, breast cancer and ovarian cancer. High expression of ROR1 has also been associated with resistance to targeted therapy and chemotherapy.

Inhibition of ROR1 signaling or silencing ROR1 in multiple preclinical cancer models, including breast cancer, ovarian cancer, and glioblastoma, and was associated with suppressing the expression of genes characteristic of tumor-initiating cells, and with repression of cancer migration and metastasis. Preclinical models have also demonstrated that inhibition of ROR1, and blocking of Wnt5a signaling, inhibited tumor cell proliferation, migration and survival, and induced differentiation of the tumor cells – resulting in fewer metastases and improved survival.

Inhibition of ROR1 has been demonstrated in preclinical models to be additive to, or synergistic with, chemotherapy agents such as paclitaxel, and with targeted therapy agents such as ibrutinib and venetoclax. In addition, inhibition of ROR1 has been shown to enhance sensitivity of cancer cells to targeted therapy with agents such as erlotinib and may increase apoptosis and decrease proliferation.

In summary, we believe that ROR1 is an attractive therapeutic target in oncology for several reasons:

Cirmtuzumab development in Mantle Cell Lymphoma and Chronic Lymphocytic Leukemia

MCL disease overview

MCL is an aggressive form of non-Hodgkin’s lymphoma. There are approximately 4,200 new cases of MCL each year in the United States, with the average age at diagnosis in the mid-60s. MCL is an aggressive lymphoma and carries a poor prognosis, with a median survival of about two to five years. The 10-year survival rate is only approximately 5%-10%.

While there are several therapeutic options available to treat patients with relapsed or refractory MCL, none of these options offers long-term benefit, with most patients relapsing in less than 20 months. In an open-label Phase 2 clinical trial, ibrutinib (Imbruvica^®), a BTK inhibitor that is approved by the FDA for the treatment of patients with relapsed MCL, demonstrated an overall response rate, or ORR, of 67% and a complete response, or CR, rate of 23%, with a median duration of response, or DoR, of 17.5 months, median progression-free survival, or PFS, of 13 months and median overall survival, or OS, of 22.5 months. In an open-label Phase 2 clinical trial, acalabrutinib (Calquence^®), another BTK inhibitor approved by the FDA for the treatment of patients with relapsed MCL, demonstrated an ORR of 80% and CR rate of 40%. Another BTK inhibitor approved in 2019, zanubrutinib (Brukinsa^®), demonstrated an ORR of 84% and CR rate of 59%, with a median DoR of 19.5 months in an open-label Phase 2 clinical trial. These therapies are given continuously for prolonged periods of time, and their use can be associated with significant toxicity. The majority of patients with MCL are older, and remissions are not durable for most patients treated with continuous ibrutinib therapy. As a result, we believe that more effective and better tolerated therapies with shorter treatment periods represent a significant unmet need.

CLL disease overview

CLL is the most common form of leukemia in adults, accounting for 25-30% of all leukemias in the United States. An estimated 20,720 new cases of CLL were expected to occur in the United States in 2019, and in 2016 the prevalence of CLL in the United States was estimated to be 178,000 patients. CLL is primarily a disease of older adults. The median age at diagnosis is 71 years of age. Most patients are diagnosed as a result of routine blood work when elevated levels of lymphocytes are detected.

Significant progress has been made in the treatment of CLL since the advent of targeted therapies and FDA approval of ibrutinib for CLL in 2014. A treatment paradigm shift has taken place, from chemotherapies to targeted therapies. Three classes of targeted therapies have been approved for the treatment of patients with CLL: inhibitors of Bruton’s tyrosine kinase, or BTK, a key component of cell signaling in B-cells, such as ibrutinib, which is marketed as Imbruvica^® by AbbVie, Inc., and Johnson & Johnson, and acalabrutinib, which is marketed as Calquence^® by AstraZeneca PLC; inhibitors of the protein B-cell lymphoma-2, or Bcl-2, such as venetoclax, which is marketed as Venclexta^® and Venclyxto^® by AbbVie, Inc., and Roche/Genentech; and inhibitors of Phosphoinositide 3-kinase, or PI3K, which include idelalisib, which is marketed as Zydelig^® by Gilead Sciences, Inc., and duvelisib, which is marketed as Copiktra^® by Verastem, Inc.. These targeted therapies are now the core of the recommended treatment regimens for patients with both first-line and relapsed or refractory CLL, and have achieved objective response rates of 85-90%, two-year PFS of 65-90%, and two-year overall survival of 75-95%. The outcomes are worse for patients with certain prognostic factors, such as 17p or 11q chromosome deletions; for such patients with relapsed or refractory CLL treated with ibrutinib, the reported PFS is 50-75%. While CLL is treatable, it generally remains incurable, and patients with CLL will generally experience a recurrence of their cancer.

While these new targeted therapies improve outcomes for patients with CLL, only a limited number of patients achieve a CR. The proportion of patients with treatment-naïve or relapsed or refractory CLL who achieve a CR when treated with single-agent ibrutinib after twelve months of therapy is below 10%. The trade-off of these new and more effective targeted therapies is the paradigm of continuous treatment required for BTK inhibitors, resulting in accumulating costs and toxicities. Adverse events have been shown in a real-world analysis to limit ibrutinib treatment duration for almost half of all patients.

We believe that the next goals for CLL therapies will be to achieve deeper anti-tumor responses and more complete remissions, and to progress towards achieving the ultimate goal of developing a cure, while maintaining an acceptable safety profile. An acceptable safety profile may be particularly important for patients with CLL who are older (the median age at diagnosis is 71) and have multiple co-morbidities.

The market for CLL therapies in the United States, France, Germany, Italy, Spain, the UK, and Canada is estimated to be approximately $8 billion, largely driven by recently approved therapies, including ibrutinib, venetoclax, and idelalisib. We believe that CLL represents an attractive clinical and commercial opportunity for cirmtuzumab.

Cirmtuzumab preclinical data in CLL and MCL

Cirmtuzumab is an investigational, humanized monoclonal antibody that was designed to bind to a specific epitope of ROR1. The ligand for ROR1 in hematologic malignancies is Wnt5a, a secreted glycoprotein that has a critical role in embryonic and fetal development. Researchers at the UC San Diego School of Medicine discovered that targeting a critical epitope on ROR1 was key to inhibiting Wnt5a activation, specifically targeting ROR1 expressing tumors. This led to the development of cirmtuzumab, which binds this critical epitope of ROR1. Unlike antibodies that bind to other epitopes of ROR1, cirmtuzumab was not observed to bind to normal adult tissues in a GLP tissue cross-reactivity study.

Wnt5a controls the ability of cancer stem cells to self-renew and regulates cell migration and adhesion. Cancer patients whose tumors have high levels of Wnt5a have a lower probability of long-term survival than patients with low Wnt5a levels, analogous to the situation for patients whose tumors express more ROR1. In tumor models derived from primary human tumors, such as glioblastoma, overexpression of Wnt5a has been associated with tumors with more rapid growth that have increased invasiveness into other tissues. Similarly, cells from human melanoma that were engineered to overexpress Wnt5a have shown increased motility and invasiveness.

Figure 1. Cirmtuzumab blocked activation of ROR1 by Wnt5a in CLL cells, preventing a cascade of intracellular signaling events that leads to expression of genes associated with dedifferentiated stem cells.

Studies in mice have shown that ROR1 expression on the tumor cells accelerated the development and progression of leukemia in models of CLL and that Wnt5a enhanced CLL cell viability, migration and proliferation in a ROR1-dependent manner.

Patients with high levels of ROR1 on their CLL cells have more aggressive disease and have a significant reduction in survival: patients with CLL having high ROR1 expression have an approximately 50% survival rate at twenty years compared to an 80% survival rate for those with low ROR1 expression.

Figure 2. Patients with CLL having high levels of ROR1 expression had lower overall survival than those with low levels of ROR1.

In vivo studies conducted in mouse CLL models have shown that ibrutinib and cirmtuzumab exerted antitumor activities through independent pathways; that is, inhibition of BTK by ibrutinib did not alter ROR1 signaling nor did it impair the rate at which cirmtuzumab blocked ROR1 signaling. The combination of both drugs reduced the size of the spleen, the primary site of leukemic disease in these mice, as well as the number of CLL cells in these spleens. Further preclinical studies suggested that cirmtuzumab was synergistic with venetoclax in vitro.

Figure 3. Combined administration of cirmtuzumab and ibrutinib reduced leukemic cell count in the spleen in a mouse model of CLL.

An analysis of patient samples indicated that ROR1 is highly and uniformly expressed on MCL cells but not on cells from multiple myeloma or follicular lymphoma patients.

Figure 4: Analysis of cell lines and clinical samples from MCL, multiple myeloma and follicular lymphoma patients indicate that ROR1 is uniformly expressed on MCL patient cells.

The presence of ROR1 on MCL patient cells was confirmed by another analysis evaluating the expression of ROR1 using clinical samples from 21 patients with MCL. These data indicated that ROR1 was expressed by a very high percentage of the analyzed patient cells.

Figure 5. ROR1 is expressed on most MCL cells in most MCL patient samples.

Furthermore, an analysis of MCL and CLL patient samples has shown that ROR1 surface expression, as well as secreted Wnt5a levels, were comparable between patients with MCL and CLL.

Figure 6: Analyses of samples from patients with CLL and MCL indicated that surface ROR1 expression levels as well as serum Wnt5a concentrations were similar.

In preclinical studies with cirmtuzumab, it has been demonstrated that the treatment of MCL patient cells with a combination of cirmtuzumab and ibrutinib led to reduced MCL cell proliferation.

Figure 7. Cirmtuzumab inhibited Wnt5a-enhanced proliferation in ibrutinib-treated MCL Cells.

Lastly, in a published study using a research reagent anti-ROR1 antibody it was shown that pretreatment with an anti-ROR1 mAb and subsequent combination with a BCL2 inhibitor (venetoclax or navitoclax) led to an increase in anti-cancer activity against MCL cell lines as well as in several MCL patient samples tested with the combination therapy compared to the single agents.

Figure 8. Percentage of cell viability (compared with controls) of untreated or treated cells with anti-ROR1 for 24 hours followed by addition of indicated drugs for 24 hours.

Cirmtuzumab clinical development in MCL and CLL

Cirmtuzumab Phase 1 clinical trial in patients with CLL

A Phase 1 dose escalation clinical trial of cirmtuzumab, which was funded jointly by us, CIRM, and others, was conducted in 26 patients with actively progressing CLL who had relapsed or refractory disease. Patients received four doses of cirmtuzumab administered every two weeks in cohorts of three, with each patient receiving escalating doses from 0.15 to 20 mg/kg/dose. Cirmtuzumab infusions were generally well tolerated. There were no dose-limiting toxicities, no serious adverse events, and no discontinuations related to adverse events. The main laboratory findings included anemia, thrombocytopenia and neutropenia, which were primarily attributed to the underlying CLL. Pharmacokinetic data showed a plasma half-life of approximately 32 days following four doses of cirmtuzumab at 16 mg/kg. In this clinical trial, 22 patients were evaluable for response assessment; four patients who discontinued cirmtuzumab early without meeting criteria for progressive disease were not considered evaluable. No patients met criteria for complete or partial remission following this brief treatment. Seventeen of 22 evaluable patients had stable disease. Five patients had progressive disease. Most patients experienced reductions in their leukemic lymphocyte counts and were able to delay initiation of further treatments for an average of 262 days, at which point plasma levels of cirmtuzumab were undetectable. Although cirmtuzumab therapy was limited to four doses, one patient who received cirmtuzumab at 20 mg/kg had a greater than 50% reduction in lymphadenopathy. Analysis of blood samples from these patients showed significantly higher plasma levels of Wnt5a compared to healthy matched controls. Patients also had high levels of expression of ROR1 on their CLL cells. Patients receiving doses of cirmtuzumab of 2 mg/kg or greater had a 33% reduction in ROR1 expression on their CLL cells relative to their baseline. In addition, when compared to baseline, cells from cirmtuzumab treated patients showed a reversal in the enrichment for genes that were identified as being the most highly correlated with stem cells and oncogenic de-differentiation. These results were consistent with other preclinical observations that cirmtuzumab induced ROR1 inhibition drove cells away from a stem-cell-like profile.

Cirmtuzumab Phase 1/2 clinical trial in combination with ibrutinib in patients with MCL and CLL (CIRLL)

We and UC San Diego, with major funding from CIRM and a donation of ibrutinib product from Pharmacyclics LLC, are conducting a Phase 1/2 trial of cirmtuzumab in combination with ibrutinib in patients with treatment-naïve or relapsed or refractory CLL and previously treated patients with MCL (Cirmtuzumab and Ibrutinib targeting ROR1 for Leukemia and Lymphoma, or CIRLL). Despite its efficacy in extending progression-free survival, ibrutinib does not provide complete tumor responses for the majority of patients even after prolonged dosing. Therefore, we believe there is potential to improve efficacy and overall outcomes by combining ibrutinib with cirmtuzumab. This clinical trial was designed to evaluate the safety, pharmacokinetics, pharmacodynamics, immunogenicity, and antitumor activity of cirmtuzumab in combination with ibrutinib in adult subjects with adequate performance status and organ function. The study has three parts:  

We have completed enrollment of patients with CLL in Parts 1 and 2, and those patients are completing therapy or are in long-term follow-up. Following an evaluation of safety and PK data from Part 1, the recommended dose regimen, or RDR, of cirmtuzumab for Part 2 was determined to be 600 mg of cirmtuzumab administered intravenously every two weeks for three doses, followed by dosing every four weeks until disease progression or intolerance develop. This cirmtuzumab regimen was designed and chosen to be used in combination with 420 mg of ibrutinib administered once daily for patients with CLL, or 560 mg of ibrutinib once daily for patients with MCL, which are the FDA-approved doses of ibrutinib in these indications. In August 2019, we opened enrollment in Part 3, which is a randomized Phase 2 study in patients with CLL, and in October 2019, we opened enrollment in the Part 2 expansion cohort of this clinical trial for patients with MCL.  In mid-2020, we expect to announce additional data from this study of patients with CLL, including 12-month follow-up data for 34 patients enrolled in Parts 1 and 2 of the study.

Cirmtuzumab CIRLL clinical trial Part 1 interim data in MCL

Twelve patients with relapsed or refractory MCL were enrolled in the dose-finding cohort of this clinical trial. Patients had received a median of two prior therapies before participating in this study. As of the data cut-off on March 6, 2020, at a median follow-up of 6.4 months, the complete response rate was 50% (6 of 12), with an additional 33% achieving a PR (4 of 12) and 17% with stable disease (2 of 12), for a best ORR of 83% and clinical benefit rate of 100%. Of the six patients who achieved CRs, most did so within three to four months on the combination of cirmtuzumab and ibrutinib. All six patients who achieved CRs were heavily pre-treated. These patients had received, prior to participating in this clinical trial, chemotherapy and additional therapies including an autologous stem cell transplant (SCT); autologous SCT and CAR-T therapy; autologous SCT and allogeneic SCT; and ibrutinib with rituximab. As of March 6, 2020, all six CRs were ongoing and one patient had remained in CR at over 21 months on study.

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Figure 9. Best tumor response over time in the MCL cohort of 9 patients, based on investigator assessments, in Phase 1/2 clinical trial of cirmtuzumab in combination with ibrutinib as of March 6, 2020.

a. Prior ibrutinib/rituximab (7-10 months), R-HyperCVAD. b. Prior chemo, auto-stem cell transplant (SCT). c. Prior chemo, auto-SCT, CAR-T. d. Prior chemo, auto-SCT, allo-SCT.

Cirmtuzumab CIRLL clinical trial Part 1 and 2 interim data in CLL

Thirty-four patients with CLL who had never been treated with a BTK inhibitor were enrolled in the dose-finding and dose-expansion cohorts of this clinical trial, including 12 treatment-naïve and 22 relapsed/refractory patients. Patients with relapsed/refractory CLL had received a median of two prior therapies before participating in this clinical trial. As of the data cut-off on January 29, 2020, at a median follow-up of 9.9 months, 30 of the 34 patients achieved a response, for a best ORR of 88%.  One patient achieved a CR and remained in remission six months after completion of the trial, without receiving any further anti-CLL therapy. In addition, three patients met radiographic and hematologic response criteria for Clinical CR, pending completion and evaluation of bone marrow biopsies. An additional four patients had stable disease, for a total clinical benefit rate of 100%. One patient was discontinued from the study after missing treatment and later passed away due to unrelated medical issues. None of the patients progressed or died while participating in the study, for a progression-free survival, or PFS, of 100%. As of an early November 2019 data cut-off, the rise in leukemic cell counts that is typically seen in the first six months with ibrutinib monotherapy was blunted with the cirmtuzumab plus ibrutinib combination, and leukemic cell counts returned toward baseline and normal levels rapidly.

Figure 10. Best tumor response over time in the CLL cohort of 34 patients, based on investigator assessments, in Phase 1/2 clinical trial of cirmtuzumab in combination with ibrutinib, as of January 29, 2020.

* HR = known high risk factors: unmutated IgVH, del 17p/ TP53, and/or deletion 11q; ** Sustained CR for 6+ months on no CLL therapy

Genetic analysis of CLL cells from three patients showed pre-treatment transcriptome profiles associated with a stemness signature and NF-kB-driven inflammation. Both genetic signatures were reversed in these patients following cirmtuzumab treatment.

Figure 11. Reversal of NF-kB target genes and cancer-cell-stemness transcriptome signature observed in three patients with CLL in Phase 1/2 clinical trial of cirmtuzumab in combination with ibrutinib, as of November 2019.

In Part 3 of this trial, which is currently enrolling patients, up to 90 additional patients with CLL will be randomized 2:1 to receive cirmtuzumab plus ibrutinib or ibrutinib alone. The primary endpoint of Part 3 is to determine the CR rate, with a secondary endpoint of PFS. The data emerging from this trial will be used to determine our regulatory strategy, including whether we will plan to seek regulatory approval through standard review or an accelerated approval pathway. This trial is co-sponsored by UC San Diego with support from CIRM.

Cirmtuzumab as a single agent has been well tolerated in the CIRLL study. The combination of cirmtuzumab plus ibrutinib has also been well tolerated, with adverse events consistent with those reported for ibrutinib alone. As of the January 29, 2020, cut-off date, there were no dose limiting toxicities, no discontinuations and no serious adverse events attributed to cirmtuzumab alone. The rate of neutropenia, which is a common hematological side effect reported for ibrutinib in patients with CLL or MCL, was only 13% for ibrutinib plus cirmtuzumab (Grade 3-4 neutropenia of 8.7%).  In mid-2020, we expect to announce additional data from this study of patients with MCL, including follow-up data for 12 patients enrolled in Part 1 of the study.

Cirmtuzumab development in breast cancer

Breast cancer disease overview

Breast cancer is the most common type of invasive cancer among women and the second leading cause of cancer deaths among women. There are approximately 266,000 new diagnoses and 41,000 breast cancer deaths in the United States each year, and 12.4% of women will develop breast cancer in their lifetime. The Centers for Disease Control and Prevention, or CDC, estimates that there are approximately one million women in the United States living with breast cancer that has been diagnosed within the past five years.

Breast cancers can be segregated into subtypes based upon the presence of three protein receptors: estrogen receptor (“ER”), progesterone receptor (“PR”) and humanepidermal growthfactorreceptor2 (“HER2”). Therapies have been developed that target tumors containing one or more of these receptors. Approximately 10% to 15% of breast cancers, however, do not express any of these three receptors and are referred to as triple-negative breast cancers, or TNBC. These tumors have a more aggressive phenotype and a poorer prognosis due to the high propensity for metastatic progression and absence of specific targeted treatments. The five-year survival rate for patients with breast cancer other than TNBC has been reported to be 80.8%, but only 62.1% for patients with TNBC. One hypothesis for the high rate of metastasis and poor response to chemotherapy for patients with TNBC is that these tumors contain a high number of tumor-initiating cells, or cancer stem cells, that are highly migratory and insensitive to standard chemotherapy. Treatment options for TNBC are limited and include chemotherapy, targeted therapy (such as PARP inhibitors), surgery, radiation, and immunotherapy. Additional targeted and immuno-therapeutic approaches are in clinical development.

ROR1 Expression and Historical Clinical Outcomes in Patients with Breast Cancer

Approximately 75% of breast tumors have been shown to express ROR1. In a retrospective analysis, patients with TNBC with high levels of ROR1 were found to have a significantly reduced disease-free survival (p< 0.00015) as well as overall survival (p<0.026) compared to patients with low ROR1 levels.

Figure 12. TNBC patients with high levels of ROR1 expression had lower disease-free survival.

Another retrospective, long-term analysis that included all breast cancer types showed that patients with tumors expressing high levels of ROR1 were at a statistically significantly higher risk of developing metastases within the first several years. Over 60% of patients with high ROR1 developed metastases, compared to only 35% of patients with the lowest levels of ROR1.

Figure 13. High levels of ROR1 in breast cancer was associated with shorter metastasis-free survival.

Preclinical experiments have shown that treatment of breast tumors with paclitaxel increased the percentage of cells with high levels of ROR1. In these experiments, immunodeficient mice were implanted with patient-derived xenografts, or PDX, then were treated with paclitaxel. While paclitaxel either slowed tumor growth or reduced the size of tumors in these mice, the surviving cells were enriched for expression of ROR1. This increased expression of ROR1 was also associated with a shift in the properties of cells from these tumors towards a more metastatic and more tumorigenic phenotype. Cells from tumors that had been treated with paclitaxel were more likely to form spheroids in tissue culture and were enriched for cells with the ability to form new tumors when transplanted, both properties that are correlated with tumor aggressiveness.

Together, these clinical and preclinical data are consistent with a model of the natural disease progression in breast cancer centered on the critical role played by tumor-initiating cells or stem-like cancer cells that express high levels of ROR1:

Preclinical experiments in an MDA-MD-231 TNBC model in mice provided evidence that reduction in ROR1 expression levels can limit metastases and improve overall survival. In that model, ROR1 levels were selectively reduced using a genetic construct that delivers a short-hairpin RNA, or shRNA, that is designed to prevent ROR1 protein from being produced. Inhibition of ROR1 production resulted in significantly fewer cancer cells that have metastasized to the lungs.

Figure 14. Suppression of ROR1 led to fewer metastases to the lungs in an MDA-MD-231 model TNBC model.

Inhibition of ROR1 production in these mice also improved overall survival to a mean of approximately 43 days compared to 30 days for mice containing control shRNA.

Figure 15. Inhibition of ROR1 expression led to improved survival in an MDA-MD-231 TNBC model.

In a preclinical model, cirmtuzumab reduced the growth rate of primary human breast cancers in immunodeficient mice and led to complete suppression of tumor growth for twenty days when used in combination with paclitaxel. Even after tumors did eventually grow, they lacked the ability to form new tumors. All tumor samples isolated from control mice, most of the tumor samples from paclitaxel-treated mice, and some of the cirmtuzumab-treated mice were able to establish new tumors when transplanted into other mice. No tumors, however, were formed when equal numbers of tumor cells from mice treated with the combination of cirmtuzumab and paclitaxel were introduced into other mice.

Figure 16. Combination of cirmtuzumab and paclitaxel suppressed growth of primary human breast tumors in a mouse model.

Cirmtuzumab clinical development in breast cancer

An investigator-sponsored single-arm, open-label, Phase 1b trial of cirmtuzumab in combination with paclitaxel in patients with locally-advanced, unresectable or metastatic HER2-negative breast cancer has been initiated at UC San Diego. The objectives of the trial include the evaluation of safety, tolerability, pharmacokinetics, and clinical activity. The treatment regimen is cirmtuzumab at a dose of 600 mg on days 1 and 15 of cycle 1, and then on day 1 of each subsequent 28-day cycle, and paclitaxel weekly at a dose of 80 mg/m. In December 2019, an interim clinical data update for this clinical trial was presented by the investigator at the 2019 San Antonio Breast Cancer Symposium. As of the data cut-off date of November 27, 2019, a total of eight patients with HER2-negative, metastatic or locally-advanced unresectable breast cancer were enrolled in the study. Seven of the eight patients were evaluable for safety and efficacy. Four of the patients had TNBC at study enrollment. Four of the seven evaluable patients achieved a partial response, for an ORR of 57%, including one patient who had a partial response that continued on cirmtuzumab alone for 30 weeks after discontinuing paclitaxel. It was reported that the combination of cirmtuzumab and paclitaxel was well tolerated in this trial, with no study discontinuations for toxicity and no dose-limiting toxicities observed as of the cutoff date. Adverse events were consistent with the known safety profile of paclitaxel alone. Pharmacokinetic analysis of serial plasma samples for free unbound antibody from two patients provided results similar to those observed in previous studies of patients with CLL, consistent with a projected half-life of 30 days. No abrupt decline in antibody concentration over time was observed, consistent with the absence of anti-drug or neutralizing antibodies.  In the second half of 2020, we expect to announce additional data from this study of patients with HER2-negative, metastatic or locally-advanced unresectable breast cancer.

Potential additional clinical opportunities for cirmtuzumab in solid tumors

Lung cancer. ROR1 is expressed by approximately 77% to 93% of lung cancers. In adenocarcinoma of the lung, higher levels of ROR1 expression were correlated with advanced stages of disease and with positive lymph node metastases. In addition, Kaplan-Meier survival analysis indicated an association of high ROR1 expression with worse overall survival in lung adenocarcinoma patients. ROR1 expression has been shown to be correlated with the presence of other negative prognostic factors such as phosphorylated AKT, or p-AKT, or phosphorylated CREB, or p-CREB. Inhibition of ROR1 in lung cancer cell lines induced apoptosis and cell cycle arrest and led to a reduction in levels of p-CREB and p-AKT. Notably, a recent preclinical study has shown that downregulating ROR1 expression re-sensitizes erlotinib-resistant lung cancer cells to an EGFR inhibitor drug.  

Ovarian cancer. ROR1 is expressed by approximately 54% of ovarian cancers, which is the most lethal gynecologic malignancy among women worldwide. Analysis of ROR1 expression on ovarian cancer patient samples revealed that disease-free survival and overall survival rate in patients with high ROR1 expression were significantly lower than in patients with low or no ROR1 expression. In a preclinical study, it was shown that a ROR1 antibody inhibited growth of ovarian cancer cell lines in vitro and slowed tumor growth in a mouse model.

Prostate cancer. ROR1 is expressed by approximately 90% of prostate cancers, and the Wnt5a signaling pathway is activated in patients with advanced prostate cancer that is progressing while on treatment with an androgen receptor, or AR, inhibitor. Treatment of prostate cancer cell lines with an AR inhibitor was found to increase the expression of Wnt5a, and the addition of Wnt5a attenuated the antiproliferative effect of AR inhibition. The expression of Wnt5a in patients with metastatic castrate resistant prostate cancer, or mCRPC, has been associated with poor overall survival. We are collaborating with academic investigators to investigate the potential effects of cirmtuzumab on this disease.

Pancreatic cancer. ROR1 is expressed by approximately 83% of pancreatic cancers. A recent preclinical study has shown that blocking ROR1 led to apoptotic cell death, which was further enhanced in combination with chemotherapeutic drugs such as erlotinib and ibrutinib, when tested against a panel of pancreatic cancer cell lines.  

In mid-2020, we expect to announce data from IND-enabling preclinical studies of cirmtuzumab for additional indications.

TK216 - ETS oncoprotein inhibitor

TK216 is an investigational, potentially first-in-class, targeted small molecule that was designed to specifically inhibit the biological activity of the ETS family of oncoproteins. Tumorigenic gene fusions involving ETS factors are frequently found in tumors such as Ewing sarcoma and prostate cancer, and ETS factors are often overexpressed in other tumors, such as AML and DLBCL. Researchers in the laboratory of Professor Jeffrey Toretsky, M.D. at Georgetown Lombardi Comprehensive Cancer Center identified the precursor to TK216 by using a novel chemical screening assay that they developed based on a deep understanding of the underlying biological mechanism of ETS factors.  Following this early work, TK216, which is designed to be a specific, high-affinity inhibitor of ETS factors, was created by us through the rational design and screening of novel small molecule inhibitors of a critical protein-protein interaction. In preclinical models, TK216 has inhibited the interaction between ETS family members and RNA helicase A, or RHA, and by doing so, shut down excessive cell proliferation.

We are evaluating TK216 as a single agent and in combination with vincristine in a Phase 1 clinical trial in patients with relapsed or refractory Ewing sarcoma. The dose-finding portion of the study was completed in 2019, and we are currently enrolling patients in an expansion cohort to evaluate the clinical response of treatment with TK216 in combination with vincristine using the recommended Phase 2 dosing regimen. Ewing sarcoma is a rare pediatric cancer that has historically been very challenging to treat effectively, particularly for recurrent and metastatic disease. ETS fusion proteins have been shown to be present in over 90% of Ewing sarcoma cases. TK216 has received an Orphan Drug Designation and Fast Track Designation from the FDA for the treatment of patients with relapsed or refractory Ewing sarcoma.

TK216 scientific background: ETS transcription factors and oncogenesis

TK216 targets the ETS family of oncoproteins known to be associated with both solid tumors and hematological malignancies. In normal development and physiology, ETS transcription factors govern processes such as cell cycle control, differentiation, proliferation, apoptosis, tissue remodeling and angiogenesis. However, when alterations in the functions of ETS factors develop, through overexpression, gene fusion or modulation, they have been shown to lead to tumor initiation, progression, and metastasis. Fusion proteins are a well-known category of targets for small molecule cancer therapy that have been cited in the scientific literature as providing a number of diagnostic and therapeutic advantages because of their tumor-specific expression. ETS overexpression or fusion proteins incorporating an ETS factor have been observed in multiple tumor types:

* Fusion identified

Fusion proteins involving ETS factors have been implicated in various solid tumors, including Ewing sarcoma and prostate cancer. For example, approximately 85% of Ewing sarcomas contain a genomic rearrangement between chromosomes 11 and 22. DNA is exchanged between these chromosomes in a pathological manner, and this exchange results in a fusion of two genes: the FLI1 gene, an ETS family member, and the EWSR1 gene, an unrelated transcription factor. This gene fusion, known as EWS/FLI1, functions as a transcription activator that is no longer controlled by the relevant regulatory machinery in the cell. In addition to escaping regulation, the dysregulated function of the EWS/FLI1 fusion causes a series of abnormalities in RNA processing including aberrant mRNA expression and splicing, where it leads to defects in the synthesis of proteins such as BRCA1, a DNA repair protein. EWS/FLI1 fusions also cause the formation of abnormal and potentially deleterious DNA and RNA structures known as R-loops that are associated with replication and transcriptional blocks as well as being prone to increased DNA damage.

Multiple other tumors contain gene fusions of other ETS factors. For example, over 50% of metastatic prostate cancers carry a TMPRSS2-ETS gene fusion. Other tumors have genetic changes that result in overexpression of ETS factors.

Despite the genetic associations between ETS factors and tumorigenesis and the reported correlation between high levels of ETS factor expression and survival, there are currently no approved therapeutics available that target these factors. It had been widely considered that transcription factors are difficult to target due to their non-enzymatic mechanism of action. Researchers in the laboratory of Jeffrey Toretsky, M.D., Professor at Georgetown University, identified the precursor to TK216 by using a chemical screening assay that they developed based on a deep understanding of the underlying biological mechanism of ETS factors. TK216 has been observed to inhibit the interaction between ETS family members and RNA helicase A, or RHA, a critical component of the human transcriptional complex, and by doing so, shuts down excessive cell proliferation in preclinical tumor models. We believe that our approach of inhibiting protein-protein interactions is novel and that our product candidate TK216 targeting ETS factors could fill an important gap in the treatment landscape for both solid tumors and hematological malignancies.

TK216 development in Ewing sarcoma

Ewing sarcoma disease overview

Ewing sarcoma is the second most common bone tumor of children that occurs most often in adolescents and accounts for approximately 2% of all childhood cancer diagnoses. The incidence of Ewing sarcoma for all ages is approximately 1.3 cases per 1 million people in the United States, corresponding to approximately 430 new patients diagnosed per year in the United States. The median age at diagnosis of patients with Ewing sarcoma is 15.

Nearly all Ewing sarcoma cases are driven by translocations of ETS family oncogenes, including 85-90% of cases driven by the EWS-FLI1 fusion, and approximately 10% by EWS-ERG.

Ewing sarcoma typically develops in the pelvis, femur, and bones of the head and trunk, but its diagnosis often takes months as other causes for non-specific symptoms such as localized pain, fever, fatigue, weight loss, or anemia are ruled out. The five-year survival of patients who are diagnosed with non-metastatic disease is between 50% and 70%. Patients diagnosed with metastatic disease have five-year survival between 18% and 30%. The prognosis for patients with recurrent Ewing sarcoma is particularly poor, and five-year survival after recurrence is approximately 10 to 15%.

Ewing sarcoma is usually treated systemically due to the fact that local treatments, even in patients without overt metastases, have an 80% to 90% relapse rate. The current standard therapy for patients with localized Ewing sarcoma in the United States is a combination of chemotherapy agents, including vincristine, doxorubicin and cyclophosphamide, with alternating cycles of ifosfamide and etoposide – a therapy known as VDC/IE. Patients that respond to this therapy may be candidates for tumor resection and continued treatment for a total of 14 to 17 cycles. This therapeutic regimen, however, is associated with significant toxicities. Patients with metastatic disease are often treated with VDC/IE or variations of this therapy with higher or more compressed dosing. This may also be supplemented by local radiation therapy or systemic radiation followed by autologous hematopoietic stem cell transplant. We believe that more effective therapies are needed for this rare and severe pediatric disease.

TK216 preclinical data in Ewing sarcoma

TK216 was the product of a novel approach based on developing small molecule inhibitors of a critical protein-protein interaction linked to the ETS family of transcription factors. Researchers at Georgetown University identified YK-4-279, the precursor to TK216, by using a novel chemical screening assay. Following this early work, TK216, a specific inhibitor of ETS factors, was then created by Oncternal through the rational design and screening of novel small molecule inhibitors of a critical protein-protein interaction linked to the ETS family of transcription factors. TK216 is a structural analog of YK-4-279 that has shown increased potency in biochemical, cellular and xenograft tumor models.

Figure 17. TK216 inhibits interaction of ETS fusion protein EWS/FLI1 with RNA helicase A (RHA).

In Ewing sarcoma, a key heterodimer between EWS/FLI1 and RHA forms the core of a transcriptome complex causing activated oncogenes, inhibited tumor suppressors, abnormal RNA transcription and abnormal RNA splicing. TK216 was developed to disrupt that heterodimer, thereby potentially preventing transcription and leading to inhibition of the oncogenic activity of EWS/FLI1, by decreasing oncogene expression, increasing tumor suppressor function, and apoptotic cell death. In preclinical models, TK216 inhibited the interaction between ETS family members and RNA helicase A (“RHA”), and by doing so, shut down excessive cell proliferation and cause apoptotic cell death.

Treatment in vitro with TK216 led to dose-dependent inhibition of transcription from a luciferase reporter assay in COS7 cells. TK216 also inhibited proliferation of Ewing sarcoma cell line A4573.

Figure 18. TK216 inhibited transcription of a reporter gene dependent on EWS/FLI (left). TK216 inhibited proliferation of a Ewing sarcoma cell line A4573 (right).

TK216 has inhibited proliferation of multiple cell lines containing EWS/FLI1 fusions, as well as other cell lines containing other ETS translocations or overexpressing ETS factors. These results suggest that TK216 binds to a site that is commonly used by multiple ETS family members to interact with other factors such as RHA. Therefore, we believe that TK216 has potential beyond targeting the EWS/FLI1 fusion that is commonly found in patients with Ewing sarcoma.

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Figure 19. YK-4-279 (analog of TK216) showed activity in a Ewing sarcoma rat xenograft model.

Treatment of aggressive tumors such as Ewing sarcoma typically requires a combination of agents. A systematic analysis combining approved agents tested in combination with YK-4-279, a precursor of TK216, was conducted using Ewing sarcoma cell lines. YK-4-279 led to synergistic cytotoxicity with 28% of the agents tested including antimetabolites, nucleic acid synthesis inhibitors, immunosuppressive or immunomodulating agents and microtubule inhibitors. In vivo activity in an A4573 xenograft model of Ewing sarcoma showed tumor shrinkage and increased survival when YK-4-279 was combined with vincristine.

Figure 20. Combination of YK-4-279 (analog of TK216) and vincristine resulted in rapid tumor shrinkage in an A4573 model of Ewing sarcoma.

TK216 clinical development in Ewing sarcoma

We are conducting an open-label, first-in-human, multicenter Phase 1 clinical trial of TK216 as a single agent and in combination with vincristine, in patients with relapsed or refractory Ewing sarcoma. In November 2019, we reported an interim clinical data update for this clinical trial at the Connective Tissue Oncology Society (CTOS) 2019 Annual Meeting. As of the data cut-off date in November 2019, 32 patients had been treated in the dose-finding part of the trial. Patients entering the trial had previously been treated with a median of four, and up to nine, prior lines of systemic therapy. TK216 was reported to be generally well tolerated in this trial, with common side effects including myelosuppression, fatigue, nausea and alopecia. No unexpected off-target toxicities were observed. Based on the dose-finding part of the trial, the recommended Phase 2 dose (RP2D) was selected to be 200 mg/m²/day for 14 days. Clinical pharmacology data suggest that this dosing regimen may result in drug levels that meet or exceed those that killed tumor cells in vitro and inhibited tumor growth in animal models.

Subsequent to the CTOS presentation, additional patients were enrolled in the cohort treated at RP2D. Of the three evaluable patients treated at RP2D in the dose-finding part of the trial, one patient achieved a deep and sustained PR on single-agent TK216, followed by a surgical CR; another patient had stable disease; and a third had progressive disease. One additional patient had been enrolled but developed rapidly progressive disease.  This patient exited the study before completing the DLT observation period and, per protocol, was replaced. 

One patient who achieved a deep and sustained clinical response at RP2D had relapsed/refractory Ewing sarcoma with lung metastases and had received and failed multiple lines of therapy prior to participating in this clinical trial, including radiation, chemotherapies and targeted therapies. Multiple lung nodules in this patient regressed following two cycles of TK216 as a single agent and, after six months of treatment that included concomitant vincristine starting in the third cycle, a single remaining 7 mm lung nodule was resected, resulting in a surgical complete remission. The patient had no evidence of disease after more than ten months of treatment. TK216, with or without vincristine, was well tolerated by this patient, with minimal myelosuppression.

In December 2019, we announced that we had opened for enrollment an expansion cohort of our clinical trial in patients with relapsed or refractory Ewing sarcoma. The expansion cohort will further evaluate the recommended Phase 2 dose regimen of TK216 (200 mg/m²/day for 14 days) in combination with vincristine and is anticipated to enroll approximately 18 patients. By mid-2020, we expect to enroll seven to 12 additional patients in the expansion cohort of this study and we anticipate announcing data from these patients in the second half of 2020.

Potential additional clinical opportunities for TK216

Acute myeloid leukemia (AML). AML is a hematologic malignancy characterized by dysregulated maturation of myeloid or blood stem cells and failure of the bone marrow to properly function, leaving patients with anemia and immune deficiency, and at high risk of infections and bleeding. AML is the most common type of acute leukemia in adults. Approximately 21,450 new AML cases and 10,920 AML associated deaths occur annually in the United States. The average age of an AML patient is 68 years. The National Cancer Institute estimated in 2018 that the five-year survival rate for adult patients with AML was approximately 27%.  We believe that there is a need for more effective and less toxic therapies for AML.

ETS overexpression or fusion proteins incorporating ETS family member have been observed in about 30% of AML cases. The ETS family member ERG is overexpressed in many cancers, such as AML. In a retrospective analysis of patients with AML, the quartile of patients with the highest levels of ERG expression had a significantly higher rate of relapse and poorer overall survival than patients with lower levels of ERG expression. Those with the highest levels of ERG had a five-year survival rate of 20%, while those with lower levels of ERG had a survival rate of approximately 50%. ERG overexpression was an independent negative prognostic factor. Similarly, AML patients with high levels of ETS2, another ETS family member, had a significantly lower five-year survival rate of approximately 15% compared to 40% for patients with lower levels of ETS2. ETS2 overexpression was an independent negative prognostic factor.

Figure 21.SurvivalofthequartileofAMLpatientswiththehighestERG(left)orETS2(right)expressionwassignificantlylowerthanthosewith lowerexpression.

Multiple AML cell lines have been shown to be sensitive to being killed by TK216, with sensitivity proportional to ETS expression. TK216 may provide a novel therapeutic strategy for the treatment of patients with relapsed and refractory AML, a patient population known to express, in certain cases, fusion proteins involving ETV6, and to have overexpression of ETS family members including FLI1, ERG, ETS2, and ETV5.

Prostate cancer. Approximately 174,650 new cases of prostate cancer are diagnosed annually in the United States. Incidence of metastatic prostate cancer is increasing, causing an estimated 31,620 deaths per year in the United States. New therapeutic options are needed after failure of androgen antagonism and prior to chemotherapy. Approximately 55% of men with advanced prostate cancer carry the ETS family fusion gene TMPRSS2-ERG that is related to androgen resistance.

We believe TK216 may provide a novel therapeutic strategy for the treatment of patients with advanced prostate cancer, in particular those who carry the ETS family fusion gene TMPRSS2-ERG. In a preclinical in vivo study, YK-4-279, which is an analog of TK216, showed anti-tumor activity against a prostate cancer cell line harboring the ETS-family translocation, while growth of a prostate cancer cell without the translocation was not inhibited.

In the second half of 2020, we expect to announce data from IND-enabling preclinical studies of TK216 in additional ETS-driven tumors.

Figure 22.Prostate cancer sensitivity was associated with an ETS-family fusion protein in human prostate cancer xenograft models.

ROR1 CAR-T Program

We are developing a CAR-T therapy based on the ROR1 binding domain of cirmtuzumab to treat patients with aggressive hematological malignancies or solid tumors. We believe that the selective expression of ROR1 on tumor cells and its absence on normal cells make it an ideal target for a CAR-T approach. In addition, we believe that the survival benefit imparted on cancer cells by expressing ROR1 may limit the development of ROR1-negative resistant tumors, and that tumors that generate mutations that escape an ROR1 CAR-T therapeutic by inactivating or suppressing ROR1 may lose their stem cell-like properties, limiting their ability to metastasize or establish new tumors. Our ROR1 targeted CAR-T therapy is in preclinical development at UC San Diego, with funding from CIRM.

We also plan to collaborate with our strategic partner SPH for our CAR-T program. Through its United States subsidiary Shanghai Pharmaceutical (USA) Inc., or SPH USA. SPH USA has entered into the SPH USA License Agreement with us to develop ROR1 targeted CAR-T products in greater China. Our plans to collaborate with SPH USA include a collaboration to develop processes to produce and manufacture lentiviruses carrying the ROR1 construct. We believe that this represents a potential advantage for our CAR-T program, because viral manufacturing capacity is constrained in the United States and European Union. We and SPH USA also intend to collaborate by conducting one or more initial clinical trials of our potential CAR-T product candidate at hospitals in China that have experience with processing cellular immunotherapy materials and conducting CAR-T clinical trials. Initial clinical trials of our CAR-T program may occur both in the United States, for example at UC San Diego and at sites in China. In the fourth quarter of 2020, we expect to announce first-in-human dosing of our ROR-1 CART therapy in China.

Scientific background: CAR-T therapy overview

Immuno-oncology approaches to treating cancer involve redirecting one of the pillars of the immune system, the adaptive immune system, so that it specifically and efficaciously recognizes cancerous cells that might previously have escaped immune recognition. A key element in the adaptive immune response is the T cell. T cells are white blood cells that can recognize and kill infected and abnormal cells. T cells also act to signal other immune cells to respond to threats. T cells recognize their targets because they are created in a way that allows them to specifically recognize foreign antigens on the surface of other cells.

T cells are ideally suited for immuno-oncology applications based on several characteristics. They are created to be exquisitely specific and avid killers. One T cell can eliminate numerous target cells. T cells are extremely specific, able to recognize a cancer cell and kill it, while ignoring an almost identical healthy cell. T cells are thought to be active all the time, eliminating cancer cells from the body before they can form tumors. However, tumor cells sometimes evolve to escape killing by T cells by activating a number of pathways that suppress T cell function. Adoptive T cell therapies, and specifically CAR-T, were developed to provide a method to generate large quantities of T cells capable of specifically recognizing and killing tumor cells despite tumor suppressive mechanisms.  

CAR-T therapeutics are created by isolating T cells from patients and modifying them to recognize specific antigens on tumors. T cells have potent cell killing activity that is directed to target cells that are recognized by specific T cell receptors, or TCRs, that are expressed on the surface of these T cells. While some T cells have TCRs that can recognize cancer cells leading to their killing, potent T cells do not develop to all targets. In some cases, the potential cancer cell target is also a protein that has an essential role in other tissues or at other stages of development, and TCRs that recognize these targets are eliminated during normal T cell development.

CAR-T therapy has emerged as a way to engineer T cells to recognize specific targets, such as those that are selectively expressed on cancer cells. A gene encoding a chimeric protein is constructed that contains a single antigen-binding domain of an antibody that recognizes the target, which is coupled to a T cell costimulatory domain and a portion of the T cell receptor.

CAR-T therapies are typically produced from a patient’s own T cells which are isolated by leukapheresis. These cells are then genetically modified with the chimeric antigen gene construct which can be delivered by various mechanisms such as lentiviral gene delivery vectors. Transduced cells are then expanded and undergo quality testing before being reintroduced into the same patient.

Figure 23. CAR-T production and patient treatment.

Two CAR-T cell therapies, Yescarta^®, developed by Kite Pharma, Inc., a wholly-owned subsidiary of Gilead Sciences, Inc., and Kymriah^®, developed by Novartis Pharmaceuticals Corporation, have been approved by the FDA. Both of these therapies target the CD19 protein, a protein expressed on the surface of the majority of B cells, including B cell tumorigenic cells. Yescarta has been approved for the treatment of relapsed or refractory large B-cell lymphoma and Kymriah for the treatment of relapsed or refractory B-cell precursor acute lymphoblastic leukemia. These therapies have shown high response rates with prolonged treatment effects for a subset of patients. No CAR-T therapies have been approved for use in patients with solid tumors. Despite the high response rates and prolonged treatment effects observed for a subset of patients, we believe that novel CAR-T approaches have the potential to improve efficacy, duration of response as well as safety.  

SARD and SARM Technologies

Prior to the Merger as defined below, GTx had been developing selective androgen receptor modulators, or SARMs, under an exclusive, worldwide license agreement with the University of Tennessee Research Foundation, or UTRF, we are developing UTRF's proprietary selective androgen receptor degrader, or SARD, technology, which we believe has the potential to provide compounds that can degrade or antagonize multiple forms of androgen receptor, or AR, thereby potentially inhibiting tumor growth in patients with progressive castration-resistant prostate cancer, or CRPC, including those patients who do not respond to or are resistant to current androgen targeted therapies. We are in the process of completing ongoing mechanistic preclinical studies in order to select the most appropriate SARD compounds to move forward into the additional preclinical studies required to submit an investigational new drug application, or IND, and potentially advance one of our SARD compounds into a first-in-human clinical trial.

        We had been developing selective androgen receptor modulators, or SARMs. OurUTRF.  GTx’s SARM product candidate, enobosarm (GTx-024), was most recently evaluated in post-menopausal women with stress urinary incontinence, or SUI. During the third quarter of 2018, weGTx announced that our randomized, placebo-controlled Phase 2 clinical trial, or the ASTRID trial, evaluating the change in the mean number of daily SUI episodes following 12 weeks of enobosarm treatment failed to achieve statistical significance on the primary endpoint of the proportion of patients with a greater than 50% reduction in incontinence episodes per day compared to placebo. We haveGTx completed the ASTRID trial, including ourits review of the full data sets from the clinical trial, and have determined that there iswas not a sufficient path forward to warrant additional clinical development of enobosarm to treat SUI. We have thereforeAs a result, GTx discontinued further development of enobosarm to treat SUI, including discontinuing the related durability and open-label safety extension studies we initiated by GTx before weit received topline data from the ASTRID trial. We have alsotrial, and discontinued any further development of ourits SARM program generally.

        Following the announcement of the ASTRID trial results, our board of directors commenced a process of evaluating strategic alternatives to maximize stockholder value. To assist with this process, our board of directors engaged a financial advisory firm to help explore our available strategic alternatives, including possible mergers and business combinations, a sale of part or all On December 31, 2019, we notified UTRF of our assets, and collaboration and licensing arrangements. On March 6, 2019, we and Oncternal announcedintent to terminate the signing of the Merger Agreement. Upon the terms and subject to the satisfaction of the conditions described in the MergerSARM License Agreement, including approval of the transaction by our stockholders and Oncternal's stockholders, a wholly-owned subsidiary of GTxwhich termination will be merged with and into Oncternal, with Oncternal surviving the Merger as a wholly-owned subsidiary of GTx.

        The proposed Merger is structured as a stock-for-stock transaction whereby all of Oncternal's outstanding shares of common stock and securities convertible into or exercisable for Oncternal's common stock will be converted into the right to receive GTx common stock and securities convertible into or exercisable for GTx common stock. Under the exchange ratio formula in the Merger Agreement, the former Oncternal stockholders immediately before the Merger are expected to own approximately 75% of the outstanding capital stock of GTx, and the stockholders of GTx immediately before the Merger are expected to own approximately 25% of the outstanding capital stock of GTx, subject to certain assumptions. The exchange ratio formula excludes Oncternal's outstanding stock options and warrants and GTx's outstanding stock options and warrants. To the extent Oncternal's outstanding stock options or warrants are exercised in the future, it will result in further dilution to

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GTx's stockholders. Under certain circumstances as set forth in the Merger Agreement, the ownership percentages may be adjusted upward or downward based on cash levels of the respective companies at the closing of the Merger. We anticipate that the Merger will close in the second quarter of 2019. Following the closing of the Merger, James Breitmeyer will serve as GTx's Chief Executive Officer, Richard Vincent will serve as GTx's Chief Financial Officer, and Lauren Otsuki will serve as GTx's Chief Operating Officer. Additionally, following the closing of the Merger, our board of directors will consist of nine directors, including two current GTx board members. This transaction, which has been approved by our board of directors and the board of directors of Oncternal, is subject to the satisfaction or waiver of certain conditions, including the required approvals by the parties' stockholders (including stockholder approval from one of Oncternal's significant stockholders, Shanghai Pharmaceutical (USA) Inc., which holds all of the outstanding shares of one series of Oncternal's preferred stock that must approve the transactions contemplated by the Merger Agreement) and other customary closing conditions. Certain affiliates of ours who hold approximately 45% of our common stockeffective as of dateMarch 31, 2020.

Also under an exclusive worldwide license agreement with UTRF, GTx had been developing UTRF’s proprietary selective androgen receptor degrader, or SARD, technology, to provide compounds to degrade or antagonize multiple forms of the Merger Agreement have agreedandrogen receptor, thereby potentially inhibiting tumor growth in patients with progressive castration-resistant prostate cancer, including those patients who do not respond to vote in favor of the Merger and certain affiliates of Oncternal, excluding Shanghai Pharmaceutical (USA) Inc., who hold approximately 42% of the outstanding capital stock of Oncternal as of date of the Merger Agreement have agreedor are resistant to vote in favor of the Merger. However, Oncternal currently expects that it will receive stockholder approval from Shanghai Pharmaceutical (USA) Inc. approximately two months after the date of the Merger Agreement based on the internal approval process required for such approval at Shanghai Pharmaceutical (USA) Inc.

        In addition, at the effective time of the Merger, GTx and certain other parties will enter into a Contingent Value Rights Agreement, or the CVR Agreement. Pursuant to the CVR Agreement, for each share of GTx common stock held, GTx stockholders of record as of immediately prior to the effective time of the Merger will receive one contingent value right, or CVR, entitling such holders to receive in the aggregate 50% of any net proceeds received during the 15-year period after the closing of the Merger from the grant, sale or transfer of rights to our SARD or SARM technology that occurs during the 10-year period after the closing of the Merger (or in the 11^th year if based on a term sheet approved during the initial 10-year period) and, if applicable, to receive royalties on the sale of any SARD products by the combined company during the 15-year period after the closing of the Merger. Under the CVR Agreement, Oncternal (as successor in interest to GTx) agreed to use commercially reasonable efforts to develop SARD products and to divest our SARM technology, subject to certain limitations. The CVRs will not be transferable, except in certain limited circumstances, will not be certificated or evidenced by any instrument and will not be registered with the SEC or listed for trading on any exchange.

        Although we have entered into the Merger Agreement and intend to consummate the proposed Merger, there is no assurance that we will be able to successfully consummate the proposed Merger on a timely basis, or at all. If, for any reason, the proposed Merger is not completed, we will reconsider our strategic alternatives and could pursue one or more of the following courses of action:

•

Continue development of our SARD program.  As set forth above, wecurrent androgen targeted therapies.  We are in the process of completing ongoingperforming additional mechanistic preclinical studies in order to select the most appropriatedetermine if one or more of these SARD compounds to move forwardshould be advanced into the additional preclinical studies required to submit an INDinvestigational new drug application, and potentiallywhether we should advance one of ourthe SARD compounds into a first-in-human clinical trial. Accordingly, if, for any reason, the proposed Merger is not consummated, we may determine to move forward with our planned IND-enabling studies of our SARD compounds. However, while we believe that our existing capital resources will be adequate to enable us to conduct

Competition

The biotechnology and complete planned IND-enabling preclinical studies of our SARD compounds, we will require significant additional financial resources in order to initiatepharmaceutical industries are intensely competitive and complete initial human clinical trials of a SARD compoundcharacterized by rapid technology evolution. Our potential competitors include large pharmaceutical, specialty pharmaceutical and to otherwise further the development of our SARD program.

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As a result, we may also resume our efforts to seek additional funds through potential collaborative, partnering or other strategic arrangements to provide us with the necessary resources for the development of our SARD program.

•

Pursue potential collaborative, partnering or other strategic arrangements for our SARM assets, including a sale or other divestiture of our SARM assets.  We have discontinued further development of our SARM program, including enobosarm, and do not currently have any plans to resume development of our SARM program. We continue our efforts to seek potential collaborative, partnering or other strategic arrangements for our SARM assets, including a sale or other divestiture of our SARM assets.



•

Pursue another strategic transaction like the proposed Merger.  Our board of directors may elect to pursue an alternative strategy, one of which may be a strategic transaction similar to the proposed Merger.



•

Dissolve and liquidate our assets.  If, for any reason, the proposed Merger is not consummated and we are unable to identify and complete an alternative strategic transaction like the Merger or potential collaborative, partnering or other strategic arrangements for our SARM assets, or to continue to operate our business due to our inability to raise additional funding for the development of our SARD program or otherwise, we may be required to dissolve and liquidate our assets. In such case, we would be required to pay all of our debts and contractual obligations, and to set aside certain reserves for potential future claims, and there can be no assurances as to the amount or timing of available cash left to distribute to our stockholders after paying our debts and other obligations and setting aside funds for reserves.

Our SARD Program

SARDs for the Potential Treatment of Castration Resistant Prostate Cancer

        Scientific Overview.    SARDs are a novel class of drugs. The AR is a major driver of prostate tumor cell proliferation, and blocking its activity is a therapeutic target. Despite the use of therapies designed to inhibit the AR pathway in men with advanced prostate cancer, a significant number of men have tumors that do not respond to such therapeutic approaches and/or become resistant to them. This lack of response may be due to the presence of forms of the AR (splice variants and mutated) for which these therapies are not effective. SARDs are designed to not only bind to androgen receptors, but also induce androgen receptor degradation and ultimately inhibit tumor cell growth. Selective AR degradation which targets the N-terminus may be an effective therapeutic strategy where a variant or mutated AR can be degraded by the SARD. This ability to circumvent common drug resistance in prostate cancer patients may provide an important tool for effective new treatments.

        We believe SARDs have the potential to treat prostate cancer,biotechnology companies, as well as government, academic and other diseases such as benign prostatic hyperplasiaresearch institutions. Many of our competitors have significantly greater financial resources and Kennedy's disease. We envision initially developing SARDs as a potentially novel treatment for menexpertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with CRPC, including those who do not respondlarge and established companies. Our commercial opportunities may be reduced or eliminated if our competitors develop and commercialize similar products that are safer, more effective, have fewer side effects or are resistant toless expensive than any products that we or our collaborators may develop.

In particular, we compete with other companies that are developing and commercializing treatments for patients with cancer. Competing therapies include chemotherapies, targeted therapies and immunotherapies and may represent various therapeutic modalities including small molecules, antibodies, cell therapies, gene therapies, and cancer vaccines. These companies may compete with us for clinical trial sites and eligible patient populations, scientific and management talent, outsourced manufacturing capacity and healthcare budgets for commercial-stage products.

Cirmtuzumab competition

While there are currently no approved therapies. Although current therapies have improved overall survivalproducts targeting the ROR1 receptor, we are aware of therapeutics in men with CRPC, approximately one-thirdclinical development that target ROR1, including an antibody-drug conjugate being developed by VelosBio, Inc., and a ROR1 CAR-T therapy being developed by Juno Therapeutics, Inc., a subsidiary of the CRPC patients do not respond to these therapies, due in part to the presence of splice variants, including AR-V7, as well as mutations in the androgen receptor. Splice variants of the androgen receptor have been identified in which the ligand binding domain, the binding site for androgens and necessaryBristol-Myers Squibb Company.

There are numerous companies developing or marketing treatments for the action of many of the current therapies, is lost. In addition, most patients who initially respond to available treatments eventually progress due to the emergence of resistance to these therapies. It is believedsame oncology indications that CRPC growth remains highly dependent on androgen receptor activity, although the mechanisms which underlie this resistancewe are not fully understood. We

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believe a therapeutic agent that would safely degrade multiple forms of the androgen receptor, including those without the ligand binding domain, would be uniquely positioned to address this patient population.

        Potential Market.    In the United States alone, we believe there are approximately 80,000 men who have developed resistance to luteinizing hormone-releasing hormone,targeting with our cirmtuzumab program. Therapies approved or LHRH, therapies and therefore have CRPC but who have not received chemotherapy. We believe there are approximately 36,000 men diagnosed each year with metastatic hormone sensitive prostate cancer. Zytiga® and XTANDI® are currently the only drugs approvedin clinical development for the treatment of metastatic CRPC in patients who have not yet received chemotherapy, although several otherwith treatment-naïve or relapsed/refractory CLL and relapsed/refractory MCL include BTK inhibitors, Bcl-2 inhibitors, PI3K inhibitors, anti-CD20 antibodies, and cell therapies that are being marketed or developed by companies including AbbVie, Inc., ArQule, Inc., AstraZeneca PLC, BeiGene, Ltd., Eli Lilly and Company, Gilead Sciences, Inc., Johnson & Johnson, Merck KGaA, Novartis Pharmaceuticals Corporation, Roche Holding AG’s Genentech subsidiary, TG Therapeutics, Inc., and Verastem, Inc.

TK216 competition

While there are currently no approved drugs designed to target ETS oncoproteins, there are numerous companies developing or marketing treatments for the same oncology indications that we are targeting with our TK216 program. Investigational therapies in clinical development for this indication. We believe new hormonal therapies in development, if approved, will be used prior to chemotherapy as physicians and patients look forthe treatment options capable of delaying cancer progression and possibly prolonging survival prior to chemotherapy.

        Preclinical Development.    We are in the process of completing ongoing mechanistic preclinical studies in order to select the most appropriate SARD compounds to move forward into the additional preclinical studies required to submit an IND and potentially advance one of our SARD compounds into a first-in-human clinical trial. However, while we believe that our existing capital resources will be adequate to enable us to conduct and complete planned IND-enabling preclinical studies of our SARD compounds, we will require significant additional financial resources in order to initiate and complete initial human clinical trials of a SARD compound and to otherwise further the development of our SARD program. Accordingly, if, for any reason, the proposed Merger is not consummated, we may resume our efforts to seek additional funds through potential collaborative, partnering or other strategic arrangements to provide us with the necessary resources for the development of our SARD program.

SARMs

        Evaluation of Enobosarm for the Treatment of Postmenopausal Women with SUI.    In the third quarter of 2017, we initiated the ASTRID trial at over 60 clinical trial centers in the United States to evaluate the change in the mean number of daily SUI episodes following 12 weeks of enobosarm treatment. The ASTRID trial evaluated the safety and efficacy of enobosarm (1 mg and 3 mg) compared with placebo in post-menopausal women who have demonstrated SUI symptoms for more than six months, with an average of 3 to 15 reported SUI episodes per day over a three-day period, and a positive bladder stress test. The primary endpoint for the ASTRID trial was the percentage of patients with at least a 50 percent reduction in mean leaks per day at week 12, compared to baseline. During the third quarter of 2018, we announcedrelapsed/refractory Ewing sarcoma include kinase inhibitors, LSD1 inhibitor and other targeted therapies, therapeutic antibodies and cell therapies that the ASTRID trial failed to achieve statistical significance on the primary endpoint of the proportion of patients with a greater than 50% reduction in incontinence episodes per day compared to placebo. The percentage of patients with a greater than 50% reduction after 12 weeks of enobosarm treatment was 58.9% for 3 mg, 57.7% for 1 mgare being developed by companies including Bayer AG, Bristol-Meyers Squibb Company, Eisai Co., Ltd., Epizyme, Inc., Gradalis, Inc., Eli Lilly and 52.7% for placebo. Enobosarm was generally safeCompany, Johnson & Johnson, Exilixis, Inc., NantCell, Inc., Pharmamar S.A., Pfizer, Inc., Salarius Pharmaceuticals, Inc., Takeda Pharmaceutical Company Limited, and well tolerated, and reported adverse events were minimal and similar across all treatment groups. We have completed the ASTRID trial, including our review of the full data sets from the clinical trial, and have determined that there is not a sufficient path forward to warrant additional clinical development of enobosarm to treat SUI. We have therefore discontinued further development of enobosarm to treat SUI, including discontinuing the related durability and open-label safety extension studies we initiated before we received topline data from the ASTRID trial.others.

        Evaluation of Enobosarm for the Treatment of Breast Cancer.    We have previously evaluated enobosarm in a Phase 2 clinical trial designed to evaluate the efficacy and safety of a 9 mg and 18 mg dose of enobosarm in patients whose advanced breast cancer is both estrogen receptor, or ER, positive and AR positive. We announced in November 2016 that enobosarm achieved the pre-specified primary efficacy endpoint in the 9 mg dose cohort with 9 patients achieving a clinical benefit response, or CBR,

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defined as a complete response, partial response, or stable disease, among the first 22 evaluable patients in that cohort. In November 2017, we announced that in the 9 mg cohort, a total of 14 patients achieved a CBR following 24 weeks of treatment. We also announced in November of 2017 that the 18 mg cohort achieved the pre-specified primary efficacy endpoint as 12 patients achieved a CBR at 24 weeks. Although both the 9 mg and 18 mg cohorts met the primary efficacy endpoint in the Phase 2 clinical trial, after evaluating the breast cancer environment where the treatment paradigms are shifting to immunotherapies and/or combination therapies, we decided in the third quarter of 2017 that the time and cost of conducting the necessary clinical trials for potential approval in this indication does not warrant further development of enobosarm in this indication. In 2015, we also commenced enrollment in a Phase 2 proof-of-concept clinical trial designed to evaluate the efficacy and safety of an 18 mg dose of enobosarm in patients with advanced AR positive triple-negative breast cancer, or TNBC. This clinical trial was conducted utilizing a Simon's two-stage trial design whereby if at least 2 of the first 21 patients achieved clinical benefit, the trial was designed to enroll the second stage, which would result in enrolling 41 evaluable patients in the clinical trial. During the third quarter of 2017, we completed our review of the data from the first stage of the clinical trial. While our review of the data did not raise any safety concerns, it did confirm that there were insufficient patients achieving clinical benefit from enobosarm treatment to continue this clinical trial and we closed the clinical trial down.

        Discontinuation of SARM Development Efforts.    Following our review of the full data sets from the ASTRID trial, we discontinued further development of enobosarm to treat SUI and otherwise discontinued any further development of our SARM program. We continue our efforts to seek potential collaborative, partnering or other strategic arrangements for our SARM assets, including a sale or other divestiture of our SARM assets. If the Merger is completed, any net proceeds derived from the disposition or licensing of our SARM assets following completion of the Merger will be made available to our stockholders in accordance with the CVR Agreement. We have for many years actively pursued, but have been unable to successfully enter into, potential collaborative, partnering or other strategic arrangements for our SARM assets. If we are unable to ultimately enter into any such arrangements for our SARM assets, we will not receive any return on our investment in enobosarm and our other SARMs.

Licenses and Collaborative Relationships

        We have in the past established and, if the proposed Merger is not completed, we may continue to pursue, in-licenses and partnering, and collaborative or other strategic relationships with academic institutions and with other pharmaceutical and biotechnology companies.UC San Diego

In March 2015,2016, we and UTRF entered into a license agreement with the Regents of the University of California (the “Regents”), represented by UC San Diego, which was amended and restated in August 2018, and amended on March 25, 2019 and May 15, 2019 (the “UC San Diego License Agreement”), for the development, manufacturing and distribution rights to naked antibodies, including cirmtuzumab and genetically engineered cellular therapy products, including CAR-T products that are covered by licensed patents for all human therapeutic, diagnostic and preventive applications in all indications. Under the UC San Diego License Agreement, we paid an upfront license fee of $0.5 million and issued 107,108 shares of common stock. Commencing in 2017, we also pay UC San Diego an annual license maintenance fee and reimburses to UC San Diego its annual patent costs for the licensed patents. The UC San Diego License Agreement also requires the payment of certain development and regulatory milestones, aggregating from $10.0 million to $12.5 million, on a per product basis, certain worldwide sales milestones based on achievement of tiered revenue levels aggregating $75.0 million, low single-digit royalties including potential future minimum annual royalties on net sales of each product, reimbursement of certain annual patent costs, and requires certain minimum diligence efforts to advance the licensed assets, including spending at least $1.0 million in development annually through 2021. Unless terminated earlier, the UC San Diego License Agreement will expire upon the later of the expiration date of the longest-lived patent rights or the SARD15th anniversary of the first commercial sale of a licensed product. UC San Diego may terminate the UC San Diego License Agreement if a material breach by us is not cured within a reasonable time, we file a claim asserting the licensed patent rights are invalid or unenforceable, or we file for bankruptcy. We may terminate the agreement at any time upon at least 90 days’ written notice. In July 2016, we entered into a research agreement with UC San Diego (the “UC San Diego Research Agreement”), for further research on the ROR1 therapeutic development program. Under this five-year agreement, UC San Diego will have an aggregate budget of $3.6 million, with $125,000 payable quarterly. The costs paid to UC San Diego under the UC San Diego Research Agreement are included as part of our annual diligence obligations under the UC San Diego License Agreement.

CIRM

In August 2017, CIRM awarded an $18.3 million grant to researchers at UC San Diego to advance our Phase 1/2 clinical trial evaluating cirmtuzumab in combination with ibrutinib for the treatment of patients with B-cell lymphoid malignancies, including MCL and CLL. We are conducting the trial in collaboration with UC San Diego, and we are responsible for study conduct and data management. We estimate we will receive approximately $14.0 million in development milestones under research subaward agreements throughout the award project period, estimated to be from October 1, 2017 to March 31, 2022. We are required to provide UC San Diego progress and financial update reports throughout the award period. The subaward does not bear a royalty payment commitment, nor is the subaward otherwise refundable. As of December 31, 2019, we believe we have met our obligations under the CIRM award and UC San Diego subawards.

In October 2017, CIRM awarded a $5.8 million grant to the researchers at UC San Diego to develop a novel anti-cancer stem cell targeted therapy for patients with advanced solid and hematological malignancies. In connection with such CIRM award, we agreed to provide up to $1.0 million in contingency funds if required during the grant period.

CIRM may suspend or permanently cease disbursements of funds under the research subaward agreements, or pursue other remedies as allowed by law, if CIRM determines that UC San Diego has not complied with the terms and conditions of the award, or if there are unexpected, substantial manufacturing failure leading to delayed enrollment in the clinical trial, failure to enroll the trial, or if FDA issues a clinical hold order with respect to the clinical trial.

Georgetown University

In March 2014, we entered into an exclusive license agreement (the “Georgetown License Agreement”), with Georgetown University, or Georgetown, pursuant to which we licensed the exclusive worldwide right to patents and technologies for the development and commercialization of certain product candidates targeting EWS-FLI1 as an anti-tumor therapy for therapeutic, diagnostics, or research tool purposes. Under the Georgetown License Agreement, we are solely responsible for all development and commercialization activities and costs in our respective territories, and are also responsible for all costs related to the filing, prosecution and maintenance of the licensed patent rights. Commencing in 2015, we are obligated to pay Georgetown an annual license maintenance fee until the first commercial sale occurs, make up to $0.2 million in aggregate milestone payments upon the achievement of certain regulatory milestones, and will be required to pay low single digit royalties based on annual net product sales. The term of the Georgetown License Agreement continues until the expiration of the last valid claim within the patent rights covering the product, but may be terminated by either party upon material breach, or by us as to one or more countries with 90 days written notice of termination. Additionally, Georgetown may terminate the agreement in the event we fail to pay any amount and fails to cure such failure within 30 days after receipt of notice, defaults in our obligation to obtain and maintain insurance and fails to remedy such breach within 60 days after receipt of notice, or declares insolvency or bankruptcy. We may terminate the agreement at any time upon at least 60 days’ written notice.

Shanghai Pharmaceutical (USA) Inc. (“SPH USA”)

In November 2018, we entered into the SPH USA License Agreement, with SPH USA under which we granted exclusive rights to SPH USA to manufacture, develop, market, distribute and sell in the People’s Republic of China, Hong Kong, Macau, and Taiwan (the “SPH USA Territory”), our product candidates under the Georgetown License Agreement and the UC San Diego License Agreement. Under the SPH USA License Agreement, SPH USA is solely responsible for all pre-clinical and clinical development activities specific to obtaining regulatory approval for such product candidates in the SPH USA Territory, any third-party license milestone or royalty payments owed under the Georgetown License Agreement and the UC San Diego License Agreement, and paying us a low single digit royalty on net sales of licensed products in the SPH USA Territory. The SPH USA License Agreement will expire on a licensed product-by-licensed product and country/region-by-country/region basis on the later of ten years from the date of first commercial sale or when there is no longer a valid patent claim covering such licensed product in such country/region. The SPH USA License Agreement may be terminated by SPH USA, on a country/region-by-country/region or product-by-product basis with 180 days written notice following the first anniversary of the effective date of the agreement or at any time on a product-by-product basis for a safety concern with respect to such product. Either party may terminate the SPH USA License Agreement in its entirety or on a licensed product-by-licensed product basis upon material breach that is not cured within 90 days, or in its entirety the event the other party becomes insolvent or enters into bankruptcy proceedings. We may terminate the agreement with 60 days written notice if SPH USA or its affiliates or sublicensees commence an action challenging the validity or enforceability of any licensed patent, or with 10 days written notice if SPH USA fails to own at least 20% of the voting securities of any assignee of the SPH USA License Agreement. Upon termination of the agreement for any reason all rights and licenses granted to SPH USA under the agreement will terminate, and in the event of termination for reasons other than our material breach, SPH USA would grant us non- exclusive, royalty-free, worldwide license to any intellectual property rights controlled by SPH USA or its affiliates to exploit the terminated program in the SPH USA Territory.

Selexis S.A.

In May 2014, ROAR Therapeutics, Inc., our predecessor company, entered into a commercial license agreement (the “Selexis License Agreement”), with Selexis, S.A., a Swiss company, pursuant to which we obtained a world-wide, non-exclusive license under certain of Selexis’ patents and technology rights to use a recombinant cell line produced using the Selexis technology to produce cirmtuzumab. Under the terms of the Selexis License Agreement, we will pay Selexis milestone payments totaling, in the aggregate, CHF 1,235,000, and a royalty in the low single digits on net sales of cirmtuzumab to third parties. The Selexis License Agreement remains in effect until the last to expire of the licensed Selexis patents, but may be terminated by either party if the other party materially breaches the agreement and fails to cure the breach within sixty days after receipt of a notice of default from the other party, or in the event the other party becomes insolvent or enters into bankruptcy proceedings. Additionally, we may terminate the Selexis License Agreement and the license granted therein at any time upon sixty days prior written notice to Selexis. In May 2015, Selexis’ rights to receive future milestone payments and royalties under the Selexis License Agreement were assigned to Ligand Pharmaceuticals, Incorporated.  In February 2020, the Selexis License Agreement was amended to authorize us to grant a sublicense to VelosBio, Inc.

University of Tennessee Research Foundation (“UTRF”)

In March 2015, we entered into a license agreement with UTRF (the “SARD License Agreement”), pursuant to which we were granted exclusive worldwide rights in all existingproprietary selective androgen receptor degrader, or SARD, technologies owned or controlled by UTRF, including all improvements thereto. Under the SARD License Agreement, we are obligated to employ active, diligent efforts to conduct preclinical research and development activities for the SARD program to advance one or more lead compounds into clinical development. We are also obligated to pay UTRF annual license maintenance fees, low single-digit royalties on net sales of products and additional royalties on sublicense revenues, depending on the state of development of a clinical product candidate at the time it is sublicensed. Unless terminated earlier, the term of the SARD License Agreement will continue, on a country-by-country basis, until the expiration of the last valid claim of any licensed patent in the particular country in which a licensed patent is granted. UTRF may terminate the SARD License Agreement for our uncured breach or upon ourits bankruptcy. On January 30, 2020, the SARD License Agreement was amended to extend certain diligence milestones.

In July 2007, we and UTRF also previously entered into a consolidated, amended and restated license agreement or the SARMwith UTRF (the “SARM License Agreement,Agreement”), to consolidate and replace our two previously

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existing SARM license agreements with UTRF and to modify and expand certain rights and obligations of each of the parties under both license agreements. Pursuant to the SARM License Agreement, we were granted exclusive worldwide rights in all existing selective androgen receptor modulator, or SARM, technologies owned or controlled by UTRF, including enobosarm, and certain improvements thereto, and exclusive rights to certain future SARM technology that may be developed by certain scientists at the University of Tennessee or subsequently licensed to UTRF under certain existing inter-institutional agreements with The Ohio State University. Unless terminated earlier, the termIn 2018, we disclosed that we had ceased its development of the SARM License Agreement will continue, ontechnology following the failure of a country-by-country basis, forPhase 2 clinical study of enobosarm to achieve statistical significance with respect to the longer of 20 years or until the expirationprimary endpoint of the last valid claimstudy. On December 31, 2019, we notified UTRF of any licensed patent in the particular country in which a licensed product is being sold. UTRF mayour intent to terminate the SARM License Agreement, for our uncured breach or upon our bankruptcy.

        Underwhich termination will be effective as of March 31, 2020. Following termination, we will no longer have the obligation to make further payments under the SARM License Agreement, we paid UTRF a one-time, upfront feeincluding payments for patent prosecution and maintenance, and will no longer have any rights to develop or sublicense the SARM Technology. We will not incur any early termination penalties due to the termination of $290,000 as consideration for entering into the SARM License Agreement.

Manufacturing

We are also obligated to pay UTRF annual license maintenance fees, low single-digit royalties on net saleshave adopted a manufacturing strategy of products and mid-single-digit royalties on sublicense revenues. We also agreed to pay all expenses to file, prosecute and maintain the patents relating to the licensed SARM technologies, and are obligated to use commercially reasonable efforts to develop and commercialize products based on the licensed SARM technologies. While we currently have ceased development efforts for SARMs, we continue to seek potential collaborative, partnering or other strategic arrangements for our SARM assets, including a sale or other divestiture of our SARM assets. In December 2008, we and UTRF amended the SARM License Agreement, or the SARM License Amendment, to, among other things, clarify the treatment of certain payments that we may receive from our current and future sublicensees for purposes of determining sublicense fees payable to UTRF, including the treatment of payments made to uscontracting with third parties in exchangeaccordance with cGMP for the salemanufacture of drug substance and product, and additional manufacturers are used to label, package and distribute investigational drug products. This strategy allows us to maintain a more flexible infrastructure while focusing our securities in connection with sublicensing arrangements. In consideration for the execution of the SARM License Amendment, we paid UTRF $494,000.expertise on developing our products.

Manufacturing

We do not currently own or operate manufacturing facilities, and we rely, and expect to continue to rely on third parties for the production of clinical and commercial quantities of any product candidates.

There are no unusually complicated chemistriesbiochemistries or unusual equipment required in the manufacturing process for either SARMscirmtuzumab or SARDs. We rely and expect to continue to rely on third-party vendors for drug substance and drug product manufacturing, including drug substance for SARDs used in our current and potential future preclinical studies.

Competition
TK216.

 The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. We face competition from many different sources, including commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies and private and public research institutions.

        Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Our commercial opportunities will be reduced or eliminated if our competitors

TableWe have established a quality control and quality assurance program, which includes a set of Contentsstandard operating procedures and specifications designed to ensure that our products are manufactured in accordance with cGMPs, and other applicable domestic and foreign regulations.

developIntellectual Property

We strive to protect and commercialize similar productsenhance the proprietary technology, inventions, and improvements that are safer, more effective, have fewer side effectscommercially important to our business, including seeking, maintaining, and defending patent rights, whether developed internally or are less expensive than any products that we and/acquired or our collaborators may develop.

SARDs for the Potential Treatment of CRPC

        We have entered into an exclusive worldwide license agreement with UTRFlicensed from third parties. Our policy is to develop its proprietary SARD technology which we believe has the potential to provide compounds that can degrade or antagonize multiple forms of the AR thereby inhibiting tumor growth in patients with CRPC, including those patients who do not respond or are resistant to current therapies. Drugs in development having potentially similar approaches to removing the AR by degradation include Arvinas Inc.'s ARV-110, which is a chimera with an AR binding moiety on one end and an E3 ligase recruiting element on the other that has recently entered Phase 1 development for the treatment of advanced prostate cancer, and Androscience Corporation's androgen receptor degrader enhancer, ASC-J9, which is currently in development for acne and alopecia with the potential for development as a treatment for prostate cancer. Additionally, Essa Pharma Inc. recently completed a Phase 1 study with EPI-506, an AR antagonist that targets the N-terminal domain of the AR, and has plans to develop a second generation agent. C4 Therapeutics, Inc. is developing degronimids as means to degrade the AR through the ligand binding domain associated degradation. CellCentric is developing therapies that target the histone methyltransferase enzyme to lower AR levels, and recently initiated a clinical trial with CCS1477 in prostate cancer. Oric Pharmaceuticals is targeting the glucocorticoid receptor as a means to impact men that have CRPC, and has a lead candidate ORIC-101 in preclinical testing. In addition to this specific potential mechanistic competition, there are various products approved or under clinical development in the broader space of treating men with advanced prostate cancer who have metastatic CRPC which may compete with our proposed initial clinical objective for our SARD compounds. Pfizer and Astellas Pharma market XTANDI® (enzalutamide), an oral androgen receptor antagonist, for the treatment of metastatic CRPC in men previously treated with docetaxel as well as those that have not yet received chemotherapy. XTANDI® received FDA approval in July 2018 for the treatment of men with non-metastatic CRPC. Zytiga®, sold by Johnson & Johnson, has been approved for the treatment of metastatic CRPC and metastatic high-risk castration-sensitive prostate cancer. Johnson & Johnson also received FDA approval for a second generation anti-androgen ERLEADA (apalutamide) for the treatment of men with non-metastatic castrate-resistant prostate cancer. Bayer HealthCare and Orion Corporation recently announced that the primary endpoint of increased metastatic free survival was met in a Phase 3 study of darolutamide (ODM-201) in men with CRPC without metastases and with a rising PSA. Another target in prostate cancer that is being pursued by several companies is bromodomain inhibition. Zenith Epigenetics, Gilead Sciences Inc., CellCentric, Incyte Corporation and GlaxoSmithKline are among the companies that are evaluating BET inhibitors in Phase 1-2 trials.

SARMs

        With respect to SARMs, there are other SARM product candidates in development that may compete with enobosarm and any future SARM product candidates, if approved for commercial sale. For example, Viking Therapeutic's VK5211 recently reported positive results from a Phase 2 study for patients recovering from non-elective hip fracture surgery. Radius Health Inc.'s RAD140 is currently being evaluated in a Phase 1 study in postmenopausal women with hormone-receptor positive locally advanced or metastatic breast cancer. GlaxoSmithKline is conducting a Phase 1 study to assess the effect of GSK2881078 on physical strength and function after 13 weeks of treatment in patients with chronic obstructive pulmonary disease, or COPD, and muscle weakness. OPKO Health's OPK88004 is enrolling in a dose ranging study to improve symptoms of benign prostatic hyperplasia (BPH) by

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reducing prostate size and, on the basis of data from a previous trial in 350 men, increase muscle mass and bone strength and decrease body fat.

Intellectual Property

        We will be ableseek to protect our technology from unauthorized useproprietary position by, third parties only to the extent it is covered by valid and enforceable patents or is effectively maintained as trade secrets. Patents andamong other proprietary rights are an essential element of our business.

        For our SARD compounds and methods, of use thereof, we have filed certainfiling patent applications in the United States Canada, Mexico, Australia, Japan, China, and other countries in Asia and before the European Patent Office and are the exclusive licensee of worldwide rights for the SARD technology under a license agreement with UTRF executed in 2015. Thus far we have six issued patents and one is allowed, all in the United States. The patents and patent applications (if are issued) will expire between 2036 and 2039.

        For enobosarm and our other SARM compounds, we have an exclusive license from UTRF under its issued patents and pending patent applications in the United States, Canada, Australia, Japan, China and other countries in Asia, before the European Patent Office designating Germany, Great Britain, Spain, France, Italy, and other European Union countries, as well as in certain other countries outside those regions, covering the composition of matter of the active pharmaceutical ingredient for pharmaceutical products, pharmaceutical compositions and methods of synthesizing the active pharmaceutical ingredients. We have also exclusively licensed from UTRF issued and pending patent applications in the United States, Canada, Australia, Japan, China and other countries in Asia, before the European Patent Office designating Germany, Great Britain, Spain, France, Italy and other European Union countries, as well as in certain other countries outside those regions, related to methods for treating muscle wasting disorders, including Duchenne Muscular Dystrophy, or DMD, and cancer cachexia, and for treating conditions such as SUI and fecal incontinence, as well as sarcopenia, and increasing muscle performance, muscle size and muscle strength and increasing the strength of or mass of a bone and for treating bone related disorders, including bone frailty and osteoporosis. Issued patents for enobosarm composition of matter that we licensed from UTRF and issued in the United States expire in 2024. Issued patents for composition of matter for our other SARM compounds in the United States will expire from 2021-2029, depending on the specific SARM compound. The issued patentsjurisdictions outside of the United States related to our proprietary technology, inventions, and improvements that are important to the development and implementation of our business. We also rely on trade secrets and know-how relating to our proprietary technology, continuing innovation, and acquisition and in-licensing opportunities to develop, strengthen, and maintain our proprietary position in the field of cancer therapeutics.

Our commercial success may depend in part on our ability to (i) obtain and maintain patent and other proprietary protection for enobosarm expire in 2025,our technology, inventions, and with respect toimprovements; (ii) preserve the confidentiality of our trade secrets; (iii) defend and enforce our proprietary rights, including our patents; and (iv) operate without infringing the valid and enforceable patents and other SARM compounds, expire in 2023 and 2027, depending on the specific SARM compound. proprietary rights of third parties.

We have developed, licensed and acquired numerous patents and patent applications and possess substantial know-how and trade secrets relating to the development and commercialization of healthcare products and services. As of February 19, 2020, our owned and in-licensed patent portfolio consisted of approximately 28 issued U.S. patents and 21 pending U.S. patent applications related to certain of our proprietary technology, inventions, and improvements, and 30 issued patents and 120 pending patent applications in jurisdictions outside of the United States.

ROR1 Program

We have an exclusive, commercial, worldwide, transferrable license to a portfolioofpatentsandpatentapplicationsdirected to ROR1 antibodiesand CAR-T therapies for alltherapeuticindications.Thisportfolio is licensed from theRegents of the University of California. We have know-how and trade secrets related to compositions of matter for treating cancers, methods for treating cancer, and methods of screening for additionalcompositionsof matter used for treating cancer, as well as to additionalantibodiesandmoleculesthatmodulate ROR1 signaling, and we have filed one pending provisional application in the U.S. related to cirmtuzumab.

As of February 19, 2020, our licensed patent portfolio included patents related to our clinical candidate currently in phase 1/2 clinical trials, cirmtuzumab. Cirmtuzumab is a humanizedmonoclonalantibodythatspecificallybinds to the ROR1 receptor. We have two issued U.S. patents directed to the cirmtuzumab compositionof matter: U.S. Pat. No. 9,217,040, with a patent term not due to expire before 2032;and U.S. Patent No. 9,758,591, with a patent term not due to expire before March 2033. We have one patent issued in the U.S. directed to methods of using cirmtuzumab to treat cancer, U.S. Pat, No. 10,344,096. We have one patent application pending in the U.S. related to single chain variable region fragments that bind to cirmtuzumab which, if issued, would have a patent term not due to expire before 2033. We also have patents issued in Australia, China, Europe, Israel, Japan, Korea, Macao and Mexico directed to the cirmtuzumab compositions of matter. We have approximately 14 pending applications in foreign jurisdictions related to the cirmtuzumab composition of matter and methods of use in treating cancer, including Australia, Canada, China, Europe, Japan, Korea, Malaysia, Mexico, Philippines, and Thailand. Patents, if issued from these pending foreign applications, would not be due to expire before 2033.

As of February 19, 2020, we have patent applications pending in the U.S. and in 17 jurisdictions outside the U.S. related to methods of treating cancer using a combination of cirmtuzumab and small-molecule chemotherapeutics. Patents, if issued from these pending non-provisional applications, would not be due to expire before dates ranging from 2037 to 2039.

As of February 19, 2020, we have patents and patent applications related to additional ROR1 binding antibodies and chimeric antigen receptor T cells specific for our other SARM compounds that,ROR1. We have four issued U.S. patents directed to non-cirmtuzumab antibodies: U.S. Pat. No. 8,212,009, with a patent term not due to expire before November, 2026; U.S. Patent No. 9,242,014, with a patent term not due to expire before June 2031; U.S. Patent No. 9,938,350, with a patent term not due to expire before June 2031; and U.S. Patent No. 9,217,040, with a patent term not due to expire before January 2032.  We have two patent applications pending in the U.S. related to additional non-cirmtuzumab ROR1 binding antibodies and non-cirmtuzumab chimeric antigen receptor T cells specific for ROR1, which, if issued, would have a patent term not due to expire before dates ranging from 2031 to 2032. We also have patents issued in Europe and Canada directed to additional ROR1 binding antibodies. We have patent applications pending in Europe and Canada related to additional ROR1 binding antibodies and single-chain variable region fragments specific for ROR1. Patents, if issued from these pending foreign applications, would not be due to expire before 2032.

As of February 19, 2020, we have intellectual property related to methods of screening for antibodies that specifically bind to ROR1. We have two issued U.S. patents, U.S. Pat. Nos. 9,523,695, and 9,933,434, with patent terms not due to expire before January 2032, directed to methods of screening for antibodies that specifically bind to ROR1. We additionally have patent applications pending directed to methods of screening for modulators of ROR1 signaling in jurisdictions including the U.S., Australia, Canada, China, Hong Kong, Japan, and Europe.

TK216 Program

We have exclusive worldwide rights to a portfolio of patents and patent applications related to small molecules, including TK216, targeting EWS-FLI1 for use in therapeutics and companion diagnostics. We hold a portfolio of patents and patent applications, the Oncternal Portfolio, related to TK216, analogs thereof, and uses thereof, as well as the Georgetown Licensed Portfolio, which is licensed from Georgetown University.

As of February 19, 2020, the Oncternal Portfolio consisted of approximately six U.S. issued patents and three pending applications in the U.S., as well as approximately three patents and approximately 36 pending patent applications in jurisdictions outside of the U.S. As of February 19, 2020, we had two U.S. patents directed to TK216: U.S. Pat. No. 9,604,927, with a patent term not due to expire before October 2035, and U.S. Pat. No. 9,987,251, with a patent term not due to expire before October 2035. We also had a patent with claims directed to methods of inhibiting proliferation of a cell that overexpresses an ETS gene or comprises an ETS fusion gene, or inhibiting growth of or killing neoplastic cells: U.S. Pat. No. 9,895,352, with a patent term not due to expire before October 2035. We had approximately one pending U.S. application and approximately 18 patents or pending applications in jurisdictions outside the U.S., including Australia, Argentina, Canada, China, Eurasia, Europe, Hong Kong, India, Israel, Japan, Korea, Mexico, New Zealand, Pakistan, and Taiwan. These patents have a patent term not due to expire before October 2035, and patents, if issued from these applications, would not be due to expire before October 2035. We also had a patent with claims covering compositions of TK216 in combination with venetoclax and associated methods of inducing apoptosis in cells in AML and DLBCL: U.S. Pat. No. 10,159,660, with a patent term not due to expire before July 2037. We had approximately one pending U.S. application and approximately 13 pending applications filed in jurisdictions outside the U.S., including Argentina, Canada, China, Europe, Hong Kong, Indonesia, Japan, Korea, Mexico, Malaysia, Philippines, Singapore, and Taiwan. Patents, if issued from these applications, would not be due to expire before July 2037.  The Oncternal Portfolio further contained additional patents and pending applications related to indoline derivative compounds, which are analogs of TK216. We had two issued U.S. patents directed to compounds and methods of inhibiting proliferation of a cell expressing an ETS gene or comprising an ETS fusion gene: U.S. Pat. No. 9,822,122, with a patent term not due to expire before March 2037, and U.S. Pat. No. 10,351,569, with a patent term not due to expire before March 2037. There was one pending U.S. application and approximately eight applications pending outside the U.S. in Argentina, Pakistan, Taiwan, China, Europe, Japan, Korea, and Malaysia. Patents, if issued from these applications, would not be due to expire before March 2037.

As of February 19, 2020, the Georgetown Licensed Portfolio contained patents directed to other EWS-FLI1 inhibitor compounds. We had three U.S. patents directed to compounds and methods for treating Ewing sarcoma or pancreatic cancer: U.S. Pat. No. 8,232,310, with a patent term not due to expire before November 2028, U.S. Pat. No. 9,045,415, with a patent term not due to expire before August 2028, and U.S. Pat. No. 9,758,481, with a patent term not due to expire before December 2027. We had four issued patents in jurisdictions outside the U.S., including Australia, Canada, Europe, and Hong Kong. These patents are not due to expire before December 2027. We had two issued U.S. patents directed to compounds and methods for treating pancreatic cancer or Ewing sarcoma: U.S. Pat. No. 9,290,449, with a patent term not due to expire before April 2033, and U.S. Pat. No. 9,714,222, with a patent term not due to expire before April 2033. There are approximately 16 patents or pending applications outside the U.S. in Australia, Canada, China, Europe, Hong Kong, Israel, India, Japan, Korea, Mexico, and New Zealand. These patents have a patent term not due to expire before April 2033, and patents, if issued from these applications, would not be due to expire before April 2033.  The Georgetown Licensed Portfolio contained additional patents and pending applications related to methods of treating cancers. We had one issued U.S. patent directed to methods of treating lung cancer or glioblastoma multiforme: U.S. Pat. No. 9,511,050, with a patent term not due to expire before October 2034. There were approximately two patents issued outside the U.S. in China and Japan. These patents have a patent term not due to expire before October 2034.

SARD Program

We have exclusive worldwide rights to a portfolio of patents and patent applications related to Selective Androgen Receptor Degrader (SARD) compounds for use in therapeutics. We hold a portfolio of patents and patent applications related to SARDs and jointly owned with University of Tennessee Research Foundation, including seven issued U.S. patents directed to SARD ligands and methods of use thereof: U.S. Pat. No. 9,814,698, U.S. Pat. No. 10,017,471, U.S. Pat. No. 10,035,763, U.S. Pat. No. 10,441,570, U.S. Pat. No. 9,815,776, U.S. Pat. No. 9,834,507, and U.S. Pat. No. 10,093,613, with a patent term not due to expire before April 2036. We also had a portfolio of patents and patent applications licensed from University of Tennessee Research Foundation including one issued U.S. patent directed to SARD ligands and methods of use thereof: U.S. Pat. No. 10,314,797 with a patent term not due to expire before June 2037.  

Individual patents extend for varying periods of time, depending upon the date of filing of the patent application, the date of patent issuance, and the legal term of patents in the countries in which they are obtained. Generally, patents issued for applications filed in the United States are effective for 20 years from the earliest effective and non-provisional filing date. The patent term may be adjusted to compensate for delayed patent issuance, when such delays are caused by the patent office or successful appeals against patent office actions. There is no limit on this patent term adjustment. In addition, in countries outsidecertain instances, a patent term can be extended to recapture a portion of the United States in 2027. We have issued patents in the United States, and issued patents and pending applications in countries outside the United States for enobosarm and certain other SARM compoundsterm effectively lost as a feed composition for animals.result of the FDA regulatory review period. The patents inextended restoration period cannot be longer than five years and the United States will expire in 2025. Issuedtotal patent term, including the restoration period, must not exceed 14 years following the date of FDA approval of the applicable drug product. The duration of patents outside the United States, and patent applications, if issued, which are pending outside the United States, will expire in 2027 or 2031 depending on the country. Patent applications which are pending in the United States and outside the United States using SARMs for SUI and pelvic floor disorders will expire in 2035, if the patents are issued. Our issued patent in the United States using enobosarm for DMD will expire in 2021. Our issued patent in the United States using other SARMs for DMD will expire in 2024. Patent applications, if issued, which are pending in the United States, using other SARMs for DMD will expire in 2024 or 2027 depending on the SARM.

        We have our own issued patents and pending patent applications in the United States, Canada, Australia, Europe, Japan, China and other countries in Asia, as well as in certain other countries outside those regions, related to solid forms of enobosarm. Issued patents covering solid forms of

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enobosarm in the United States will expire in 2029. Issued patents and pending patent applications, if issued, in countries outside of the United States willvaries in accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective non-provisional filing date. Our issued patents are due to expire in 2028. We haveon dates ranging from 2026-2037. If patents are issued on our own pending patent applications, the resulting patents would be due to expire on dates ranging from 2026-2040. However, the actual protection afforded by a patent varies on a product-by-product basis, from country-to-country, and issueddepends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country, and the validity and enforceability of the patent. Most countries require a patent owner to pay maintenance fees or annuities in order to extend the patent to the full length of its term.  If these fees and annuities are not paid timely, our patents will expire prior to the expiration dates set forth herein.

Government Regulation

Government authorities in the United States, at the federal, state and in Europe, Canada, Australia, Japan, Chinalocal level, and other countries in Asia related to methodsextensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record‑keeping, promotion, advertising, distribution, marketing and export and import of treating breast cancer using our SARM compounds. Such patentsproducts such as those we are developing. A new drug must be approved by the FDA through the NDA process and patent applications, if issued, would expire in 2033a new biologic must be approved by the FDA through the BLA process before it may be legally marketed in the United States.

United States and outside of the United States. We have issued patents inDrug Development Process

In the United States, directed to androgen receptor positive breast cancerthe FDA regulates drugs under the federal Food, Drug, and Cosmetic Act, or FDCA, and in general, various categoriesthe case of estrogen receptorbiologics, also under the Public Health Service Act, or “PHSA”, and androgen receptor positive breast cancer, as well as triple negative breast cancer.

        We cannot be certain that anytheir implementing regulations. The process of our pending patent applications, or those of UTRF, will result in issued patents. In addition, because the patent positions of biopharmaceutical companies are highly uncertain and involve complex legal and factual questions, the patents we own and license, or any further patents we may own or license, may not prevent other companies from developing similar or therapeutically equivalent products. Patents also will not protect our product candidates if competitors devise ways of making or using these product candidates without legally infringing our patents. In recent years, several companies have been extremely aggressive in challenging patents covering pharmaceutical products,obtaining regulatory approvals and the challenges have often been successful. We cannot be assured that our patents will not be challenged by third parties or that we will be successful in any defense we undertake.subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to successfully defendcomply with the applicable U.S. requirements at any time during the product development process, approval process or after approval may subject an applicant to administrative or judicial sanctions. These sanctions could include the FDA’s refusal to approve pending applications, withdrawal of an approval, a patent challenge could materially and adversely affect our business.

        In addition, changes in patent laws, rulesclinical hold, warning letters, product recalls, product seizures, total or regulationspartial suspension of production or in their interpretations in the United States and other countries by the courts may materially diminish the valuedistribution, injunctions, fines, refusals of our intellectual propertygovernment contracts, restitution, disgorgement or narrow the scope of our patent protection, whichcivil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on our business and financial condition.us.

        We also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position. We seek to protect our proprietary informationThe process required by requiring our employees, consultants, contractors, outside scientific collaborators and other advisors to execute non-disclosure and confidentiality agreements and our employees to execute assignment of invention agreements to us on commencement of their employment. Agreements with our employees also prevent them from bringing any proprietary rights of third parties to us. We also require confidentialitythe FDA before a drug or material transfer agreements from third parties that receive our confidential data or materials.

Government Regulation

New Drug Development and Approval Process

        Numerous governmental authoritiesbiologic may be marketed in the United States generally involves the following:

The clinical study sponsor must submit the results of the preclinical tests, together with manufacturing information, and analytical data, are submittedany available clinical data or literature and a proposed clinical protocol, to the FDA as part of anthe IND. Some preclinical testing may continue even after the IND submission.is submitted. The IND automatically becomes effective if not rejected30 days after receipt by the FDA, within 30 days afterunless the FDA receivesplaces the IND.clinical study on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical study can begin. The FDA may either during the 30-day period after filing of an IND oralso impose clinical holds on a biological product candidate at any future time impose a clinical hold on proposedbefore or ongoingduring clinical trials on various grounds, including that the study subjects aredue to safety concerns or would be exposed to an unreasonable and significant health risk.non-compliance. If the FDA imposes a clinical hold, clinical trials cannot commence ormay not recommence without FDA authorization and then only under terms authorized by the FDA.

        ClinicalIn addition to the submission of an IND to the FDA, supervision of certain human gene transfer trials may also require evaluation and assessment by an institutional biosafety committee, or IBC, a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution. The IBC assesses the safety of the research and identifies any potential risk to the public health or the environment, and such assessment may result in some delay before initiation of a clinical trial.

’Clinical trials involve the administration of the investigationala product candidatescandidate to humanshealthy volunteers or patients under the supervision of a qualified principal investigator.investigators, generally physicians not employed by or under the study sponsor’s control. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical study, dosing procedures, patient selection and exclusion criteria, and the parameters to be used to monitor patient safety, including stopping rules that assure a clinical study will be stopped if certain adverse events should occur. Each protocol and any amendments to the protocol must be conducted in accordance with Good Clinical Practices under protocols submitted to the FDA as part of the IND. In addition,Clinical trials must be conducted and monitored in accordance with the FDA’s regulations including GCP requirements, including the requirement that all research patients provide informed consent. Further, each clinical trialstudy must be reviewed and approved and conducted under the auspices ofby an Investigational Review Board,independent institutional review board, or IRB, and with patient informed consent. The IRB typically considers, among other things, ethical factors andat or servicing each institution at which the safety of human subjects.

        Clinicalclinical study will be conducted. Human clinical trials are typically conducted in three sequential phases butthat may overlap or be combined:

Post‑approval trials, sometimes referred to as Phase 4 studies, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA or BLA.

The FDA or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug candidate.

Tablehas been associated with unexpected serious harm to patients. In addition, some clinical trials are overseen by an independent group of Contentsqualified experts organized by the sponsor, known as a data safety monitoring board or committee. Depending on its charter, this group may determine whether a trial may move forward at designated check points based on access to certain data from the trial.

Product FormulationDuring the development of a new drug or biologic, sponsors are given opportunities to meet with the FDA at certain points. These points may be prior to submission of an IND, at the end of Phase 2, and Manufacture
before an NDA or BLA is submitted. Meetings at other times may be requested. These meetings can provide an opportunity for the sponsor to share information about the data gathered to date, for the FDA to provide advice, and for the sponsor and the FDA to reach agreement on the next phase of development. Sponsors typically use the meetings at the end of the Phase 2 trial to discuss Phase 2 clinical results and present plans for the pivotal Phase 3 clinical trial that they believe will support approval of the new drug or biologic.

Concurrent with clinical trials, companies usually complete additional animal studies and preclinical studies, companies must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the product. In addition, manufacturers, including contract manufacturers, are required to complyproduct in commercial quantities in accordance with current applicable FDA Good Manufacturing Practice, or cGMP regulations. The cGMP regulations include requirements relating to quality control and quality assurance, as well as the corresponding maintenance of records and documentation.requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality purity and potencypurity of the final drugs. Additionally,drug. In addition, appropriate packaging must be selected and tested, and chemistry stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf-life.

        Compliance with cGMP regulations alsoshelf life. While the IND is active and before approval, progress reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report must be submitted at least annually to the FDA, and written IND safety reports must be submitted to the FDA and investigators for serious and unexpected suspected adverse events, findings from other studies suggesting a conditionsignificant risk to humans exposed to the same or similar drugs, findings from animal or in vitro testing suggesting a significant risk to humans, and any clinically important increased incidence of new drug application approval. The FDA must approve manufacturing facilities before they can be useda serious suspected adverse reaction compared to that listed in the commercial manufactureprotocol or investigator brochure.

There are also requirements governing the reporting of drug products. In addition, manufacturing establishmentsongoing clinical trials and completed trial results to public registries. Sponsors of certain clinical trials of FDA‑regulated products are subjectrequired to pre-approval inspectionsregister and unannounced periodic inspections.

New Drug Application Process

        Afterdisclose specified clinical trial information, which is publicly available at www.clinicaltrials.gov. Information related to the completionproduct, patient population, phase of investigation, trial sites and investigators and other aspects of the clinical trial phasesis then made public as part of the registration. Sponsors are also obligated to discuss the results of their clinical trials after completion. Disclosure of the results of these trials can be delayed until the new product or new indication being studied has been approved.

United States Review and Approval Process

The results of product development, ifpreclinical and other non‑clinical studies and clinical trials, along with descriptions of the sponsor concludes that there is substantial evidence thatmanufacturing process, analytical tests conducted on the chemistry of the drug, candidate is safeproposed labeling and effective for its intended use, the sponsor may submit a NDAother relevant information are submitted to the FDA.FDA as part of an NDA or BLA requesting approval to market the product. The application must contain all of the information on the drug candidate gathered to that date, including data from the clinical trials, and be accompanied by a user fee.

        Under the Prescription Drug User Fee Act, or PDUFA, submission of aan NDA with clinical data requiresor BLA is subject to the payment of user fees; a fee, with some exceptions. In return, the FDA assigns a goalwaiver of six or ten months from filing of the application to return of a first "complete response," in which the FDAsuch fees may approve the product or request additional information. There can be no assurance that an application will be approved within the performance goal timeframe establishedobtained under PDUFA. certain limited circumstances.

The FDA initially determines whether a NDA asreviews all NDAs and BLAs submitted is acceptableto ensure that they are sufficiently complete for substantive review before it accepts them for filing. The FDA may refuserequest additional information rather than accept an NDA or BLA for filing. In this event, the NDA or BLA must be resubmitted with the additional information. The resubmitted application also is subject to file an application, in which casereview before the FDA retains one-half of the user fees. Ifaccepts it for filing.

Once the submission is accepted for filing, the FDA begins an in-depth review of the application. As part of this review, thein‑depth substantive review. The FDA may refer the applicationNDA or BLA to an appropriate advisory committee typically a panel of clinicians, for review, evaluation and a recommendation.recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee.

        Ifcommittee, but it generally follows such recommendations. The approval process is lengthy and often difficult, and the FDA evaluations ofmay refuse to approve an NDA or BLA if the applicable regulatory criteria are not satisfied or may require additional clinical or other data and information. Even if such data and information are submitted, the FDA may ultimately decide that the NDA or BLA does not satisfy the criteria for approval. The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP‑compliant to assure and preserve the product’s identity, strength, quality and purity. The FDA reviews a BLA to determine, among other things whether the product is safe, pure and potent and the manufacturing facilities are favorable,facility in which it is manufactured, processed, packed or held meets standards designed to assure the product’s continued safety, purity and potency. Before approving an NDA or BLA, the FDA maywill inspect the facility or facilities where the product is manufactured.

After the FDA evaluates an NDA or BLA, it will issue an approval letter authorizingor a Complete Response Letter. An approval letter authorizes commercial marketing of the drug candidatewith prescribing information for specifiedspecific indications. The FDA could also issue a "complete response" letter at the end of the review period. A "complete response" letter will be issued to let a company knowComplete Response Letter indicates that the review period for a drugcycle of the application is complete and that the application iswill not yet ready for approval. The letter will describebe approved in its present form. A Complete Response Letter usually describes the specific deficiencies and, when possible, will outline recommended actionsin the applicant might take to get the application ready for approval, including calling for additional clinical trial data.

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Marketing Approval and Post-Marketing Obligations

        If the FDA approves an application, the drug becomes available for physicians to prescribe. Periodic reports must be submitted to the FDA, including descriptions of any adverse reactions reported. The FDA may require post-marketing studies, also known as Phase IV studies, as a condition of approval. In addition to studies required by the FDA after approval, trials and studies are often conducted to explore new indications for the drug. The purpose of these trials and studies and related publications is to develop data to support additional indications for the drug, which must be approvedNDA or BLA identified by the FDA and may require additional clinical data, such as an additional pivotal Phase 3 trial or other significant and time‑consuming requirements related to increase its acceptanceclinical trials, nonclinical studies or manufacturing. If a Complete Response Letter is issued, the sponsor must resubmit the NDA or BLA, addressing all of the deficiencies identified in the medical community.letter, or withdraw the application. Even if such data and information are submitted, the FDA may decide that the NDA or BLA does not satisfy the criteria for approval. If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. In addition, some post-marketing studies are done at the request of the FDA may require a sponsor to develop additional information regarding theconduct Phase 4 testing, which involves clinical trials designed to further assess a drug’s safety of a product.

        The FDAand effectiveness after NDA or BLA approval, and may impose risk evaluation mitigation strategies, or REMS, on a product if the FDA believes there is a reasonrequire testing and surveillance programs to monitor the safety of approved products which have been commercialized. The FDA may also place other conditions on approval including the requirement for a risk evaluation and mitigation strategy, or “REMS” to assure the safe use of the drug. If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS. The FDA will not approve the NDA without an approved REMS, if required. A REMS could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products. Marketing approval may be withdrawn for non‑compliance with regulatory requirements or if problems occur following initial marketing.

The Food and Drug Administration Safety and Innovation Act, or FDASIA, made permanent the Pediatric Research Equity Act, or PREA, which requires a sponsor to conduct pediatric clinical trials for most drugs and biologics, for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. Under PREA, original NDAs, BLAs and supplements thereto must contain a pediatric assessment unless the sponsor has received a deferral or waiver. The required assessment must evaluate the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The sponsor or FDA may request a deferral of pediatric clinical trials for some or all of the pediatric subpopulations. A deferral may be granted for several reasons, including a finding that the drug or biologic is ready for approval for use in adults before pediatric clinical trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric clinical trials begin. The FDA must send a non‑compliance letter to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.

Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the marketplace. REMSUnited States or, if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a drug or biologic product available in the United States for this type of disease or condition will be recovered from sales of the product. Orphan designation must be requested before submitting an NDA or BLA. After the FDA grants orphan designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biological product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or inability to manufacture the product in sufficient quantities. The designation of such drug or biologic also entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user‑fee waivers. However, competitors, may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity. Orphan exclusivity also could add training requirementsblock the approval of one of our product candidates for healthcare professionals, safety communications efforts,seven years if a competitor obtains approval of the same drug or biologic as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease. If an orphan designated product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan exclusivity. Orphan drug status in the European Union has similar but not identical benefits in that jurisdiction.

Expedited Development and limitsReview Programs

The FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new drug products that meet certain criteria. Specifically, new drugs are eligible for Fast Track designation if they are intended to treat a serious or life‑threatening disease or condition and demonstrate the potential to address unmet medical needs for the disease or condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. Unique to a Fast Track product, the FDA may consider for review sections of the NDA or BLA on channelsa rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of distribution, amongthe sections of the NDA or BLA, the FDA agrees to accept sections of the NDA or BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA or BLA.

Any product submitted to the FDA for approval, including a product with a Fast Track designation, may also be eligible for other things.types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. A product is eligible for priority review if it has the potential to provide a significant improvement in the treatment, diagnosis or prevention of a serious disease or condition compared to marketed products. The FDA will attempt to direct additional resources to the evaluation of an application for a new drug designated for priority review in an effort to facilitate the review. The FDA endeavors to review applications with priority review designations within six months of the filing date as compared to ten months for review of original BLAs and new molecular entity NDAs under its standard review goals.

In addition, a product may be eligible for accelerated approval. Drug and biologic products intended to treat serious or life‑threatening diseases or conditions may be eligible for accelerated approval upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform adequate and well‑controlled post‑marketing clinical trials. In addition, the FDA currently requires as a condition for accelerated approval pre‑approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. Fast Track designation, priority review and accelerated approval do not change the standards for approval but may expedite the development or approval process.

FDASIA established a category of drugs and biologics referred to as “breakthrough therapies” that may be eligible to receive Breakthrough Therapy Designation. A sponsor may seek FDA designation of a drug or biologic candidate as a “breakthrough therapy” if the product is intended, alone or in combination with one or more other products, to treat a serious or life‑threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The designation includes all of the Fast Track program features, as well as more intensive FDA interaction and guidance. The Breakthrough Therapy Designation is a distinct status from both accelerated approval and priority review, which can also be granted to the same drug if relevant criteria are met. If a product is designated as breakthrough therapy, the FDA will expedite the development and review of such drug. All requests for breakthrough therapy designation will be reviewed within 60 days of receipt, and the FDA will either grant or deny the request.

Rare Pediatric Disease Priority Review Voucher Program

In 2012, Congress authorized the FDA to award priority review vouchers to sponsors of certain rare pediatric disease product applications. This program is designed to encourage development of new drug and biological products for prevention and treatment of certain rare pediatric diseases. Specifically, under this program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease” may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product. The sponsor wouldof a rare pediatric disease drug product receiving a priority review voucher may transfer (including by sale) the voucher to another sponsor. The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application. The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the U.S. within one year following the date of approval.

For purposes of this program, a “rare pediatric disease” is a (a) serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years, including age groups often called neonates, infants, children, and adolescents; and (b) rare diseases or conditions within the meaning of the Orphan Drug Act. Congress has only authorized the Rare Pediatric Disease Priority Review Voucher program until September 30, 2020.  Consequently, sponsors of marketing applications approved after that date will not receive the voucher unless Congress reauthorizes the Rare Pediatric Disease Priority Review Voucher program, for which legislation has been proposed in the current Congress.  However, even if the program is not reauthorized, if a drug candidate receives Rare Pediatric Disease Designation before October 1, 2020, the sponsor of the marketing application for such drug will be eligible to receive a voucher if the application for the designated drug is approved by the FDA before October 1, 2022.

Post‑approval requirements

Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. After approval, some types of changes to the approved product, such as adding new indications, certain manufacturing changes and additional labeling claims, are subject to further FDA review and approval. Drug and biologics manufacturers and other entities involved in the manufacture and distribution of approved drugs and biologics are required to evaluateregister their establishments with the FDA and monitorcertain state agencies, and are subject to periodic unannounced inspections by the various REMS activitiesFDA and adjust them if need be. Whether a REMS would be imposedcertain state agencies for compliance with cGMP regulations and other laws and regulations. Changes to the manufacturing process are strictly regulated, and, depending on a productthe significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting requirements upon us and any resulting financial impact is uncertain at this time.third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

Any drug products manufacturedwe or distributedour partners manufacture or distribute pursuant to FDA approvals arewill be subject to continuing regulation by the FDA, including, record among other things, record‑keeping requirements, reporting of adverse experiences with the drug, providing the FDA with updated safety and efficacy information, drug sampling and distribution requirements, notifying the FDA and gaining its approval of certain manufacturing or labeling changes, complying with certain electronic records and signature requirements, and complying with FDA promotion and advertising requirements. The FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market and imposes requirements and restrictions on drug and biologics manufacturers, such as those related to direct‑to‑consumer advertising, the prohibition on promoting products for uses or in patient populations that are not described in the product’s approved labeling (known as “off‑label use”), industry‑sponsored scientific and educational activities, and promotional activities involving the internet. A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and consistent with the provisions of the approved label. Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant or manufacturer to administrative or judicial civil or criminal sanctions and adverse publicity. FDA sanctions could include refusal to approve pending applications or supplements to approved applications, withdrawal of an approval, clinical hold, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties.

Biosimilars and Exclusivity

The Affordable Care Act includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or “BPCIA”, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA‑licensed reference biological product. The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars.

Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. However, complexities associated with the larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being addressed by the FDA.

Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12‑year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well‑controlled clinical trials to demonstrate the safety, purity and potency of their product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law.

A biological product can also obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.

The BPCIA is complex and continues to be interpreted and implemented by the FDA. In addition, recent government proposals have sought to reduce the 12‑year reference product exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. As a result, the ultimate impact, implementation and meaning of the BPCIA is subject to significant uncertainty.

FDA Regulation of Companion Diagnostics

Our product candidates may require use of an in vitro diagnostic to identify appropriate patient populations. These diagnostics, often referred to as companion diagnostics, are regulated as medical devices. In the United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, pre-clinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance. Unless an exemption applies, companion diagnostic tests require marketing clearance or approval from the FDA prior to commercial distribution. The two primary types of FDA marketing authorization applicable to a medical device are premarket notification, also called 510(k) clearance, and premarket approval, or PMA, approval.

If use of companion diagnostic is essential to safe and effective use of a drug or biologic product, then the FDA generally will require approval or clearance of the diagnostic contemporaneously with the approval of the therapeutic product. On August 6, 2014, the FDA issued a final guidance document addressing the development and approval process for “In Vitro Companion Diagnostic Devices.” According to the guidance, for novel candidates such as our product candidates, a companion diagnostic device and its corresponding drug or biologic candidate should be approved or cleared contemporaneously by FDA for the use indicated in the therapeutic product labeling. The guidance also explains that a companion diagnostic device used to make treatment decisions in clinical trials of a drug generally will be considered an investigational device, unless it is employed for an intended use for which the device is already approved or cleared. If used to make critical treatment decisions, such as patient selection, the diagnostic device generally will be considered a significant risk device under the FDA’s Investigational Device Exemption, or IDE, regulations. Thus, the sponsor of the diagnostic device will be required to comply with the IDE regulations. According to the guidance, if a diagnostic device and a drug are to be studied together to support their respective approvals, both products can be studied in the same investigational study, if the study meets both the requirements of the IDE regulations and the IND regulations. The guidance provides that depending on the details of the study plan and subjects, a sponsor may seek to submit an IND alone, or both an IND and an IDE. In July 2016, the FDA issued a draft guidance document intended to further assist sponsors of therapeutic products and sponsors of in vitro companion diagnostic devices on issues related to co-development of these products.

The FDA generally requires companion diagnostics intended to select the patients who will respond to cancer treatment to obtain approval of a PMA for that diagnostic contemporaneously with approval of the therapeutic. The review of these in vitro companion diagnostics in conjunction with the review of therapeutic candidates such as those we are developing involves coordination of review by the FDA’s Center for Drug Evaluation and Research and by the FDA’s Center for Devices and Radiological Health. The PMA process, including the gathering of clinical and pre-clinical data and the submission to and review by the FDA, can take several years or longer. It involves a rigorous premarket review during which the applicant must prepare and provide the FDA with reasonable assurance of the device’s safety and effectiveness and information about the device and its components regarding, among other things, device design, manufacturing and labeling. PMA applications are also subject to an application fee. In addition, PMAs for certain devices must generally include the results from extensive pre-clinical and adequate and well-controlled clinical trials to establish the safety and effectiveness of the device for each indication for which FDA approval is sought. In particular, for a diagnostic, the applicant must demonstrate that the diagnostic produces reproducible results when the same sample is tested multiple times by multiple users at multiple laboratories. In addition, as part of the PMA review, the FDA will typically inspect the manufacturer’s facilities for compliance with the Quality System Regulation, or QSR, which imposes elaborate testing, control, documentation and other quality assurance requirements.

If the FDA evaluations of both the PMA application and the manufacturing facilities are favorable, the FDA will either issue an approval letter or an approvable letter, which usually contains a number of conditions that must be met in order to secure the final approval of the PMA, such as changes in labeling, or specific additional information, such as submission of final labeling, in order to secure final approval of the PMA. If the FDA concludes that the applicable criteria have been met, the FDA will issue a PMA for the approved indications, which can be more limited than those originally sought by the applicant. The PMA can include post-approval conditions that the FDA believes necessary to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution.

If the FDA’s evaluation of the PMA or manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter. A not approvable letter will outline the deficiencies in the application and, where practical, will identify what is necessary to make the PMA approvable. The FDA may also determine that additional clinical trials are necessary, in which case the PMA approval may be delayed for several months or years while the trials are conducted and then the data submitted in an amendment to the PMA. Once granted, PMA approval may be withdrawn by the FDA if compliance with post approval requirements, conditions of approval or other regulatory standards is not maintained or problems are identified following initial marketing. PMA approval is not guaranteed, and the FDA may ultimately respond to a PMA submission with a not approvable determination based on deficiencies in the application and require additional clinical trial or other data that may be expensive and time-consuming to generate and that can substantially delay approval.

After a device is placed on the market, it remains subject to significant regulatory requirements. Medical devices may be marketed only for the uses and indications for which they are cleared or approved. Device manufacturers must also establish registration and their subcontractorsdevice listings with the FDA. A medical device manufacturer’s manufacturing processes and those of its suppliers are required to register their establishmentscomply with the applicable portions of the QSR, which cover the methods and documentation of the design, testing, production, processes, controls, quality assurance, labeling, packaging and shipping of medical devices. Domestic facility records and manufacturing processes are subject to periodic unannouncedunscheduled inspections for compliance with cGMP requirements. Also, newly discovered or developed safety or effectiveness databy the FDA. The FDA also may require changesinspect foreign facilities that export products to a product's approved labeling, including the addition of new warnings and contraindications, or even in some instances revocation or withdrawal of the product's approval.United States.

Approval Process Outside of the United States

In orderaddition to market any product outside ofregulations in the United States, we must comply with numerous and varying regulatory requirementswill be subject to a variety of regulations in other countries regarding safety and efficacy andjurisdictions governing, among other things, clinical trialsstudies and any commercial sales and distribution of our products, which broadly reflectproduct candidates.

Whether or not we obtain FDA approval for a product candidate, we must obtain the issues addressed byrequisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical studies or marketing of the product candidates in those countries. Certain countries outside of the United States have a similar process that requires the submission of a clinical study application much like the IND prior to the commencement of human clinical studies. In the European Union, for example, a clinical trial authorization, or CTA, must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA above. Approval procedures vary among countries and can involve additionalthe IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, clinical study development may proceed.

To obtain regulatory approval of an investigational biological product testing and additional administrative review periods.under European Union regulatory systems, we must submit a marketing authorization application. The time requiredapplication used to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. Marketing approval in one country does not ensure marketing approval in another, but a failure or delay in obtaining marketing approval in one country may negatively impactfile the regulatory process in other countries.

        AsBLA in the United States is similar to that required in the European Union, with the exception of, among other things, country‑specific document requirements. The European Union also provides opportunities for market exclusivity. For example, in the European Union, upon receiving marketing authorization, new chemical entities generally receive eight years of data exclusivity and an additional two years of market exclusivity. If granted, data exclusivity prevents regulatory authorities in the European Union from referencing the innovator’s data to assess a generic application. During the additional two‑year period of market exclusivity, a generic marketing authorization can be submitted, and the innovator’s data may be referenced, but no generic product can be marketed until the expiration of the market exclusivity. However, there is no guarantee that a product will be considered by the European Union’s regulatory authorities to be a new chemical entity, and products may not qualify for data exclusivity. Products receiving orphan designation in the European Union can receive ten years of market exclusivity, during which time no similar medicinal product for the same indication may be placed on the market. An orphan product can also obtain an additional two years of market exclusivity in the European Union for pediatric studies. No extension to any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications.

The criteria for designating an “orphan medicinal product” in the European Union are similar in principle to those in the United States. Under Article 3 of Regulation (EC) 141/2000, a medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life‑threatening or chronically debilitating condition; (2) either (a) such condition affects no more than five in 10,000 persons in the European Union when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the European Union to justify investment; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the European Union, or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000. Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication. The application for orphan drug designation must be submitted before the application for marketing authorization. The applicant will receive a fee reduction for the marketing authorization application if the orphan drug designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process in Europe and inprocess.

The 10‑year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity. In addition, marketing authorization may be granted to a similar product for the same indication at any time if:

For other countries is a lengthy, challengingoutside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical studies, product licensing, pricing and inherently uncertain process. reimbursement vary from country to country. In all cases, again, the clinical studies are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of marketingregulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. Generally

Other Healthcare Laws and Compliance Requirements

Pharmaceutical companies are subject to additional healthcare regulation and enforcement by the developmentU.S. federal and approval procedures are harmonized throughout the European Union: however, there is limited harmonization in relation to national pricingstate governments and reimbursement practices.

        Under European Union regulatory systems, a company may not market a medicinal product without marketing authorization. There are three procedures for submitting a MAAby authorities in the EU: (1)foreign jurisdictions in which they conduct their business. At the

Table federal level, such laws include, without limitation: the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, to induce, or in return for, either the referral of Contentsan individual, or the purchase or recommendation of an item or service for which payment may be made under any federal healthcare program; federal civil and criminal false claims laws, including the civil False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment to the federal government, including federal healthcare programs, that are false or fraudulent and civil monetary penalty laws; the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which prohibits, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; and the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to the federal government, information related to payments or other transfers of value made to physicians, certain other health care professionals beginning in 2022, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

mutual recognition procedure (MRP); (2) the decentralized procedure (DCP)Pharmaceutical companies are also subject to U.S. state and (3) the centralized procedure (CP). The submission strategy for a given product will depend on the natureforeign law equivalents of each of the product, the target indication(s), the historyabove federal laws, such as anti-kickback and false claims laws which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or that apply regardless of the product, and the marketing plan. The centralized procedure is compulsory for medicinal productspayor; laws which are produced by biotechnology processes, advanced therapy medicinal products and orphan drugs. Besides the products falling under the mandatory scope, the centralized procedure is also open for other innovative products that are new active substances or other medicinal products that constitute a significant therapeutic, scientific or technical innovation.

        The centralized procedure leadsrequire pharmaceutical companies to approval of the product in all 27 EU member states and in Norway, Iceland and Liechtenstein. Submission of one MAA thus leads to one assessment process and one authorization that allows access to all applicable markets within the entire EU. The process of the centralized procedure is triggered when the applicant sends the letter announcing the intent to submit a MAA (letter of intent). The letter of intent also initiates the assignment of the Rapporteur and Co-Rapporteur, who are the two appointed members of the Committee for Human Medicinal Products, or CHMP, representing two EU member states. However, in light of the United Kingdom's vote in 2016 to leave the European Union, the so-called Brexit vote, there may be changes forthcoming in the scope of the centralized approval procedure as the terms of that exit are negotiated between the UK and the European Union.

        When using the MRP or DCP, the applicant must select which and how many EU member states in which to seek approval. In the case of an MRP, the applicant must initially receive national approval in one EU member state. This will be the so-called reference member state (RMS) for the MRP. Then, the applicant seeks approval for the product in other EU member states, the so-called concerned member states (CMS) in a second step: the mutual recognition process. For the DCP, the applicant will approach all chosen member states at the same time. To do so, the applicant will identify the RMS that will assess the submitted MAA and provide the other selected member statescomply with the conclusions and results of the assessment.

        When the application for marketing authorization is made, the competent authority responsible for granting a marketing authorization must verify whether the application complies with the relevant requirements, includingpharmaceutical industry’s voluntary compliance with the agreed pediatric investigational plan, or PIP. Assuming it does, the marketing authorization may be grantedguidelines and the relevant results are included in the summary of product characteristics (SmPC) for the product, along with a statement indicating compliance with the agreed PIP. It is not necessary for the product actually to be indicated for use in the pediatric population (for example, if the results show that that would not be appropriate).

Drug Price Competition and Patent Term Restoration Act of 1984

        Under the Drug Price Competition and Patent Term Restoration Act of 1984, known as the Hatch-Waxman Act, a portion of a product's patent term that was lost during clinical development and application reviewguidance promulgated by the FDAU.S. federal government, laws which require pharmaceutical companies to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and information related to drug pricing, and laws requiring the registration of pharmaceutical sales and medical representatives. Violation of these laws or other governmental regulations may be restored. The Hatch-Waxman Act also provides for a statutory protection, knownresult in penalties, including, without limitation, significant civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as exclusivity, against the FDA's acceptanceMedicare and Medicaid or approvalsimilar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of certain competitor applications. The Hatch-Waxman Act also provides the legal basis for the approval of abbreviated new drug applications, or ANDAs.

        Patent term extension can compensate for time lost during product developmentnon-compliance, disgorgement, imprisonment, contractual damages, reputational harm, diminished profits and the regulatory review process by returning up to five yearscurtailment or restructuring of patent life for a patent that covers a new product or its use. This period is generally one-half the time between the effective date of an INDoperations.

Coverage and the submission date of a NDA, plus the time between the submission date of a NDA and the approval of that application. Patent term extensions, however, are subject to a maximum extension of five years, and the patent term extension cannot extend the remaining term of a patent beyond a total of 14 years.

Table of ContentsReimbursement

The application for patent term extension is subject to approval by the United States Patent and Trademark Office in conjunction with the FDA. It generally takes at least six months to obtain approval of the application for patent term extension.

        The Hatch-Waxman Act also provides for a period of statutory protection for new drugs that receive NDA approval from the FDA. If a new drug receives NDA approvalSignificant uncertainty exists as a new chemical entity, meaning that the FDA has not previously approved any other new drug containing the same active entity, then the Hatch-Waxman Act prohibits an ANDA or a NDA submitted pursuant to section 505(b)(2) of the Federal Food, Drug, and Cosmetics Act, where the applicant does not own or have a legal right of reference to all of the data required for approval to be submitted by another company for a generic version of such drug (505(b)(2) NDA), with some exceptions, for a period of five years from the date of approval of the NDA. The statutory protection provided pursuant to the Hatch-Waxman Act will not prevent the filing or approval of a full NDA, as opposed to an ANDA or 505(b)(2) NDA, for any drug, including, for example, a drug with the same active ingredient, dosage form, route of administration, strengthcoverage and conditions of use. In order to obtain a NDA, however, a competitor would be required to conduct its own clinical trials, and any use of the drug for which marketing approval is sought could not violate another NDA holder's patent claims.

        If NDA approval is received for a new drug containing an active ingredient that was previously approved by the FDA but the NDA is for a drug that includes an innovation over the previously approved drug, for example, a NDA approval for a new indication or formulation of the drug with the same active ingredient, and if such NDA approval was dependent upon the submission to the FDA of new clinical investigations, other than bioavailability studies, then the Hatch-Waxman Act prohibits the FDA from making effective the approval of an ANDA or 505(b)(2) NDA for a generic version of such drug for a period of three years from the date of the NDA approval. This three year exclusivity, however, only covers the innovation associated with the NDA to which it attaches. Thus, the three year exclusivity does not prohibit the FDA, with limited exceptions, from approving ANDAs or 505(b)(2) NDAs for drugs containing the same active ingredient but without the new innovation.

        While the Hatch-Waxman Act provides certain patent restoration and exclusivity protections to innovator drug manufacturers, it also permits the FDA to approve ANDAs for generic versions of their drugs assuming the approval would not violate another NDA holder's patent claims. The ANDA process permits competitor companies to obtain marketing approval for a drug with the same active ingredient for the same uses but does not require the conduct and submission of clinical studies demonstrating safety and effectiveness for that product. Instead of safety and effectiveness data, an ANDA applicant needs only to submit data demonstrating that its product is bioequivalent to the innovator product as well as relevant chemistry, manufacturing and product data. The Hatch-Waxman Act also instituted a third type of drug application that requires the same information as a NDA, including full reports of clinical and preclinical studies, except that some of the information from the reports required for marketing approval comes from studies which the applicant does not own or have a legal right of reference. This type of application, a 505(b)(2) NDA, permits a manufacturer to obtain marketing approval for a drug without needing to conduct or obtain a right of reference for all of the required studies.

        If a competitor submits an ANDA or 505(b)(2) NDA for a compound or usereimbursement status of any compound covered by another NDA holder's patent claims, the Hatch-Waxman Act requires, in some circumstances, the applicant to notify the patent owner and the holder of the approved NDA of the factual and legal basis of the applicant's opinion that the patent is not validpharmaceutical or will not be infringed. Upon receipt of this notice, the patent owner and the NDA holder have 45 days to bring a patent infringement suit in federal district court and obtain a 30-month stay against the company seeking to reference the NDA. The NDA holder could still file a patent suit after the 45 days, but if they miss the

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45-day deadline, they would not have the benefit of the 30-month stay. Alternatively, after this 45-day period, the applicant may file a declaratory judgment action, seeking a determination that the patent is invalid or will not be infringed. Depending on the circumstances, however, the applicant may not be able to demonstrate a controversy sufficient to confer jurisdiction on the court. The discovery, trial and appeals process in such suits can take several years. If such a suit is commenced, the Hatch-Waxman Act provides a 30-month stay on the approval of the competitor's ANDA or 505(b)(2) NDA. If the litigation is resolved in favor of the competitor or the challenged patent expires during the 30-month period, unless otherwise extended by court order, the stay is lifted and the FDA may approve the application. Under regulations issued by the FDA, and essentially codified under the Medicare prescription drug legislation, the patent owner and the NDA holder have the opportunity to trigger only a single 30-month stay per ANDA or 505(b)(2) NDA. Once the applicant of the ANDA or 505(b)(2) NDA has notified the patent owner and the NDA holder of the infringement, the applicant cannot be subjected to another 30-month stay, even if the applicant becomes aware of additional patents that may be infringed by its product.

Pharmaceutical Pricing and Reimbursement

        We currently have no marketed products. In both domestic and foreign markets, sales of any productsbiological product for which we receiveobtain regulatory approval for commercial sale willapproval. Sales of any product depend, in part, on the availabilityextent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance and managed healthcare organizations, and the level of reimbursement fromfor such product by third-party payors. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. Further, no uniform policy for coverage and reimbursement exists in the United States, and coverage and reimbursement can differ significantly from payor to payor. Third-party payors includeoften rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations. As a result, the coverage determination process is often a time-consuming and costly process that may require companies to provide scientific and clinical support for the use of a product to each payor separately. For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs. Additionally, separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization. Lastly, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement for their companion pharmaceutical or biological products. Similar challenges to obtaining coverage and reimbursement, applicable to pharmaceutical or biological products, will apply to companion diagnostics.

In addition, the U.S. government, authorities orstate legislatures and foreign governments have continued implementing cost-containment programs, managed care providers, private health insurersincluding price controls, restrictions on coverage and other organizations. These third-partyreimbursement and requirements for substitution of generic products. Third-party payors are increasingly challenging the price and examining the cost-effectiveness ofprices charged for medical products and services. Inservices, examining the medical necessity and reviewing the cost effectiveness of pharmaceutical or biological products, medical devices and medical services, in addition significant uncertainty exists as to the reimbursement statusquestioning safety and efficacy. Adoption of newly approved healthcare products. We may need to conduct expensive pharmacoeconomic studiesprice controls and cost-containment measures, and adoption of more restrictive policies in order to demonstrate the cost-effectivenessjurisdictions with existing controls and measures, could further limit sales of our products. Our product candidates may not be considered cost-effective. Adequateany product. Decreases in third-party reimbursement mayfor any product or a decision by a third-party payor not be available to enable uscover a product could reduce physician usage and patient demand for the product.

Healthcare Reform

The United States and some foreign jurisdictions are considering or have enacted a number of reform proposals to maintain price levels sufficient to realize an appropriate return on our investmentchange the healthcare system. There is significant interest in product development. Third-party payors may also control access to,promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or manage utilization of, our products with various utilization management techniques, such as requiring prior authorization for coverage of our products.

        Withinexpanding access. In the United States, if we obtain appropriate approval in the future to market anypharmaceutical industry has been a particular focus of our oral drug product candidates, those products could potentially be coveredthese efforts and has been significantly affected by various government health benefit programs as well as purchased by government agencies. The participation in such programs or the sale of products to such agencies is subject to regulation. The marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement.

        Medicaid is a joint federal and state program that is administered bylegislative initiatives, including those designed to limit the states for low income and disabled beneficiaries. Under the Medicaid Drug Rebate Program, participating manufacturers are required to pay a rebate for each unit of product reimbursed by the state Medicaid programs. The amount of the rebate for each product is set by law and may be subject to an additional discount if certain pricing, increases more than inflation.

        Medicare is a federal program that is administered by the federal government that covers individuals age 65 and over as well as those with certain disabilities. Oral drugs may be covered under Medicare Part D. Medicare Part D provides coverage to enrolled Medicare patients for self-administered drugs (i.e., drugs that do not need to be injected or otherwise administered by a physician). Medicare Part D is administered by private prescription drug plans approved by the U.S. government and each drug plan establishes its own Medicare Part D formulary for prescription drug coverage, and pricing,reimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded health care programs, and increased governmental control of drug pricing.

In March 2010, the ACA was signed into law, which substantially changed the drug plan may modify from time-to-time.way healthcare is financed by both governmental and private insurers in the United States, and significantly affected the pharmaceutical industry. The prescription drug plans negotiate pricing withACA contains a number of provisions of particular import to the pharmaceutical and biotechnology industries, including, but not limited to, those governing enrollment in federal healthcare programs, a new methodology by which rebates owed by manufacturers and may condition formulary placement on the availability of

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manufacturer discounts. Since 2011, manufacturers with marketed brand name drugs have been required to provide a 50% discount the negotiated price for on brand name prescription drugs utilized by Medicare Part D beneficiaries when those beneficiaries reach the coverage gap in their drug benefits, and, beginning in 2019, that discount increased to 70%.

        Drug products are subject to discounted pricing when purchased by federal agencies via the Federal Supply Schedule (FSS). FSS participation is required for a drug product to be covered and reimbursed by certain federal agencies and for coverage under Medicaid, Medicare Part B and the Public Health Service (PHS) pharmaceutical pricing program. FSS pricing is negotiated periodically with the Department of Veterans Affairs. FSS pricing is intended not to exceed the price that a manufacturer charges its most-favored non-federal customer for its product. In addition, prices for drugs purchased by the Veterans Administration, Department of Defense (including drugs purchased by military personnel and dependents through the TRICARE retail pharmacy program), Coast Guard, and PHS are subject to a cap on pricing (known as the "federal ceiling price") and may be subject to an additional discount if pricing increases more than the rate of inflation.

        To maintain coverage of drugs under the Medicaid Drug Rebate Program manufacturers are requiredcalculated for drugs that are inhaled, infused, instilled, implanted or injected, and annual fees based on pharmaceutical companies’ share of sales to extend discountsfederal health care programs. Since its enactment, there have been judicial, Congressional, and executive branch challenges to certain purchasers underaspects of the PHS pharmaceutical pricing program. Purchasers eligibleACA. For example, the Tax Act, was enacted on December 22, 2017, which includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health insurance for discounts include hospitalsall or part of a year that serveis commonly referred to as the “individual mandate”. On December 14, 2018, a disproportionate shareU.S. District Court Judge in the Northern District of financially needy patients, community health clinicsTexas, ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the Tax Act, the remaining provisions of the ACA are invalid as well. On December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court’s decision that the individual mandate was unconstitutional but remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well. It is unclear how these decisions, subsequent appeals, if any, and other entities that receive health services grants fromefforts to challenge, repeal or replace the PHS.ACA will impact the law.

        The United StatesOther legislative changes have been proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers of 2% per fiscal year and reduced payments to several types of Medicare providers. Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state governments continue to propose and pass legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform delivery of, or paymentgovernment program reimbursement methodologies for health care, which include initiatives to reducedrug products. At the cost of healthcare. For example, in March 2010, the United States Congress enacted the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act ("Healthcare Reform Act") which includes changes to the coverage and reimbursement of drug products under government health care programs. Underfederal level, the Trump administration, there have been ongoing effortsadministration’s budget proposal for fiscal year 2019 contains further drug price control measures that could be enacted during the 2020 budget process or in other future legislation, including, for example, measures to modify or repeal all or certain provisions of the Healthcare Reform Act. For example, tax reform legislation was enacted at the end of 2017 that eliminates the tax penalty for individuals who do not maintain sufficient health insurance coverage beginning in 2019 (the so-called "individual mandate"). In a May 2018 report, the Congressional Budget Office estimated that, compared to 2018, the number of uninsured will increase by 3 million in 2019 and 6 million in 2028, in part due to the elimination of the individual mandate. The Healthcare Reform Act has also been subject to judicial challenge. In December 2018, a federal district court judge, in a challenge brought by a number of state attorneys general, found the Healthcare Reform Act unconstitutional in its entirety because, once Congress repealed the individual mandate provision, there was no longer a basis to rely on Congressional taxing authority to support enactment of the law. Pending appeals, which could take some time, the Healthcare Reform Act is still operational in all respects.

        There have also been other reform initiatives under the Trump Administration, including initiatives focused on drug pricing. For example, in May of 2018, President Trump and the Secretary of the Department of Health and Human Services released a "blueprint" to lower prescription drug prices and out-of-pocket costs. Certain proposals in the blueprint, and related drug pricing measures proposed since the blueprint, could cause significant operational and reimbursement changes for the pharmaceutical industry. As another example, in November of 2018, CMS issued an advance notice of proposed rulemaking that proposed revisions to Medicare Part D to support health plans' negotiation of lower drug prices with manufacturers and reduce health plan members' out-of-pocket costs. The HHS Office of Inspector General also issued a proposed rule in February of 2019 that would revise the federal anti-kickback statute to limit protection for discounts offered by pharmaceutical manufacturers to pharmacy benefit managers ("PBMs"),permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug prices under Medicaid, and Medicaid managed care plansto eliminate cost sharing for generic drugs for low-income patients. Additionally, the Trump administration released a “Blueprint” to lower drug prices and reduce the out of pocket costs of prescription drugs that contains additional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out of pocket costs of drug products paid by consumers.  Although some of these, and other, proposals will require authorization through additional legislation to become effective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

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that are not reflected in the price charged to the patient at the pharmacy counter and to provide protection only for certain types of service fees paid by pharmaceutical manufacturers to PBMs.

        Recently, there has been considerable public and government scrutiny in the U.S. of pharmaceutical pricing and proposals to address the perceived high cost of pharmaceuticals. There have also been several recent state legislative efforts to address drug costs, which generally have focused on increasing transparency around drug costs or limiting drug prices or price increases. Adoption of new legislation at the federal or state level could affect demand for, or pricing of, our product candidates if approved for sale.

        We cannot predict the ultimate content, timing or effect of any changes to the Healthcare Reform Act or other federal and state reform efforts. There is no assurance that federal or state health care reform will not adversely affect our future business and financial results.

        Although we currently have no products approved for commercial sale, we marketed FARESTON® through September 30, 2012 and the product was covered under various government health benefit programs as well as purchased by federal agencies. We could be subject to liability under federal laws regulating our participation in such programs or the sale of our product to such agencies if we failed to comply with applicable requirements, including reporting prices for our products or offering products for sale at certain prices.

Regulations Pertaining to Sales and Marketing

        Although we currently have no products approved for commercial sale, wePharmaceutical companies may be subject to variousU.S. federal and state health information privacy, security and data breach notification laws, which may govern the collection, use, disclosure and protection of health-related and other personal information. HIPAA imposes privacy, security and breach reporting obligations with respect to individually identifiable health information upon “covered entities” (health plans, health care clearinghouses and certain health care providers), and their respective business associates, individuals or entities that create, received, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity. HIPAA mandates the reporting of certain breaches of health information to HHS, affected individuals and if the breach is large enough, the media. Entities that are found to be in violation of HIPAA as the result of a breach of unsecured PHI, a complaint about privacy practices or an audit by HHS, may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.  Even when HIPAA does not apply, according to the Federal Trade Commission or the FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, or the FTCA, 15 U.S.C § 45(a). The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Individually identifiable health information is considered sensitive data that merits stronger safeguards. The FTC’s guidance for appropriately securing consumers’ personal information is similar to what is required by the HIPAA Security Rule.

In addition, certain state laws govern the privacy and security of health information in certain circumstances, some of which may be more stringent, broader in scope or offer greater individual rights with respect to protected health information, or PHI, than HIPAA, and many of which differ from each other, thus complicating compliance efforts. Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.  For example, California enacted the California Consumer Privacy Act, or the CCPA, on June 28, 2018, which took effect on January 1, 2020. The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA may increase our compliance costs and potential liability.

In the European Union, as of May 25, 2018, Regulation 2016/676, known as the General Data Protection Regulation, or GDPR, replaced the Data Protection Directive with respect to the processing of personal data in the European Union. The GDPR imposes many requirements for controllers and processors of personal data, including, for example, higher standards for obtaining consent from individuals to process their personal data, more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention and secondary use of information, increased requirements pertaining to health care "frauddata and abuse," including anti-kickback lawspseudonymized (i.e., key-coded) data and false claims laws for activities related to our previous salesadditional obligations when we contract third-party processors in connection with the processing of FARESTON®, which we sold to a third party in 2012, or to future sales of any of our product candidates that may in the future receive regulatory and marketing approval. Anti-kickback laws generally prohibit a prescription drug manufacturer from soliciting, offering, receiving, or paying any remuneration to generate business, including the purchase or prescription of a particular drug. Although the specific provisions of these laws vary, their scope is generally broad and there may not be regulations, guidance or court decisions that apply the laws to particular industry practices. There is therefore a possibility that our practices might be challenged under such anti-kickback laws. False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented, any claims for payment for reimbursed drugs or services to third party payors (including Medicare and Medicaid) that are false or fraudulent. Violations of fraud and abuse laws may be punishable by criminal or civil sanctions, including fines and civil monetary penalties, and/or exclusion from federal health care programs (including Medicare and Medicaid).

        Laws and regulations have been enacted by the federal government and variouspersonal data. The GDPR allows EU member states to regulate the sales and marketing practices of pharmaceutical manufacturers with marketed products. Themake additional laws and regulations generally limitfurther limiting the processing of genetic, biometric or health data. Failure to comply with the requirements of GDPR and the applicable national data protection laws of the EU member states may result in fines of up to €20 million or up to 4% of the total worldwide annual turnover of the preceding financial interactions between manufacturersyear, whichever is higher, and health care providers and/or require disclosureother administrative penalties.

Merger

On March 6, 2019, we, then operating as GTx, Inc. (“GTx”), entered into an Agreement and Plan of Merger and Reorganization, as amended (the “Merger Agreement”), with privately-held Oncternal Therapeutics, Inc. (“Private Oncternal”) and Grizzly Merger Sub, Inc., our wholly-owned subsidiary (“Merger Sub”). Under the Merger Agreement, Merger Sub merged with and into Private Oncternal, with Private Oncternal surviving as our wholly-owned subsidiary (the “Merger”). On June 7, 2019, the Merger was completed.  GTx changed its name to Oncternal Therapeutics, Inc., and Private Oncternal, which remains as our wholly-owned subsidiary, changed its name to Oncternal Oncology, Inc. On June 10, 2019, the combined company’s common stock began trading on The Nasdaq Capital Market under the ticker symbol “ONCT.”  

Pursuant to the government and publicterms of such interactions. Manythe Merger Agreement, each outstanding share of these laws and regulations contain ambiguous requirements or require administrative guidance for implementation. Given the lack of clarity in laws and their implementation, ourPrivate Oncternal common stock outstanding immediately prior activities (when we marketed FARESTON®) or any future activities (if we obtain approval and/or reimbursement from federal healthcare programs for our product candidates) could be subject to the penalty provisionsclosing of the pertinent lawsMerger was converted into approximately 0.073386 shares of our common stock (the “Exchange Ratio”), after taking into account a one-for-seven reverse stock split of our then-outstanding common stock (the “Reverse Stock Split”). Immediately prior to the closing of the Merger, all shares of Private Oncternal preferred stock then outstanding were exchanged into shares of common stock of Private Oncternal. In addition, all outstanding options exercisable for common stock of Private Oncternal and regulations.

Tablewarrants exercisable for convertible preferred stock of ContentsPrivate Oncternal became options and warrants exercisable for the same number of shares of common stock of the Company multiplied by the Exchange Ratio. Immediately following the Merger, stockholders of Private Oncternal owned approximately 77.5% of the outstanding common stock of the combined company. The par value and the authorized shares of our common stock were not adjusted as a result of the Reverse Stock Split.

The transaction was accounted for as a reverse asset acquisition in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Under this method of accounting, Private Oncternal was deemed to be the accounting acquirer for financial reporting purposes. This determination was primarily based on the facts that, immediately following the Merger: (i) Private Oncternal’s stockholders owned a substantial majority of the voting rights in the combined company, (ii) Private Oncternal designated a majority of the members of the initial board of directors of the combined  company, and (iii) Private Oncternal’s senior management holds all key positions in the senior management of the combined company. As a result, as of the closing date of the Merger, our net assets were recorded at their acquisition-date relative fair values in our condensed consolidated financial statements and the reported operating results prior to the Merger are those of Private Oncternal.  

Employees

Employees

As of December 31, 2018,March 6, 2020, we had 21eleven full-time employees, 6three part-time employees, and a number of consultants, most of whom were M.D.s, Pharm.D.s and/or Ph.D.s.are engaged in research and development activities. None of our employees are subject to arepresented by labor unions or covered by collective bargaining agreement.agreements. We believe that we have good relationsconsider our relationship with our employees.employees to be good.

AvailableFacilities

Our corporate headquarters are located in San Diego, California, where we currently sublease 4,677 square feet of office space used primarily for corporate, research, development, clinical, regulatory, manufacturing and quality functions. Our sublease for this facility expires in March 2021.

Corporate Information

We were originally incorporated under the name Genotherapeutics, Inc. in Tennessee in September 1997.  We changed our name to GTx, Inc. in 2001 and we reincorporated in Delaware in 2003.  On March 6, 2019, we, then operating as GTx, Inc., entered into the Merger Agreement with Private Oncternal and Merger Sub. Under the Merger Agreement, Merger Sub merged with and into Private Oncternal, with Private Oncternal surviving as our wholly-owned subsidiary. On June 7, 2019, the Merger was completed and GTx, Inc. changed its name to Oncternal Therapeutics, Inc.  Private Oncternal, which remains as our wholly-owned subsidiary, changed its name to Oncternal Oncology, Inc. On June 10, 2019, the combined company’s common stock began trading on The Nasdaq Capital Market under the ticker symbol “ONCT.”  

Our principal executive office isoffices are located at 175 Toyota Plaza, 7th Floor, Memphis, TN 38103,12230 El Camino Real, Suite 300, San Diego, CA 92130, and our telephone number is (901) 523-9700.(858) 434-1113. Our website address is www.oncternal.com.

We file electronically with the U.S. Securities and Exchange Commission, or SEC, our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.1934, as amended. We make available on our Web sitewebsite at www.gtxinc.com,www.oncternal.com, free of charge, copies of these reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains a website that contains reports, proxy and information provided onstatements and other information regarding issuers that file electronically with the SEC. The address of that website is www.sec.gov. The information in or accessible through the SEC and our Web site iswebsite are not incorporated into, and are not considered part of, this report, and is therefore not incorporated by reference unless such information is otherwise specifically referenced elsewhere in this report.

Executive Officers offiling. Further, our references to the Registrant
URLs for these websites are intended to be inactive textual references only.

 The following table sets forth information about our executive officers as of March 12, 2019:

Marc S. Hanover, a co-founder of GTx, served as our President and Chief Operating Officer from our inception in September 1997 until his appointment as our permanent Chief Executive Officer in February 2015, and served as our acting Principal Financial Officer from December 31, 2013 until his appointment as our interim Chief Executive Officer on April 3, 2014. He also previously served as a member of our Board of Directors from September 1997 to August 2011. Prior to joining GTx, Mr. Hanover was a founder of Equity Partners International, Inc., a private equity firm in Memphis, Tennessee, and participated as a founder and investor in three healthcare companies. From 1985 to 1997, Mr. Hanover was a Senior Vice President and a member of the Executive Management Committee of National Bank of Commerce in Memphis, Tennessee. Mr. Hanover holds a B.S. in Biology from the University of Memphis and an MBA in Finance from the University of Memphis.

Robert J. Wills, Ph.D., joined GTx as Executive Chairman of the Board of Directors and as the Chairman of the Board's Scientific and Development Committee on March 2, 2015. Prior to joining GTx, Dr. Wills served as Vice President, Alliance Manager for Johnson & Johnson (J&J) and was responsible for managing strategic alliances for J&J's Pharmaceutical Group worldwide since 2002. Prior to this, Dr. Wills spent 22 years in pharmaceutical drug development, 12 of which were at J&J and 10 of which were at Hoffmann-La Roche Inc. Before assuming his alliance management role at