a result, we believe we can better predict the efficacy and safety profile expected from modulating this target.consequently affect body weight. The critical role of the MC4 MC4R

The figuretable below summarizes the indications on which we are focusing for the developmentcurrently approved or under active clinical investigation.

POMCPOMC/PCSK1 deficiency is characterized by voracious infant feeding, rapid weight gain and severe obesity, often in early infancy, with patients demonstrating remarkable weight increases many standard deviations from the normal weight growth curves. These patients and their caregivers have attempted to stabilize body weight with the help of psychologists, nutritionists and pediatric endocrinologists, all without significant success. We are currently enrolling patients in our POMC

Obesity due to LEPR deficiency obesity Phase 3 clinical trial. We expect to complete enrollment in the first half of 2018 and to report Phase 3 data in the first half of 2019. Currently there are no approved or effective therapies for POMC deficiency obesity.

Leptin Receptor Deficiency Obesity

LepR deficiency obesity is an ultra‑rareultra-rare genetic disorderdisease that causes hyperphagia and severe, early onsetearly-onset obesity. LepR deficiency accounts for an estimated 1% of cases of severe, early onset obesity. Based on epidemiology studies in small cohorts of patients with severe, early onset obesity, we estimate that our addressable patient population for this disorder is approximately 500 to 2,000 patients in the United States.

Leptin’s role in obesity has been elucidated by characterization of severely obese people with homozygousbiallelic mutations that impair the activity of leptin, including disruption of signaling at the LepR,LEPR, known as LepRLEPR deficiency obesity. Under normal conditions, leptin can activate POMC neurons and the downstream MC4,MC4R, but like other deficiencies upstream in the MC4MC4R pathway, lack of signaling at LepRLEPR results in loss of function in the MC4MC4R pathway.

LikePivotal Phase 3 Clinical Trials Evaluating Setmelanotide in POMC and LEPR Deficiency Obesities

We assessed the safety and efficacy of IMCIVREE in two pivotal trials that were identically designed: one-year, open-label studies, each with an eight-week, double-blind withdrawal period. The studies enrolled patients with homozygous or presumed compound heterozygous pathogenic, likely pathogenic variants, or VUS, for either the POMC, PCSK1 or LEPR gene. In both studies, adult patients had a body mass index (BMI) of ≥30 kg/m2. Weight in pediatric patients was ≥95th percentile using growth chart assessments.

Efficacy analyses were conducted in 21 patients who had completed at least one year of treatment at the time of a pre-specified data cutoff. Of the 21 patients included in the efficacy analysis in both pivotal studies, 62 percent were adults and 38 percent were aged 16 years or younger. In Study 1, 50 percent of patients were female, 70 percent were White, and the median BMI was 40.0 kg/m² (range: 26.6-53.3) at baseline. In Study 2, 73 percent of patients were female, 91 percent were White, and the median BMI was 46.6 kg/m² (range: 35.8-64.6) at baseline.

In the POMC/PCSK1 study, 80 percent of patients with obesity due to POMC or PCSK1 deficiency met the primary endpoint, achieving a ≥10 percent weight loss after one year of treatment with IMCIVREE. In the LEPR study, 46 percent of patients with obesity due to LEPR deficiency achieved a ≥10 percent weight loss after 1 year of treatment with IMCIVREE.

Proportion of Patients Achieving at Least 10 percent Weight Loss from Baseline at 1 Year in Study 1 and Study 2

​

Percent Change from Baseline in Weight at 1 Year in Studies 1 and 2 (Full Analysis Set)

Other Upstream Genetic Defects in the MC4 PathwayBBS.

In additionDecember 2020, we reported positive topline results from our pivotal Phase 3 clinical trial evaluating setmelanotide for the treatment of insatiable hunger and severe obesity in individuals with BBS or Alström syndrome. The combined pivotal, Phase 3 trial is a multinational, open-label, single-arm study consisting of 52 weeks of treatment with setmelanotide. Participants were blinded and randomized for the first 14 weeks of the trial to POMC deficiency obesity, LepR deficiency obesityreceive either placebo or setmelanotide therapy. Those participants who began the trial on setmelanotide continued therapy for a total of 52 weeks, while those on placebo went on to receive 52 weeks of setmelanotide therapy after completion of the 14-week placebo period.  All patients were obese, defined as BMI ≥30 kg/m² for patients ≥16 years of age or weight >97th percentile for age and Bardet‑Biedl syndrome, there are other upstream, MC4 pathway deficienciessex on growth chart assessment for which we believepatients 6 to 15 years of age. Based on the statistical analysis plan, the primary analysis was completed for 28 of the 31 patients who reached or exceeded 52 weeks on setmelanotide may function as replacement therapy, including defects that partially modulate POMC activity, such as POMC heterozygous deficiency obesity and POMC epigenetic disorders, as well as deficienciesthree patients who were randomized to the placebo group during the 14-week double-blind period, who had not yet reached 52 weeks on therapy.  The study met its primary and all key secondary endpoints, demonstrating statistically significant and clinically meaningful reductions in weight and hunger scores, with patients with BBS comprising all primary endpoint responders. No patients with Alström syndrome met the primary endpoint.  The analysis of the primary endpoint showed that may indirectly impair POMC11 of 31 (34.5 percent) of participants achieved the primary endpoint of at least 10 percent reduction in body weight from baseline at approximately 52 weeks of therapy (p=0.0024), 11 of 28 patients with BBS achieved 10 percent reduction in body weight, and LepR signaling, such0 of 3 patients with Alström syndrome achieved 10 percent reduction in body weight. The analysis of the key secondary endpoints showed that mean reduction from baseline in body weight was -6.2 percent (p<0.0001), mean reduction from baseline in most hunger rating was -30.8 percent (p<0.0001) and 60.2 percent of participants achieved at least 25 percent reduction in most hunger scores from baseline at approximately 52 weeks of therapy (p<0.0001).

We believe the inclusion of adolescents in the primary analysis confounded the weight analysis as Alström syndrome.they represented approximately half of the patients and were still growing.  Of the 28 BBS patients included in the primary analysis set, 15 of them were adults, age 18 or older, and 13 were adolescents. Looking at adults only, 11 out of 15 or 73 percent had greater than 5 percent weight loss. And 8 out of 15 or 53 percent had greater than 10 percent weight loss.

We believe this distinction between adults and adolescents is important because children and adolescents are growing in height and increasing bone mass and therefore would be expected to gain weight. On January 26, 2021, we shared data from a predefined exploratory endpoint showing the impact of setmelanotide on BMI-Z scores for patients younger than 18 years old with BBS. The BMI-Z score, or BMI standard deviation score, represents the number of standard deviations from median BMI by child age and sex. Setmelanotide was associated with statistically significant and clinically meaningful reductions in BMI-Z scores in patients with BBS. In 16 patients younger than 18 with BBS, the mean BMI-Z score was reduced from 3.74 at baseline to 2.98 for a reduction of -0.76, or -24.5 percent (p=0.0006).

Consistent with prior clinical experience, setmelanotide was generally well tolerated, there were no serious adverse events, or SAEs, related to treatment with setmelanotide and the safety results were consistent with previous setmelanotide clinical trials. Eight patients discontinued from study drug treatment during the trial, five due to adverse events, or AEs (one on placebo at the time), and three for other reasons (one on placebo at the time).

We are continuing to follow patients with BBS who are severely obese and enrolled in our Phase 2 trial.  Results from this Phase 2 trial demonstrate that treatment with setmelanotide led to marked reductions in body weight and decreased appetite as shown by lower hunger scores. The results of this study were published in an article entitled, “Effect of Setmelanotide, an MC4R Agonist, on Obesity in Bardet-Biedl Syndrome,” in July 2020 in the peer-reviewed journal Diabetes, Obesity and Metabolism. Previously, we reported in September 2019 that six of the nine patients showed clinically important, marked weight loss. In the second quarter of 2018, the FDA agreed to include BBS under our existing Breakthrough Therapy designation for setmelanotide.

Epigenetics implies DNA modifications, which can change gene expression without altering the DNA sequence itself. The most stable epigenetic modification is called DNA methylation. Recently, our academic collaborators in Berlin have described a POMC hypermethylation variant, which correlates with increased body weight in children and adults. Therefore, the presence of the POMC epigenetic variant leads to an increased risk of obesity based on reduced POMC gene activity. We expect that these patients under‑express the POMC gene product and as a result have a partial MSH deficiency. We have initiated a Phase 2 proof of concept trial to confirm our hypothesis that the subset of patients with very severe POMC epigenetic disorders may be highly responsive to setmelanotide therapy. We have enrolled patients with POMC epigenetic disorders in a Phase 2 clinical trial and anticipate reporting preliminary results in the first half of 2018. There are currently no approved or effective therapies for these disorders.

Obesity Caused by Downstream Genetic Deficiencies Affecting the MC4 Pathway

MC4 Heterozygous Deficiency Obesity

MC4 heterozygous deficiency is caused by the absence of one genetic copy of the gene for MC4R. Consistent with POMC heterozygous deficiency, MC4 heterozygous deficiency results in a strong predisposition to early onset and severe obesity. MC4 heterozygous deficiency is the most common genetic cause of obesity. An epidemiological study performed in Europe in 2006 reported a prevalence of 2.6% of genetic defects in the MC4 gene in the obese population with a BMI of greater than 30 kg/m2, and studies performed in both Europe and the United States in 2000 and 2003, respectively, reported a prevalence of up to 4% of these genetic defects in more severely obese populations with a BMI of greater than 35 kg/m2. These prevalence rates suggest that there are approximately one million people in the United States with obesity caused by a mutation of the MC4R gene.

These patients have a higher risk than the general population for early onset obesity and complications such as diabetes. Furthermore, MC4 deficiency may offset the beneficial effects of diet and exercise for sustained weight loss, limiting treatment options for these individuals. There are currently no approved or effective therapies for MC4 heterozygous deficiency obesity.

We believe that MC4 heterozygous deficient patients can respond to setmelanotide therapy by increasing activity that results from the one normal copy of the MC4 gene. However, while setmelanotide appears to show strong efficacy in a Phase 1b trial for the treatment of MC4 heterozygous deficiency obesity patients, we are focusing instead on genetic defects that are upstream of the MC4 receptor. This is because we believe that many of these upstream genetic disorders cause even more severe, often life‑threatening obesity, and because setmelanotide has the potential to restore lost function in these upstream disorders, delivering more compelling efficacy.

Expanding Attention to the Diagnosis of Genetic Obesity

The Endocrine Society issued new Pediatric Obesity Guidelines in January 2017 that, for the first time, recommend genotyping patients with severe pediatric obesity and hyperphagia. These guidelines estimate that up to 7% of patients with extreme pediatric obesity have a genetic mutation, including genetic MC4 pathway deficiencies, that drives their obesity. The guidelines also suggest that this percentage of severe pediatric obesity patients will increase, with newer methods and wider awareness of the need for genetic testing.

We are supporting several initiatives to expand the diagnosis of genetic obesity, including The Genetic Obesity Project. The Genetic Obesity Project has initiated a genotyping study, or GO‑ID genotyping study, and a patient registry, or GO‑ID registry, both focusing initially on identifying people with POMC deficiency obesity and LepR deficiency obesity and which we intend to expand to include other MC4 pathway deficiencies. Our preliminary results in 560 genotyped patients suggest we can successfully identify these patients. We have also conducted a genetic obesity epidemiology analysis of MC4 pathway genetic defects in a large representative sample of the U.S. population. Based on preliminary findings from this analysis, we believe the prevalence of these MC4 pathway deficiencies could be substantially larger than our current estimates. Our work in the epidemiology for these rare genetic disorders of obesity is continuing.

Limitations of Current Therapies

Although drugs approved for general obesity can potentially be used in obese patients with MC4 pathway deficiencies, all have limited efficacy and aim to treat symptoms rather than addressing the underlying biology. There are currently no treatments approved specifically for obesity and hyperphagia in POMC deficiency obesity, LepR deficiency obesity, Bardet‑Biedl syndrome, Alström syndrome, POMC heterozygous deficiency obesity, or POMC epigenetic disorders. Bariatric surgery is not an option in patients with upstream defects in the MC4 pathway who have severe obesity and hyperphagia.

Setmelanotide: A First‑in‑Class MC4R Agonist in Two Phase 3 Programs

Setmelanotide is a potent, first‑in‑class, MC4R agonist peptide administered by daily subcutaneous, or SC, injection. Setmelanotide is in Phase 3 for the treatment of two rare genetic disorders of obesity caused by MC4 pathway deficiencies, and in Phase 2 for other MC4 pathway disorders. MC4R modulates a key pathway in humans that regulates energy homeostasis and food intake.

The critical role of the MC4 pathway in weight regulation was validated with the discovery that single genetic defects in this pathway result in severe, early onset obesity. The first generation MC4R agonists were small molecules that failed in clinical trials primarily due to safety issues, particularly increases in blood pressure, as well as limited efficacy. In contrast, setmelanotide is a peptide that retains the specificity and functionality of the naturally occurring hormone that activates MC4R. Approximately 300 obese subjects and patients have been treated with setmelanotide in previous and ongoing clinical trials in which setmelanotide demonstrated significant weight loss with good tolerability.

Clinical Development in Rare Genetic Disorders of Obesity Caused by MC4 Pathway Deficiencies

Setmelanotide is currently in Phase 3 development for the treatment of two ultra‑rare monogenic disorders of obesity, POMC deficiency obesity and LepR deficiency obesity, each of which has had one pivotal trial. We are currently enrolling patients in our POMC deficiency obesity Phase 3 clinical trial, and expect to complete enrollment in the first half of 2018 and to report Phase 3 data in the first half of 2019. We have enrolled the first patients in our LepR deficiency obesity Phase 3 clinical trial, and expect to complete enrollment in 2018. In addition, setmelanotide is in Phase 2 development for the treatment of other rare monogenic disorders of obesity, including Bardet‑Biedl syndrome, Alström syndrome, POMC heterozygous deficiency obesity, and POMC epigenetic disorders. We hypothesize that all of these disorders are genetically defined deficiencies upstream in the MC4 pathway. We have initiated two very similar Phase 2 protocols, each of which is designed to capture a broad range of indications under one investigational protocol. We have demonstrated proof of concept in Bardet‑Biedl syndrome, indicating that this is also a setmelanotide‑responsive, upstream MC4 pathway disorder. We are continuing to enroll patients in this trial and reported preliminary Phase 2 results in the fourth quarter of 2017. We expect to initiate a Phase 3 clinical trial in Bardet‑Biedl syndrome in 2018. We have enrolled or expect to enroll patients with Alström syndrome, POMC heterozygous deficiency obesity, and POMC epigenetic disorders in our Phase 2 clinical trial, and to report preliminary results from these trials in the first half of 2018. We have also completed a Phase 2 trial in Prader‑Willi syndrome, or PWS. Based on FDA consultations to date, and the FDA awarding Breakthrough Therapy designation, we believe we can seek indications for obesity caused by upstream defects in the MC4 pathway with faster paths to approval, as compared to typical obesity drug candidates, because of the high unmet need and rare prevalence of these disorders. We expect to use the results of our Phase 3 clinical trials of setmelanotide in POMC deficiency obesity and LepR deficiency obesity as the foundation for proceeding directly to approval for those indications.

We believe our data in POMC deficiency obesity, LepR deficiency obesity, and Bardet‑Biedl syndrome provide strong proof of concept that setmelanotide, when targeted for deficiencies affecting the upstream portion of the MC4 pathway, can provide compelling efficacy for weight loss and decrease in hunger. Proof of concept for substantial weight loss in patients with downstream, heterozygous mutations of the MC4R gene itself has also been achieved in a small, four week, Phase 1b clinical trial. While these downstream defects are not our current area of focus, we believe they provide evidence for substantial, though lesser, weight loss efficacy in a setting of a partially defective, downstream defect in the MC4 pathway, which impacts a significantly larger population.

Initial setmelanotide clinical trials were in patients with general obesity, which provided preliminary evidence of the safety and efficacy of the drug, and were the foundation for the Phase 2 trials in rare genetic disorders of obesity. In these trials, setmelanotide has generally achieved weight loss without adversely increasing blood pressure. These trials in the general obese population are described separately below.

The following table outlines our ongoing and planned setmelanotide trials in rare monogenic disorders of obesity.

Setmelanotide: Key Clinical Programs in Monogenic MC4 Pathway Disorders of Defined Obesity

(1)Setmelanotide, administered as once daily SC injection.

(2)These trials include a placebo controlled, double‑blind withdrawal period.

(3)Approximately 10 POMC deficiency obesity and 10 LepR deficiency obesity patients are anticipated in each pivotal trial.

(4)POMC deficiency includes homozygous deficiency in either the POMC or PCSK genes; pediatric patients ≥ 12 years are currently being studied, and lower age pediatric patients will also be studied when applicable. We expect to enroll pediatric patients in our LepR pivotal trial in 2018.

(5)Trial site activation activities ongoing and enrollment expected to be completed in 2018.

(6)Basket protocols study a variety of different indications or patient populations administratively in one protocol, though each population is enrolled and analyzed separately.

(7)One of our proof of concept basket protocols was originally the Phase 2 trial for POMC deficiency obesity and LepR deficiency obesity initiated in Germany in 2016 and provided proof of concept in these indications. This trial was later amended in 2016 to include other MC4 pathway disorders. Our second basket protocol is open, or is being opened in other geographical locations (United States 2016; United Kingdom, France in 2017).

(8)We have enrolled patients with Bardet‑Biedl syndrome, Alström syndrome, and POMC epigenetic disorders, and we anticipate enrolling patients with POMC heterozygous deficiency obesity in the first half of 2018.

(9)Approximately five patients are planned for each of the four MC4 pathway indications.

(10)We have ongoing trials approved in the United States, Germany, United Kingdom, France and the Netherlands.

Setmelanotide: Clinical Development Program in Genetically Defined Obesity

Phase 2 Clinical Development in POMC Deficiency Obesity

We have completed a Phase 2 proof of concept, open label clinical trial, Study RM‑493‑011, in patients with POMC deficiency obesity. With the two patients in this trial, we have provided proof of concept for the compelling effect of setmelanotide in this disorder and after discussions with the FDA, have initiated a Phase 3 trial for this indication. To validate the scientific and clinical importance of our Phase 2 findings, the results of this trial were published on July 21, 2016 in the New England Journal of Medicine, and the accompanying editorial described the trial as demonstrating impressive hunger reduction and weight loss as well as improved insulin sensitivity.

The first setmelanotide‑treated patient was a 20‑year old woman, who at three months of age experienced the onset of obesity and hyperphagia. In spite of enormous efforts, the patient was never able to stabilize her body weight, except for brief periods, and she has remained hyperphagic. Ahead of our trial, the patient’s self‑reported trial hunger score was eight to nine out of 10 points, representing extreme hunger. She was entered into the trial at adulthood because of her severe obesity, with a baseline weight of 155 kg, or 341.7 lbs., and a BMI of 49.8 kg/m2, and significant risk of comorbidities and a reduced life expectancy.

The trial, initially a 13‑week, open label, ascending dose Phase 2 trial, was approved by the German Federal Institute for Drugs and Medical Devices, with open‑label one year extensions, and was planned to include approximately four to six patients with genetically confirmed POMC deficiency obesity. After efficacy‑gated dose escalation, aiming for weekly weight loss of approximately two kg, or 4.4 lbs., the primary endpoint was weight loss, with other key endpoints including hunger score, body composition, insulin and glucose parameters, metabolic and cardiovascular risk factors, energy expenditure and general safety and tolerability.

After 13 weeks of therapy, with approximately the first four weeks at sub‑therapeutic doses, our initial patient demonstrated weight loss of 25.8 kg, or 56.9 lbs., representing 16.7% of her initial body weight, with approximately two to three kilograms per week of weight loss demonstrated at the highest 1.5 mg/day dose. Hunger scores, measured using a Likert score of zero to 10, where zero represents no hunger and 10 represents extreme hunger, mirrored the rate of weight loss, moving from scores of eight to nine prior to our trial to zero to one, as the patient was treated with increasing doses of setmelanotide. After termination of the 13‑week main trial, the patient underwent a three‑week withdrawal period off drug and regained 4.8 kg, or 10.6 lbs., with a return to moderate to severe hunger. Following approval to restart setmelanotide treatment, there was an immediate reduction of hunger and subsequently a continuation of body weight loss. This patient was on continuous treatment for 106 weeks, with a total weight loss of 65.6 kg, or 144.6 lbs., representing 42.3% of her initial body weight. There was no apparent difference in the rate of weight loss during the initial extension phase versus the main trial, however over time, the rate of weight loss has slowed, though this patient has continued to lose weight. The patient’s need for continued therapy was supported by a short period of withdrawal after the patient had been treated for over one year. Reducing her daily dose from 1.5 mg/day to 1.0 mg/day resulted in an increase in her hunger scores from one to two points to four to five points, resulting in the patient requesting to be returned to her 1.5 mg/day dose, after which her hunger scores returned to one to two points. This data supports the physiological prediction that pharmacological treatment for this condition to suppress hunger will be required chronically. After approximately 106 weeks of treatment, her dose was reduced to 1 mg/day, and while her weight remained stable from week 106 to week 118, her hunger scores increased to three to four points on the lower dose.

The results for this patient are shown in the figure below.

Initial Patient in the Setmelanotide POMC Deficiency Obesity Phase 2 Trial(1)

*Figures represent cumulative weight lost in kgs.

(1)Daily setmelanotide dose adjustments over time are indicated at the top of the panel.

In general, diet induced weight loss in patients with general obesity is accompanied by significant counter‑regulatory effects, including reductions in energy expenditure and increases in hunger. These lead to weight regain in the majority of patients. In contrast, the initial patient in our trial did not manifest these counter‑regulatory responses, even after six months of therapy and a tremendous reduction of body weight. This data supports an effect of setmelanotide on energy expenditure independent from the profound effects on hyperphagia, corroborating results from previous trials of setmelanotide in patients with general obesity. Also of note, the reduction in body weight was mainly due to a loss of body fat mass, and lean body mass was not greatly altered. In this initial patient, setmelanotide was also associated with excellent tolerability, additional favorable changes in cardiovascular risk parameters, or lipids, and improvements in blood pressure and heart rate.

MC4R activation also causes improvements in glucose and insulin parameters in animal models, independent of weight loss. As shown in the figure below, for the initial patient in our POMC deficiency proof of concept trial, setmelanotide demonstrated a marked improvement in insulin resistance during treatment. While weight loss likely played an important role in this improvement, we believe the independent effect of MC4R agonism may also have contributed.

Setmelanotide Treatment Effects on Insulin Resistance (Insulin Response in Oral Glucose Tolerance

Test) at Baseline, After 13 Weeks of Treatment (Phase 1), and at Approximately 26 Weeks During the Long‑term Extension for our POMC Initial Patient

Results are also available for treatment with setmelanotide of a second patient with POMC deficiency obesity. The second patient is a 26‑year old woman who also experienced early onset of obesity and hyperphagia. Like the first patient, in spite of significant efforts, she was never able to stabilize her body weight, and she has remained hyperphagic. Ahead of our trial, the patient’s self‑reported trial hunger score was nine out of 10 points, representing extreme hunger, and her weight and BMI at trial entry were 152.8 kg, or 336.9 lbs., and 54.1 kg/m2, respectively.

After 42 weeks of therapy at the 1.5 mg/day dose, our second patient demonstrated weight loss of 40.6 kg, or 89.5 lbs., representing 26.6% of her initial body weight, with approximately two to three kilograms per week of weight loss demonstrated initially. Hunger scores, measured using a Likert score of zero to 10, where zero represents no hunger and 10 represents extreme hunger, mirrored the rate of weight loss, with scores moving from nine prior to the trial to one on most weeks during the trial, as the patient was treated with increasing doses of setmelanotide. Similar to the initial patient, setmelanotide demonstrated an improvement in insulin resistance during treatment in our second POMC deficiency obesity patient. This patient continues on active treatment, with a total of 64 weeks on therapy, although this patient is now on a reduced 1.2 mg/day dose, and her weight has stabilized at a weight loss of 40.5 kg, or 89.3 lbs.

Our Second Patient in the Setmelanotide POMC Deficiency Obesity Phase 2 Trial(1)

*Figures represent cumulative weight lost in kgs.

(1)Daily setmelanotide dose adjustments over time are indicated at the top of the panel.

Setmelanotide was generally well tolerated in the POMC deficiency obesity Phase 2 trial, with few adverse events, all mild and infrequent, and all previously reported in other clinical trials. These included reduced appetite and tanning of skin and nevi, or moles, intermittent and mild injection site reactions, and in rare instances tiredness, dry mouth, and gastrointestinal symptoms. The single serious adverse event was an influenza immunization reaction, which resulted in an overnight hospitalization and was considered unrelated to trial drug. A similar immunization reaction had occurred in this patient in a previous influenza immunization prior to treatment, and the patient has continued on setmelanotide since that event.

The results from the initial patients in our POMC deficiency obesity proof of concept trial are compelling, but these data have limitations due to open label treatment. However the strong treatment effect is supported by these patients’ long histories of weight gain and hyperphagia prior to treatment, and a strong dose response in the dose escalation phase. More importantly, the biology of this disorder has been well studied, and the clinical responses in these patients were strongly predicted by the deep understanding of the role of the MC4 pathway in appetite and weight regulation. The interruption of treatment effectively allowed the first patient to serve as her own control, demonstrating an immediate and rapid increase in hunger and weight after a short‑term treatment withdrawal, and a rapid response to re‑treatment, thereby further demonstrating the strong effect of setmelanotide. The greater than two years of treatment of our first patient, and the greater than one year of treatment for our second patient also support the ability of setmelanotide to be effective for longer treatment periods. Finally, our data supports that this indication will require chronic treatment.

Most importantly, this initial proof of concept data provides support for the belief that setmelanotide will restore activity in patients with upstream defects in the MC4 pathway, by helping patients lose weight and reduce hyperphagia. This was confirmed in our second MC4 pathway rare genetic obesity, LepR deficiency obesity. Similarly, we would expect efficacy in other upstream MC4 pathway genetic disorders, many of which are under study in Phase 2 proof of concept trials.

Phase 3 Clinical Development in POMC Deficiency Obesity

After discussions with the FDA as part of our Breakthrough Therapy designation, we initiated our Phase 3 trial in POMC deficiency obesity in January 2017, Study RM‑493‑012. This is an open label, one‑year trial, including a double‑blind placebo‑controlled withdrawal period, of setmelanotide in POMC deficiency obesity. This pivotal trial is assessing long‑term efficacy of setmelanotide given once daily by SC injection. The trial will begin with an initial period of dose titration lasting between two and 12 weeks where the individual patient’s therapeutic dose will be established by upwards dose titration in two week intervals. Thereafter, patients will continue on active treatment at their individually titrated optimal therapeutic dose for an additional 10 weeks, for a total combined dosing duration of 12 weeks at the individual patient’s therapeutic dose. Patients who demonstrate at least five kilograms weight loss at the end of the open label treatment period will continue onto the double‑blind, variably‑timed, placebo‑controlled, withdrawal period lasting eight weeks inclusive of a four‑week period of placebo treatment. Following the withdrawal period, all patients will complete an additional period of setmelanotide treatment to bring the total therapeutic dosing period to one year.

We plan to file a New Drug Application (NDA) with the FDA based on one-year data from a cohort of 10 patients in this trial. We also plan to enroll supplemental patients who may not complete one year of treatment at the time of NDA filing, including patients between six and eleven years of age under the implementation of a pediatric amendment, to provide additional important data regarding the use of setmelanotide in people living with POMC deficiency obesity.  The primary endpoint of the trial will be a categorical analysis of responders for weight, defined as patients achieving a 10% change from baseline, with mean percentage change in weight from baseline as the key secondary endpoint. Other secondary endpoints are safety and tolerability, hunger, change in body fat mass and glucose parameters, and the effect of withdrawal of setmelanotide in the double‑blind, placebo controlled period. We have also obtained Scientific Advice from the European Medicines Agency, or EMA, in relation to the Protocol for this trial, which is currently enrolling in the United States, United Kingdom, Germany, and France.

We expect to complete enrollment in the first half of 2018 and to report Phase 3 data in the first half of 2019.

Phase 2 Clinical Development in LepR Deficiency Obesity

Leptin’s role in obesity has been elucidated by characterization of severely obese people with homozygous mutations that impair the activity of leptin, including disruption of signaling at the LepR, known as LepR deficiency obesity. To study setmelanotide in this indication we initially amended our Phase 2 clinical trial in POMC deficiency obesity, Study RM‑493‑011, to also include this new and related genetically defined population of severely obese patients. We then completed this part of the Phase 2 proof of concept, open label clinical trial in patients with LepR deficiency obesity by treating three patients in this trial, who demonstrated weight loss and hunger reduction as outlined below.

Results from treatment with setmelanotide in these three LepR deficiency obesity patients are available. The first LepR deficiency obesity patient was a 23‑year old male, who experienced early onset of obesity and hyperphagia. After little success in controlling his weight, he underwent, and failed, a gastric banding procedure, and had regained over 20 kg in the last year since his procedure. Ahead of our trial, the patient’s self‑reported trial hunger score was nine out of 10 points, representing extreme hunger, and his weight and BMI at trial entry were 130.6 kg, or 287.9 lbs., and 39.9 kg/m2, respectively. After initiation and upwards dose titration over 13 weeks of setmelanotide treatment, the patient demonstrated prompt and striking reductions in appetite and body weight with a total loss of 17.5 kg body weight, representing 13.4% of his initial body weight. Hunger scores decreased from nine points at baseline to one to two points at 13 weeks. With continued treatment for 27 weeks, the patient lost 28.2 kg, or 62.2 lbs, representing 21.6% of his initial body weight, and during that interval, he had a hunger score of one to two. Subsequently, on this dose, his weight has been generally stable through 49 weeks of treatment. The weight loss was predominantly caused by a reduction in body fat and resting energy expenditure stayed stable during this period. This patient also had pre‑trial insulin levels that were elevated as examined

by an oral glucose tolerance test, as were glucose values, demonstrating insulin resistance. These values improved with setmelanotide treatment. Notably, there was also an improvement in the patient’s lipid profile over 13 weeks of setmelanotide treatment. Setmelanotide was generally well tolerated in this LepR deficiency obesity trial.

Initial Patient in the Setmelanotide LepR Deficiency Obesity Phase 2 Trial(1)

*Figures represent cumulative weight loss in kgs.

(1)Daily setmelanotide dose adjustments over time are indicated at the top of the panel.

The second LepR deficiency obesity patient is a 22‑year old male who also experienced early onset of obesity and hyperphagia. His growth curve since infancy demonstrated early onset, severe obesity that had continued through his whole life, with little ability to control his weight gain. Ahead of our trial, the patient’s self‑reported trial hunger score was nine to 10 out of 10 points, and his weight and BMI at trial entry were 122.1 kg, or 269.2 lbs., and 40.7 kg/m2, respectively. He was treated with setmelanotide and his dose was escalated up to 1.5 mg once daily with only modest effects on weight and hunger scores. However, when he was advanced to 2 mg once daily, he demonstrated prompt and striking reductions in appetite and body weight. After 17 weeks, including 11 weeks on his therapeutic dose of 2 mg/day, he had lost 9.6 kg, or 21.2 lbs, representing 7.9% of his body weight, and his hunger score dropped to two to three points. By 36 weeks of total treatment, he had lost 13.9 kg, or 30.6 lbs, representing 11.4% of his body weight. Despite good tolerance of treatment and this marked weight loss, the patient self‑discontinued the drug starting at week 36 for approximately two weeks. During this time he regained 5.2 kg or 11.5 lbs, and his hunger score increased to nine out of 10 points, or severe hunger. The patient reported that he felt hungry every hour, and was struggling not to eat. As a result, treatment was re‑initiated at the 2 mg dose, and was then increased to 2.5 mg per day with the goal of accelerating his weight loss. Following the increase, he demonstrated a significant reduction in hunger, with his hunger scores decreasing from nine to two out of 10 points, and a reduction in body weight. The patient remains on treatment with good tolerability. This patient had few metabolic abnormalities at baseline, but he was hyperinsulinemic as examined by an oral glucose tolerance test. After 13 weeks of treatment, the hyperinsulinemia started to improve and the blood glucose levels during the oral glucose tolerance test normalized.

Our Second and Third Patients in the Setmelanotide LepR Deficiency Obesity Phase 2 Trial(1)

*Figures represent cumulative weight loss in kgs

*Figures show patient data only during weeks in which patients were in compliance with the trial protocol.

(1)Daily setmelanotide dose adjustments over time are indicated at the top of the panel.

The third LepR deficiency obesity patient is a 14‑year old female adolescent, and the first adolescent patient treated with setmelanotide. Her growth curve since infancy demonstrated early onset, severe obesity her whole life, with little ability to control her weight gain. Ahead of our trial, the patient’s self‑reported trial hunger score was nine out of 10 points, and her weight and BMI at trial entry were 120.4 kg, or 265.4 lbs., and 44.2 kg/m2, respectively. The patient lost 10 kg, or 22 lbs, representing 8.3% of her body weight, and her hunger score reduced to five out of 10 points in the first 13 weeks on a dose of 1.5 mg per day. Before and during treatment, the patient showed adolescent behavior that compromised compliance with the treatment regimen. This behavior led to a misunderstanding that, by week 23 of the treatment, resulted in the patient incorrectly performing the injections late in the afternoon and at an incorrect, lower dosage of 1.0 mg. The combination of the minimum dose threshold for therapeutic effects and the half‑life of setmelanotide being 10 to 12 hours meant that the combination of lower dose and the maximum drug concentration being reached during the night resulted in an interval of less‑optimal outcomes and weight regain. The patient reported that her hunger was less intensive during the night but increased during the day. Eventually, these errors were reported and corrected. Following such correction, careful monitoring was instituted to ensure that the patient performed the injections in the morning as instructed and the dosage was increased to 2.0 mg per day.

This trial provides the second proof of concept for the effectiveness of setmelanotide in patients with upstream defects in the MC4 pathway, showing marked weight reduction and decreases in hunger in patients with LepR deficiency obesity. In addition, the efficacy of the drug correlates well with periods of setmelanotide treatment and withdrawal, as in POMC deficiency obesity. Based on this proof of concept for the compelling efficacy of setmelanotide in this disorder, we have transitioned the LepR development program to Phase 3.

Phase 3 Clinical Development in LepR Deficiency Obesity

Our LepR deficiency obesity development program is now in Phase 3. We have enrolled our first patient in our LepR deficiency obesity Phase 3 clinical trial, and expect to complete enrollment in 2018. This is an open label, one‑year trial, including a double‑blind placebo‑controlled withdrawal period, of setmelanotide in LepR deficiency obesity. This pivotal trial will assess long‑term efficacy of setmelanotide given once daily by SC injection in LepR deficiency obesity, and is planned to be very similar to the Phase 3 ongoing trial in POMC deficiency obesity. The trial will begin with an initial period of dose titration lasting between two and 12 weeks where the individual patient’s therapeutic dose will be established by upwards dose titration in two week intervals. Thereafter, patients will continue on active treatment at their individually titrated optimal therapeutic dose for an additional 10 weeks, for a total combined dosing duration of 12 weeks at the individual patient’s therapeutic dose. Patients who demonstrate at least five kilograms weight loss at the end of the open label treatment period will continue onto the double‑blind, variably‑timed, placebo‑controlled, withdrawal period. Following the withdrawal period, all patients will complete an additional period of setmelanotide treatment to bring the total therapeutic dosing period to one year.

We plan to treat approximately 10 patients in this trial, aged 12 years and older, and subject to FDA approval, we intend to amend the protocol to include patients aged six years and older before completion of the trial. The primary and key secondary endpoints will be similar to those for our POMC deficiency obesity pivotal trial. This trial is currently being conducted in the United States, the United Kingdom, France, Netherlands, and Germany.

Based on the FDA awarding Breakthrough Therapy designation for the treatment of obesity associated with genetic defects upstream of the MC4 receptor in the leptin‑melanocortin pathway, which includes the LepR deficiency obesity indication, we believe we can seek indications for this type of obesity with a faster path to approval, as compared to typical obesity drug candidates, because of the high unmet need and rare prevalence of this disorder.

Phase 2 Clinical Development in Bardet‑Biedl Syndrome

Bardet‑Biedl syndrome is a life‑threatening, orphan disease with prevalence of approximately one in 100,000 in North America. We estimate that the addressable patient population for Bardet‑Biedl syndrome is approximately 1,500 to 2,500 patients in the United States. It is a rare monogenic disorder that causes severe obesity and hyperphagia as well as vision loss, polydactyly, kidney abnormalities, and other signs and symptoms. Bardet‑Biedl syndrome is part of a class of disorders called ciliopathies, or disorders associated with the impairment of cilia function in cells. Cilia are hair‑like cellular projections that play a fundamental role in the regulation of several biological processes, including satiety signaling. Cilia dysfunction is thought to contribute to hyperphagia and obesity in Bardet‑Biedl syndrome. Bardet‑Biedl syndrome is a genetically heterogeneous disease that is caused by as many as 21 separate Bardet‑Biedl loci defects resulting in a similar syndrome, though each Bardet‑Biedl syndrome patient only has one of these defects.

The role of abnormal cilia development and function in obesity has been elucidated in animal models, most strongly for Bardet‑Biedl. Studies in mouse models of Bardet‑Biedl syndrome show that deficiencies in the MC4 pathway contribute to the obesity and hyperphagia in Bardet‑Biedl syndrome, with animals developing hyperphagic tendencies early in life. Notably, these mice have decreased leptin receptor signaling, with the essential hallmarks of failure to activate POMC neurons. This is supported in Bardet‑Biedl syndrome rodent models, where the mice respond to an MC4 agonist resulting in reduced food intake and body weight. The relation of Bardet‑Biedl syndrome gene mutations to the MC4 pathway is supported by clinical data. Patients with Bardet‑Biedl syndrome have higher leptin than expected for their degree of adiposity, or leptin resistance, which is consistent with the notion that ciliopathy‑induced leptin signaling dysfunction is associated with leptin resistance.

Overall, these data support that the phenotypes of these ciliopathies, while complex with additional clinically important features along with obesity and hyperphagia, may be responsive to setmelanotide treatment, and will be investigated in our proof of concept Phase 2 trial.

We are studying Bardet‑Biedl syndrome patients who are severely obese, or whose BMI is equal to or greater than 40kg/m2, to provide proof of concept that Bardet‑Biedl syndrome patients will also demonstrate decreased hunger and significant weight loss, similar to that seen in patients with POMC deficiency obesity, or LepR deficiency obesity. We

have enrolled the first five patients in this trial, have reported preliminary results for Bardet‑Biedl syndrome in the fourth quarter of 2017, and plan to initiate Phase 3 clinical trials in 2018.

For this trial, additional assessments of hunger using daily hunger scores and questionnaires were also obtained. We plan to use these new assessments in our ongoing Phase 2 and Phase 3 trials and for future trials. These new assessments are as follows:

•Daily Hunger Scores. In addition to our morning assessment of hunger, as performed in the Phase 2 trials in POMC deficiency obesity and LepR deficiency obesity, we are also obtaining a daily hunger score rating in response to the question: “In the last 24 hours, how hungry did you feel when you were the most hungry?” Patients are asked to give a response that is measured on a scale of 0‑10, whereby 0 points signifies “not hungry at all” and 10 points indicates the patient feels his or her “hungriest possible.”

•Questionnaires. For patients 16 years of age and younger, we are using two observer related questionnaires as exploratory endpoints. These questionnaires are completed by the patient’s parent or other caregiver.

•The Food Problem Diary, or FPD, is based on food‑related behaviors. This questionnaire was adapted from a similar questionnaire that was used with patients with Prader‑Willi syndrome. The questionnaire is rated on a 30‑point scale where 30 points is strong evidence of hyperphagia and 0 points is evidence of no hyperphagia. The best possible response therefore is 0 points.

•The Significant Event Questionnaire, or SEQ, counts events not typically seen in this population, such as a patient leaving food on his or her plate at a meal. This questionnaire consists of eight “yes” or “no” questions. The best possible response is 8 points, since this questionnaire tracks events and behavior not typically seen in patients with MC4 pathway disorders. In contrast with other score scales, a higher score in this hunger assessment category represents improvement, and thus, the results are plotted in reverse scale and downward trends indicate improvement.

We believe that proof of concept in Bardet‑Biedl syndrome has been demonstrated by improvements in hunger and weight reduction, supporting that this is a setmelanotide‑responsive, MC4 pathway disorder. Four different Bardet‑Biedl genotypes were studied in this trial. The age of the patients ranged from 12 to 61 years of age. The starting weights of the patients ranged from 98.3 to 147.5 kg and BMI ranged from 42 to 49. The starting hunger scores for the adult patients ranged from 6 to 9 points on the 10‑point scale, with higher scores indicating more hunger and the SEQ scores for the two adolescent patients were both 1.

Description of the Five Bardet‑Biedl patients in the Phase 2 Proof of Concept study

Two Bardet‑Biedl syndrome patients with Bardet-Biedl syndrome 1 mutations and one each with Bardet-Biedl syndrome 2, 10 and 12 mutations were enrolled. Body weight and hunger scores for three patients or hyperphagia score for one patient time courses are depicted for four Bardet-Biedl patients demonstrating therapeutic responses to setmelanotide, with both endpoints evaluated over total treatment durations lasting between 12 and 26 weeks, with five to 14 weeks representing time spent in the dose titration period designed to define an individualized therapeutic dose. Four of the five patients showed early, but significant weight loss of 17.8, 7.9, 11.8 and 9.5 kg lost, or 39.2, 17.4, 26.0 and 21.0 lbs. The fifth patient, a patient with a Bardet-Biedl syndrome 1 mutation, did not demonstrate any body weight change after 33 weeks on treatment, including a final 12-week test period on 3.0 mg daily. However, the weight curve for this

patient indicated a slowing of prior childhood weight gain as shown in her pediatric growth chart. This patient was a 12-year old with Type 1 diabetes who entered the trial with extremely poor glucose control, with an average blood sugar level, or HbA1c, of 10.1%). We are investigating the reason for the inconsistency between her improvement in hunger and lack of weight loss. During her treatment, her HbA1c showed an improvement to 7.6%. All five patients demonstrated a greater than 50% reduction from baseline in either hunger or hyperphagia scores, and setmelanotide was generally well tolerated in this Bardet-Biedl syndrome Phase 2 proof of concept study.

Our Four Patients in the Setmelanotide Bardet‑Biedl Syndrome Phase 2 Trial who showed improvements in both weight and hunger(1)(2)

* Figures represent cumulative weight lost in kgs

FPD: Food Problem Diary; Score Range 0 to 30, higher score means worse result

SEQ: Significant Event Questionnaire, which counts significant food behavior events rarely seen in this population (Y/N for 8 behaviors), so maximum score of 8 points means greatest improvement. Shown in reverse scale so downward movement equals improvement for clarity.

(1)Daily setmelanotide dose adjustments over time are indicated at the top of the panel.

(2)In some cases, dates for entry of weight and hunger assessment data may differ within a single patient.

Phase 2 Proof of Concept Studies Focused on Patients with Monogenic Disorders of the MC4 Pathway: Alström syndrome, Heterozygous Mutations in the MC4 Pathway, and Epigenetic Disorders of the MC4 Pathway

We are conducting Phase 2, proof of concept trials in a variety of monogenic, upstream disorders of the MC4 pathway, including Alström syndrome, POMC heterozygous mutations in the MC4 pathway, and epigenetic disorders of the MC4 pathway. These trials are Phase 2 open label, single arm, proof of concept trials assessing the effect of setmelanotide on the rare genetic disorders of obesity described below. We hypothesize that all of these disorders may be genetically‑defined deficiencies upstream in the MC4 pathway. Each trial includes a three month proof of concept phase at which weight loss, hunger and other metabolic parameters will be evaluated. If patients demonstrate significant weight loss and acceptable safety and tolerability, they will continue in one‑year extensions for evaluation of setmelanotide’s effects at one year and onwards of total therapeutic dosing. Similar to our previous trials, this trial will begin with an initial period of dose titration where the individual patient’s therapeutic dose will be established by upwards dose titration in two week intervals. We plan to enroll approximately five patients for each of these rare genetic populations. We will conduct these trials, as well as the ongoing Bardet‑Biedl syndrome trial described above, under basket protocols, which are designed to capture a broad range of patient populations to be treated under one investigational protocol. We believe this approach is efficient for studying many potential indications, and we intend to add additional populations to these basket protocols over the next one to two years.

The genetic disorders we are studying in our additional Phase 2 proof of concept trials are outlined below.

a.Clinical Development in Alström Syndrome Obesity

Alström syndrome is a life‑threatening, ultra‑rare orphan disease with a prevalence of approximately one in 1,000,000 in North America and we estimate that the addressable patient population for Alström syndrome obesity is approximately 500 to 1,000 patients worldwide. Alström syndrome shares many clinical features with Bardet‑Biedl syndrome, including obesity and hyperphagia, and is also characterized by progressive vision loss, deafness, congestive heart failure, hyperinsulinemia and type 2 diabetes mellitus. Similarly, Alström syndrome is a ciliopathy caused by mutations in the ALMS1 gene, which has also been shown to be important for cilia function. Like Bardet‑Biedl syndrome, recent scientific studies identify genetic deficiencies affecting the MC4 signaling pathway as a potential cause of the obesity and hyperphagia associated with Alström syndrome. Studies in a mouse model of Alström syndrome show a reduction in the number of cilia in specific neurons in the hypothalamus that are critical for MC4 pathway signaling. While Alström syndrome is less well studied than Bardet‑Biedl syndrome, the similar pathophysiology of cilial dysfunction and clinical presentation support that deficiencies in the MC4 pathway are implicated in the obesity and hyperphagia observed in Alström syndrome. Therefore, we hypothesize that setmelanotide treatment can be applied to treat Alström syndrome.

We will enrollare studying Alström syndrome patients who are severely obese, or whose BMI is equal to or greater than 40kg/m2, to provide proof of concept thatobese. As stated above, our Phase 3 study included three patients with Alström syndrome in the primary analysis and none of them met the primary endpoint. However, there were signals of potential efficacy in some patients, and we are exploring further these phase 3 data. One pediatric patient with Alström syndrome lost 8 percent of body weight in the pivotal trial. In our Phase 2 trial, we had enrolled four patients with Alström syndrome. One of those patients, a 12-year-old male, lost 25 percent of body weight, and another patient who achieved and maintained 6 percent weight loss also saw her HbA1c decrease by 3 percent from 11 percent to 8 percent.

We are evaluating next steps for setmelanotide for the potential treatment of patients with Alström syndrome.

Community-building efforts for BBS and Alström Syndrome

The ongoing efforts outlined to support the POMC, PCSK1 and LEPR launch lay the foundation for future commercialization efforts, including potential for BBS and Alström if setmelanotide is ultimately approved in these indications. All disease education efforts supporting awareness of rare genetic diseases of obesity and testing will also demonstrate decreased hungeruncover BBS and significant weight loss, similarAlström patients. In addition, compared to POMC, PCSK1 and LEPR, BBS and Alström are syndromic diseases where patients suffer from multiple symptoms beyond early-onset obesity and hyperphagia. This allows for a tailored approach to disease education efforts to differentiate individuals with BBS and Alström syndrome from the broader general obese population.

Initial primary and secondary market research has been conducted to understand the patient journey to diagnosis and treatment and the HCPs involved in the diagnosis and management of individuals with BBS and Alström syndrome. This research demonstrates there is still a need to decrease the time to diagnosis and increase awareness of these diseases, particularly education around how the underlying pathology causing obesity in BBS and Alström Syndrome differs from common obesity. Currently HCPs often treat the obesity and hyperphagia with traditional obesity management practices that seenfrequently prove insufficient, leading to inadequate improvements and frustration for diagnosed individuals.  We continue to advance our education and community building efforts as we make progress against these unmet needs in the community through engagements with existing HCP treaters, diagnosers, referrers, along with patient advocacy groups.

We continue to hone our understanding of the number of diagnosed individuals, while supporting additional patient identification. An ongoing assessment of the market will guide decisions around future headcount needs to support the launch in BBS/AS, whether from a field perspective or to supplement our existing patients and customer support services.

to carry this mutation, but our genotyping study of 560 patients with early onset, childhood obesity has identified five heterozygote patients with the R236G mutation, all with severe obesity. Because, in both our genotyping study and in the scientific literature, this mutation is associated with severe obesity and has a relatively‑high observed prevalence, this mutation will be a focus when enrolling our Phase 2 trial in POMC heterozygous obesity.setmelanotide.

We also plan to study patients who are heterozygous deficient for LepR deficiency obesity in the near future, though we have not yet initiated study in this population. Less is known about the epidemiology and clinical impact of LepR heterozygous deficiency obesity. Smith-Magenis Syndrome

In addition, we have hypothesizedare studying setmelanotide for the treatment of obesity in patients with Smith-Magenis syndrome,  a developmental disorder that patients who are composite heterozygous, or who have heterozygosity in twoaffects many parts of the body. The major features of this condition include mild to moderate intellectual disability, delayed speech and language skills, distinctive facial features, sleep disturbances, behavioral problems, and in some cases, adolescent-onset obesity and hyperphagia. It arises due to loss of function mutations or chromosomal deletions that ablate the function of a gene called RAI1. RAI1 is a transcription factor that's been shown to affect the expression of several MC4 receptor pathway genes, including POMC itself. As a result, we believe that hyperphagia and obesity found with Smith-Magenis syndrome is likely caused by an overall decrease in the activity of the MC4 pathway, both POMCreceptor pathway. We are continuing to enroll patients in this cohort.

Additional Planned Phase 2 Studies

Expanded Phase 2 MC4R Pathway Basket Study

Leveraging our extensive scientific expertise and LepR, and who therefore mightyears of internal research, we have some impairment at more than one location in the MC4 pathway, might alsodeveloped a process that allows us to identify new genes that we believe may be responsive to setmelanotide. Through this proprietary gene curation and selection strategy specifically designed to evaluate a gene’s relevance to the MC4R pathway, we have identified an additional 31 MC4R pathway genes with “strong” or “very strong” pathway relevance, which we plan to evaluate in an expanded Phase 2 Basket Study. Similar to our ongoing exploratory Phase 2 Basket Study, we will look to enroll patients with early-onset, severe obesity with a body mass index (BMI) ≥40 kg/m² with a confirmed genetic variant of one of these 31 genes. We expect that patient identified for this study will be screened, stratified into cohorts by gene and receive setmelanotide therapy over 12 to 16 weeks. We expect to finalize this study design and initiate this trial in the second half of 2021.

Hypothalamic Obesity

Hypothalamic obesity, or HO, is a severe obesity that arises from mechanical hypothalamic insults. Lesions of the hypothalamus can derive from various types of tumors (e.g., craniopharyngiomas, gliomas, pituitary adenomas,

The following figure depicts preliminary data relating to our setmelanotide Phase 1b clinical trial in MC4 heterozygous deficiency obesity patients:

Setmelanotide Phase 1b Trial MC4 Heterozygous Patients: Placebo Subtracted Differences(1)(2)

(1)Over four weeks of treatment with setmelanotide 0.01 mg/kg/day by continuous SC infusion.

(2)Preliminary data.

In general, we consider a p‑value of 0.0528 years, inclusive, are planned to be significant. P‑values are an indication of statistical significance reflecting the probability of an observation occurring due to chance alone. However, it is not possible to determine a p‑value for very small sample sizes, such as one‑ or two‑patient trials.

Other Clinical Initiatives in Genetic Obesity

Genotyping Study

Leveraging new understanding of severe obesity caused by specific genetic defects has the potential to improve both diagnosis and treatment for specific types of life‑threatening obesity. Therefore, we are sponsoring the Genetic Obesity Project, which is dedicated to improving the understanding of severe obesity that is caused by specific genetic defects—particularly rare genetic disorders that result in life‑threatening obesity. As part of that initiative, we have initiated a genotyping study—the Genetic Obesity ID | Genotyping Study—in which eligible patients are genotyped for rare genetic disorders of obesity. The goal is to develop a screening algorithm for selecting patients to be genotyped and diagnosed with POMC deficiency obesity and LepR deficiency obesity, and to guide further genotyping efforts; in addition, it is our expectation that patients who can participate in ourenrolled across approximately 3-5 clinical trials will be genetically identified. We are currently including other MC4 pathway deficiencies in the study. Key entry criteria for the study include a history of severe, early onset

obesity, along with hyperphagia and are consistent with the recently published Pediatric Obesity guidelines published by the Endocrine Society. Study investigators, who are academic experts in childhood obesity, are located in both the United States and Europe. We plan to work with these investigators to publish the results of this study and guidance on the use of the algorithm for screening, to enable more systematic diagnoses of these rare genetic disorders of obesity. Our preliminary results in 560 genotyped patients, described below, suggest we can successfully identify these patients using our algorithms. We intend to validate these early results in larger numbers of patients, but we believe these results provide preliminary support for our genotyping approach.

Genetic Epidemiology Studies

We have estimated the patient population for our rare genetic disorders of obesity primarily by identifying patients or by estimating from clinical epidemiology information. Another method to estimate the size of these ultra‑rare populations is by genetic epidemiology—using newly available large genomic databases, both full genome sequencing or exome sequencing, that are now becoming available. We have begun some substantial efforts with a series of such databases and/or collaborators and much of our preliminary work has been with a database of approximately 140,000 genomes, representative of the U.S. population.

While results from this effort are preliminary, they have been very supportive of our clinical epidemiological estimates, even when using conservative assumptions. They support that estimates of the number of patients in the United States who are homozygous deficient in the POMC gene, which is one of the genetic defects causing POMC deficiency obesity, and who are homozygous deficient in the LepR gene are at least as large as our assumptions provided above, if not larger. In addition, the estimates of patients who are homozygous deficient in the PCSK1 gene, which is the other genetic defect causing POMC deficiency obesity, may be substantially larger than our estimates, at more than 1,000 patientssites in the United States. We have already begun to expand this work into other genomic databasesexpect that contain patients with different demographics, and are actively working with a series of academic and industry collaborators. The ongoing expansion of genomic data available in other forums also has the effect of supporting this effort. An important improvement in this effort will be workingtreated with data linked to phenotypic information to better characterize the genetic information we are analyzing. However, until these data are confirmed in additional genetic epidemiology databases, we must continue to base our patient population estimates on clinical epidemiological information.

Setmelanotide: Clinical Development Program in Prader‑Willi Syndrome

Prader-Willi Syndrome (“PWS”) is a life threatening, orphan multigenic disease with prevalence estimates ranging from approximately one in 8,000 to one in 52,000, with at least 8,000 diagnosed patients in the United States. A hallmark of PWS is hyperphagia, leading to severe obesity and other complications. For PWS patients, hyperphagia and obesity are the greatest threats to their health, and these patients are likely to die prematurely as a result of choking, stomach rupture, or from complications caused by morbid obesity.

The genetics of PWS are complex, involving many genes on chromosome 15 that are not properly expressed. Recent discoveries highlight that a defect in one of these, the melanoma antigen family L2, or MAGEL2, gene, in rodent models impairs the function of POMC neurons, which are key components of the MC4 pathway. Studies have suggested a link between defects in MAGEL2 in some humans with obesity, hyperphagia, autism spectrum disorders, reduced intellectual ability and most other aspects of behavior and metabolism associated with PWS. However, the connection of PWSsetmelanotide for 16 weeks, with the MC4 pathway is complex.

We have completed a Phase 2 proofprimary endpoint being the percentage of concept, double‑blind, placebo‑controlled, randomized clinical trial in PWS, Study RM‑493‑010, which enrolled 40 patients for four weeks of active setmelanotide treatment, administered once

daily by SC injection. This trial was intended to assess the effects of setmelanotide on weight reduction, and PWS‑specific hyperphagia‑related behaviors, as PWS patients do not respond to hunger questionnaires, as well as determine its safety profile. Based on the data from this Phase 2 clinical trial, we do not believe we will be positioned to proceed directly into a Phase 3 clinical trial.

The trial included a two‑week run‑in period, a four‑week double blind, randomized, placebo‑controlled parallel group main trial, a two‑week double‑blind, randomized, placebo‑controlled withdrawal period during which half of the trial patients were randomized to either continue to receive their therapy or be switched to the alternative therapy, from active to placebo, or vice versa, and a two‑week active‑treatment extension. There were four treatment arms in the trial: placebo (N=14); 0.5 mg of setmelanotide SC injection daily (N=4), 1.5 mg of setmelanotide SC injection daily (N=12), and 2.5 mg of setmelanotide SC injection daily (N=10). Patients were 17 to 54subjects aged >12 years of age, with a mean BMI of 39.4 kg/m2, and with a genetically confirmed diagnosis of PWS. Primary endpoints for the trial included safety and tolerability, weight loss and hyperphagia, with hyperphagia to be measured by a PWS hyperphagia observer reported outcome, or ORO, questionnaire. Secondary endpoints included dual‑energy x‑ray absorptiometry measurements, pharmacokinetics, effects during the randomized withdrawal stage, and effects on quality of life and food‑related and other behaviors. Primary evaluations were assessed at the end of the four‑week double blind parallel group stage, as well as after the withdrawal stage and open label extension.

The results of the trial showed modest effects on hyperphagia, which did not approach statistical significance, and no effect on weight, though there may have been some small evidence of clinically‑important weight loss in the very small group of patients who were randomized to the highest dose of setmelanotide over the longest interval of treatment (N=4 patients, post‑hoc evaluation, non‑significant). There was good safety and tolerability, providing support for the 2.5 mg daily dose, with only injection site reactions common in both active and placebo groups. There were no serious adverse events, no significant safety issues or changes in labs or other safety parameters, and the one discontinuation was due to injection site reactions.

PWS is a complex multigenic disease, and the hypothesis that PWS is an upstream MC4 pathway disorder is supported primarily on the role of only one of those genes, MAGEL2, in animal models of obesity. Our results may support that PWS is not an upstream MC4 pathway disorder. Alternatively, other design factors may have influenced the outcome of this trial, and we will reassess in 2018 the possibility of future Phase 2 trials in PWS that address these potential factors: longer duration of treatment, younger patient population, improved setmelanotide pharmacokinetics, consideration of higher doses, and operational limitations of the completed Phase 2 trial.

Setmelanotide Clinical Development in General Obesity Patients

Initial studies in general obesity provided preliminary evidence of efficacy and of good tolerability, and served as a foundation for the clinical development of setmelanotide. The general obese population is defined as having a BMI of equal to or greater than 30 kg/m2. In our initial clinical trials, we delivered setmelanotide with continuous SC infusion using an insulin pump. More recently, our administration has been converted to a once daily SC injectable formulation. In addition, we have an ongoing trial to assess the pharmacokinetics of a new, long‑acting formulation of setmelanotide.

The table below summarizes the setmelanotide studies that we conducted in general obese patients under IND # 112595 submitted to the Division of Metabolism and Endocrinology Products, Center for Drug Evaluation and Research, FDA.

Completed and Ongoing Setmelanotide Clinical Trials in the General Obese Population

SC=subcutaneous.

Phase 2 Clinical Development in the General Obese Population

a.Phase 2 Clinical Trial Results with Continuous Infusion

We conducted our first Phase 2 clinical trial of setmelanotide using continuous SC infusion. This was a 12‑week, Phase 2 proof of concept clinical trial in general obese patients using the SC continuous infusion formulation of setmelanotide delivered by an insulin pump. We treated approximately 74 obese patients with either placebo or setmelanotide at a dose of 1.0 mg over 24 hours, with no serious adverse events or other safety indications from laboratory tests, electrocardiograms or vital signs noted in the setmelanotide treatment group. Evaluation of the pharmacokinetics, or blood levels, of setmelanotide from this clinical trial demonstrated that the SC continuous infusion method of drug administration was not optimal. A large number of patients did not meet the target pharmacokinetic exposures of setmelanotide that our Phase 1 clinical trials suggested would have to be achieved in order for setmelanotide to show efficacy. This clinical trial did not demonstrate statistically significant weight loss compared to the placebo. We believe patients in this clinical trial lacked adequate exposure to setmelanotide, and concluded that all future efficacy clinical trials in obese patients should be conducted using

the SC injection method. This belief is based on a prior Phase 1 pharmacokinetic trial, which used the SC injection formulation and demonstrated higher pharmacokinetic exposures in obese patients.

b.Phase 2 Clinical Trial with Once Daily SC Injection

We conducted a three‑stage, randomized, placebo‑controlled, Phase 2 12‑week general obesity trial, with approximately 100 obese patients, using our SC injection formulation, primarily with once daily dosing. We designed this Phase 2 clinical trial to bridge between the earlier clinical trials that used continuous infusion and all future clinical trials that use the formulation for once daily SC injection. Therefore, the primary purpose of the staged approach in this trial was to assess if appropriate pharmacokinetic targets could be reached with the new SC injection, first in an in‑patient setting similar to the setting where robust weight loss was demonstrated in the Phase 1 general obesity trial, and then in an outpatient setting.

Overall, setmelanotide demonstrated significant weight loss over 12‑weeks in all stages, with placebo subtracted weight loss, or the difference in the amount of weight gained or lost in the active treatment group as compared to the placebo treatment group, from baseline of −2.78% to −4.69% and p‑values ranging from 0.005 to <0.001. However, weight loss was more pronounced and consistent in the cohort treated with an initial four‑week, observed dosing, inpatient period, for which overall placebo subtracted≥5 percent body weight loss from baseline at week 12 ranged from −3.87% to −4.69%, all with p‑values of less than 0.005, with the most pronounced weight loss during the in‑patient period. The once daily SC injection formulation also showed consistent and predictable pharmacokinetic measurements during the four‑week inpatient interval in the first stage, validating the characteristics of the SC injection formulation. However, this trial demonstrated challenges in drug administration and compliance when administered in an outpatient setting in the general obese population.

Setmelanotide Phase 2 SC Injection Trial 4‑week In‑Patient Dosing Period: Percent Weight Loss for

Setmelanotide 1.5 mg/day SC injection vs Placebo over 26 days of Observed Dosing

Phase 1 Clinical Development in the General Obese Population

We have completed a Phase 1 single‑ascending dose, or SAD, clinical trial of setmelanotide, as well as five cohorts in a Phase 1 multiple‑ascending dose, or MAD, clinical trial of setmelanotide. Both clinical trials were in healthy obese subjects, and included a double‑blind, placebo‑controlled randomized escalating dose design. Subjects received

treatment in these Phase 1 clinical trials for one day at doses up to 0.1 mg/kg/day, which is a total daily dose of approximately 10 mg/day, and for up to 28 days at doses up to 0.015 mg/kg/day, which is a total daily dose of approximately 1.5 mg/day.

In the SAD clinical trial, our extensive monitoring of heart rate and blood pressure did not demonstrate any clinically meaningful changes with setmelanotide treatment compared with placebo. Similarly, in the MAD clinical trial, there was no evidence of any notable changes in cardiovascular parameters compared to placebo when assessed by 24‑hour ambulatory blood pressure monitoring,a historic control of <5 percent in this subject population. All enrolled patients will be obese, defined as a BMI ≥35 kg/m² for subjects ≥16 years of age or ABPM. We determined thatBMI ≥99th percentile for age and gender for subjects 6 to <16 years of age based on the terminal half‑lifeU.S. Centers for Disease Control and Prevention criteria.

Weekly Formulation of setmelanotide is approximately nine to ten hours, making it suitable for once daily dosing.

Four cohorts of the Phase 1 MAD clinical trial that included doses of greater than 0.01 mg/kg/day, which is approximately 1 mg/day, for two to four weeks, demonstrated placebo subtracted weight loss differences. Most panels showed statistically significant, placebo subtracted weight reduction that ranged from 0.6 to 1.4 kg/week, with a mean of approximately 0.9 kg/week over the two to four weeks of treatment in Phase 1.

Setmelanotide: Phase 1b General Obesity Patients: Placebo Subtracted Differences(1)(2)

(1)Over two to four weeks of treatment with setmelanotide by continuous SC infusion. Placebo subtracted differences are the FDA’s primary weight loss analysis approach, assessing the weight difference between active and placebo treatment groups for changes from baseline for weight.

(2)Preliminary data.

Δ = Placebo subtracted weight loss from baseline.

BID = Two times per day.

Phase 1 Energy Expenditure Clinical TrialSetmelanotide

In collaboration with the National Institute of Diabetes, Digestive and Kidney Diseases, we investigated setmelanotide in a Phase 1 clinical trial to determine the effects of setmelanotide on energy expenditure, a mechanism for weight loss, in addition to the well‑known effects of MC4R agonists on appetite and food intake. Twelve obese adults were randomized to receive setmelanotide or placebo by continuous SC infusion over 72 hours, followed immediately by crossover to the other treatment. Setmelanotide showed statistically significant 6.85% increases in resting energy expenditure, supporting a role for setmelanotide in weight regulation. This trial provided the first clinical demonstration that MC4R activation with setmelanotide increases resting energy expenditure in obese humans.

Long‑Acting Setmelanotide Pharmacokinetic Trial

In addition to developing the once daily SC injectable formulation of setmelanotide that we are using in our ongoing clinical trials, in collaboration with Camurus AB, or Camurus, we have developed a once weekly, long‑acting

long-acting formulation using FluidCrystal^® technology. When injected subcutaneously, aqueous body fluid is absorbed by the excipient lipid phase which forms a gel‑likegel-like depot consisting of liquid crystals formed in situ leading to slow diffusion of setmelanotide from the depot. We believe that this formulation may be more convenient and less burdensome for patients and their families.

We have compelling preclinical data with the long‑acting formulation: in monkeys, the terminal half‑life of the long‑acting formulation is approximately 105 hours, and in rats, approximately 92 hours. Two‑week toxicology studies in rats have been completed, and the long‑acting formulation was well tolerated. During the two‑week dosing period, animals given setmelanotide had dose‑related, statistically significant lower body weights, from −9.8% to −11.7%, compared to those given placebo controls. Food consumption for animals given setmelanotide was also lower compared to controls, which decreased by approximately −20.5%.

A clinical pharmacokinetic trial is ongoing. It is an ascending‑dose, placebo‑controlled, up to three sequential panel PK trial, and PK and safety/tolerability will be collected for approximately 14 days. Dose for the three panels will range from 2.5 mg up to 30 mg given as a single SC injection.

TheIn November 2020, we presented interim results from the 2.5 mg and 10 mg doses are now available. At these doses, setmelanotide long‑acting formulation was well tolerated. The pharmacokinetic data from the 10 mg single subcutaneous dose showed a profile that was consistent with once weekly dosing with a mean pharmacokinetic half‑life of 123 hours.

Following the completion of the single-dose study, we recently completed a multi-dosePhase 2 study evaluating an extended-release,a once-weekly formulation of setmelanotide.setmelanotide in healthy obese volunteers. The data showed that, as of a cutoff date of April 17, 2020, healthy obese people treated with the weekly formulation which we are developing in collaborationof setmelanotide achieved comparable weight loss to those treated with Camurus, demonstrated tolerabilitythe daily formulation and pharmacokinetics that support further clinical development. While this data is preliminary,both weekly and this formulation is expecteddaily formulations of setmelanotide were observed to be only ready for submission in 2020, or later, this simpler dosing regimen may provide improvements in patient convenience, and may provide additional advantagesgenerally well tolerated. A total of 85 individuals were included in the pediatric population.interim data analysis: 28 individuals were treated with weekly setmelanotide without titration for 12 weeks (10mg, 20mg or 30mg doses); 20 individuals were treated with weekly setmelanotide with titration (10mg for one week, followed by 20mg for 11 weeks or 20mg for one week, followed by 30mg for 11 weeks); 13 individuals were treated with daily setmelanotide (2mg daily for one week, followed by 3mg daily for 11 weeks); and 24 individuals were treated with placebo for 12 weeks.

We plan to discuss our development plans with the FDA and EMA in the first half of 2021 and anticipate dosing the first patient in our planned once-weekly clinical trial in late 2021.

These interim data showed that, as of the cutoff date of April 17, 2020, the weight and hunger score changes in individuals who received the weekly formulation were generally comparable to the score changes observed in individuals who received the daily formulation. Notably, the weight and hunger score changes in healthy obese individuals receiving both formulations were lower than those reported separately in patients with rare genetic obesities associated with an impaired MC4R pathway who received setmelanotide. We believe the interim results from this study reinforces the position that setmelanotide is a precision medicine targeted at patients with deficits in the MC4R pathway. Additionally,  pharmacokinetic, or PK, analyses showed similar trough drug concentrations for the daily and weekly formulations over the duration of therapy. The weekly formulation of setmelanotide demonstrated a consistent 24-hour PK range and was detected steadily over one week, with a trough concentration consistent with the trough concentration of the daily formulation.

As of the data cutoff of April 17, 2020, weekly setmelanotide administration was generally well tolerated, with no serious TEAEs, and the safety results were similar to the daily administration and consistent with prior clinical experience. The most commonly reported TEAEs, rates of which were generally similar between individuals treated with the weekly and daily formulations, included injection site reaction, hyperpigmentation, nausea, headache and vomiting.

musculoskeletal pain. There were no treatment‑related changes in physical examination, except as noted below, and few, if any, clinically relevant changes in electrocardiograms, laboratory data and/or anti‑drug antibodies. Overall, there have been six other serious adverse events in the full development program, in addition to the serious adverse event described above: three others on setmelanotide, including left arm numbness, influenza immunization reaction and pancreatitis secondary to pre-existing gallstones.   There were also three serious adverse events during treatment with placebo, consisting of biliary dyskinesia, severe groin strain, and pelvic inflammatory disease. None of these serious adverse events was considered related to setmelanotide treatment.

To demonstrate thatevaluate whether setmelanotide has the potential to provide a safeavoid adverse cardiovascular profile,issues, we extensively validatedstudied setmelanotide in obese primate preclinical studies, with special attention to cardiovascular effects. The results of these studies supported testing in clinical trials. In the clinical trials, we monitored blood pressure and heart rate extensively, primarily by 24‑hour24-hour ambulatory blood pressure monitoring, or ABPM. In most clinical trials, there were multiple 24‑hour24-hour ABPM periods, both on a pre‑treatmentpre-treatment and post‑treatmentpost-treatment basis. Trial‑by‑trialTrial-by-trial review of the 24‑hour24-hour ABPM data showsshowed little, if any, evidence of changes in heart rate and/or blood pressure even at the highest doses tested in Phase 1 and Phase 2 clinical trials. We have also conducted an analysis of 24‑hour24-hour ABPMs that were obtained pre‑dosepre-dose and post‑dosepost-dose across completed studies, which was presented at the Obesity Society in 2015. This included 128 patients, of which 79 were active and 49 were on a placebo. Overall, there was little, if any, evidence of blood pressure or heart rate changes evident from baseline versus placebo in any trial, preliminarily supporting an important differentiation of setmelanotide from previous MC4MC4R therapies. While the preliminary data are encouraging, there will be continued focus on potential cardiovascular risk until addressed in larger and longer clinical trials.

Setmelanotide Phase 2 SC Injection Trial: 24‑hr ABPM (All Studied Patients),

Showing No Adverse Effect of Setmelanotide on Blood Pressure or Heart Rate

In the majority of our trials, there waswe observed a small increase in frequency of penile erections in male patients, as well as signs of sexual arousal in a small number of female patients. These symptoms were infrequent, generally mild, not painful, and short‑lived.short-lived. Most often these symptoms were reported in the first week of treatment. There was a small incidence of nausea and vomiting, as well as injection site reactions, both of which usually were reported as mild, early in treatment, and short‑lived.short-lived. A small number of patients had dose reductions and/or discontinued treatment due to nausea and vomiting.

We also noted darkening of skin and skin lesions, such as moles and freckles, in most patients who received setmelanotide. This was likely caused by activation of the closely related MC1 receptor, the receptor that mediates skin darkening in response to sun exposure. This was observed generally after one to two weeks of treatment, most often plateaued by two to four weeks of treatment, and like sun‑relatedsun-related tanning, generally returned to baseline after cessation of exposure.

Other effects, specifically back pain, headaches, fatigue, diarrhea and arthralgia,Overall, the most common AEs reported among setmelanotide treated patients have been numerically more frequent in setmelanotide‑treated patients as comparedskin hyperpigmentation, injection site reactions, nausea, headache, vomiting, decreased appetite, and diarrhea.

Life-Cycle Management and Preclinical Development

We continue to placebo patients, but most investigators reported these effects to be unrelated to setmelanotide.

While general obese patients are not currentlyadvance the focusdevelopment of our once-weekly formulation of setmelanotide studies,for all indications in which setmelanotide is approved or in development.  We plan to discuss our development plans with the FDA and EMA consider

Therepatients with obesity due to POMC, PCSK1 or LEPR deficiencies, and there are no current pharmacologicalapproved treatments for regulating hunger and hyperphagia‑hyperphagia related behaviors of patients with POMC deficiency obesity, LepR deficiency obesity, Bardet‑Biedl syndrome,BBS, Alström syndrome, POMC heterozygous deficiency obesity, SRC1 deficiency obesity, SH2B1 deficiency obesity, MC4R deficiency obesity, or POMC epigenetic disorders.Smith-Magenis syndrome. Bariatric surgery is not a treatment option for these genetic disordersdiseases of obesity because the severe obesity and hyperphagia associated with these disordersdiseases are considered to be risk factors for bariatric surgery.

Licensing Agreements

Ipsen Pharma S.A.S.

In February 2010, the Predecessor Company entered intoPursuant to a license agreement with Ipsen Pharma S.A.S., or Ipsen, pursuant to which Ipsen granted to itwe have an exclusive, sublicensable, worldwide license to certain patents and other intellectual property rights to research, develop, and commercialize compounds that were discovered or researched by Ipsen in the course of conducting its MC4MC4R program or that otherwise were covered by the licensed patents. Rights under the license included the right to research, develop and commercialize setmelanotide. Pursuant to the license, Ipsen also granted to the Predecessor Companywe have a non‑exclusive,non-exclusive, sublicensable, worldwide license to certain patents and

is eligible to receive progressive payments of approximately $65.0 million, of which the majority are sales milestones. In addition, Camurus is eligible to receive tiered, mid to mid‑high,mid-high, single digit royalties on future sales of the product.

The term of the agreement continues until the expiration of the applicable royalty term on a country‑by‑countrycountry-by-country and product‑by‑productproduct-by-product basis. Upon expiration of the term of the agreement, the licensed rights granted to us under the agreement, to the extent they remain in effect at the time of expiration, will thereafter become irrevocable, perpetual and fully paid‑uppaid-up licenses that survive the expiration of the term. We have a right to terminate the license agreement at any time during the term for any reason upon 90 days’ written notice to Camurus. Camurus has a right to terminate the agreement prior to expiration of its term for our material breach of the agreement, if we voluntarily or involuntarily file for bankruptcy, or for our bringing an action seeking to have a Camurus license patent right declared invalid. Upon any early termination of the license agreement not due to Camurus’ material breach, all licensed rights granted under the license agreement will terminate.

Commercial OperationsTakeda

Our commercial strategies center around creatingIn March 2018, we acquired exclusive, worldwide rights from Takeda to develop and commercialize RM-853. RM-853 is a well‑informed, supportivepotent, orally available GOAT inhibitor currently in preclinical development for Prader-Willi Syndrome, or PWS. PWS is a rare genetic disorder that results in hyperphagia and early-onset, life-threatening obesity, community of institutions, healthcare providers, patients, caregivers, and payers to support our ongoing research and development efforts to transform the care of patients with MC4 pathway deficiencies.

Our commercial prioritiesfor which there are no approved therapeutic options. We will assume sole responsibility for the launchglobal product development and commercialization of setmelanotide include:RM-853. Takeda received an upfront fee of $4.4 million which we settled in April 2018 with shares of our common stock, and is eligible to receive milestone payments of approximately $140.0 million, most of which are payable upon regulatory approval or are sales milestones. In addition, Takeda is eligible to receive back-end development milestones, and single-digit royalties on future RM-853 sales.

of matter, formulations and methods of treatment using setmelanotide. As of May 10, 2017,December 31, 2020, the portfolio licensed for the MC‑4MC4 program consists of seven14 issued United States patents and 42228 issued non‑Unitednon-United States patents across four8 of the 913 families. We are actively pursuing sixThere also 13 pending United States patent applications and 48 non‑United76 pending non-United States applications in 1824 jurisdictions.

In the patent family directed to selected MC4R receptor agonists, including the composition of matter for setmelanotide, we have two3 issued United States patents and 21108 issued non‑Unitednon-United States patents, including Australia, Canada, China, Europe, Hong Kong, India, Israel, Japan, Korea, New Zealand, Russia and Singapore. The standard 20‑year20-year term for patents in this family would expire in 2026, but two of the United States patent willpatents are expected to expire in 2027 due to patent term adjustments. Patent term extensions for delays in marketing approval may also extend the terms of patents in this family, and we have filed for patent term extension in the United States that, if granted, would extend the composition of matter patent protection to 2032.

In addition to the patents and patent applications discussed above, we co-own one patent family with Charité-Universitätsmedizin Berlin, which has been filed in 21 jurisdictions. We also co-own one patent family with the University of Strasbourg and the French National Institute of Health and Medical Research, which has been filed in 4 jurisdictions. Both of these patent families relate to the melanocortin program.

We have also in-licensed a patent family from Takeda directed to the composition of matter and methods of use of ghrelin O-acetyltransferase inhibitors, including RM-853. This patent family includes 1 issued United States patent, nine issued non-United States patents including China, Europe, and Japan, and one allowed application in Canada. The standard 20-year term adjustment. Patentfor the patents in this family will expire in 2033, though patent term extensions for delays in marketing approval may also extend the terms of patents in this family.

In addition to the patents and patent applications discussed above, we have filed one application co‑owned with Charité‑Universitätsmedizin Berlin, that relates to the melanocortin program, which has not yet entered active prosecution.

Intellectual Property Protection Strategy

We currently seek, and intend to continue seeking, patent protection whenever commercially reasonable for any patentable aspects of setmelanotide and related technology or any new products or product candidates we acquire in the future. Where our intellectual property is not protected by patents, we may seek to protect it through other means, including

a patentee for administrative delays by the United States PTO in granting a patent, or may be shortened if a patent is terminally disclaimed over another patent with an earlier expiration date.

As mentioned above, in the United States, the patent term of a patent that covers an FDA‑approvedFDA-approved drug may also be eligible for patent term extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory review process. Setmelanotide has received FDA approval and we have filed for patent term extension on that product. In the future, if and when our other pharmaceutical products receive FDA approval, we expect to apply for patent term extensions on patents covering those products. We intend to seek patent term adjustments and extensions to any of our issued patents in any jurisdiction where these are available, however there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether such extensions should be granted, and even if granted, the length of such adjustments or extensions.

To protect our rights to any of our issued patents and proprietary information, we may need to litigate against infringing third parties, or avail ourselves of the courts or participate in hearings to determine the scope and validity of those patents or other proprietary rights. These types of proceedings are often costly and could be very time‑consumingtime-consuming to us, and we cannot be certain that the deciding authorities will rule in our favor. An unfavorable decision could result in the invalidation or a limitation in the scope of our patents or forfeiture of the rights associated with our patents or pending patent applications. Any such decision could result in our key technologies not being protectable, allowing third parties to use our technology without being required to pay us licensing fees or may compel us to license needed technologies from third parties to avoid infringing third‑partythird-party patent and proprietary rights. Such a decision could even result in the

requirements for that product being sourced from non‑affiliateneed to engage other third parties.parties to assist in, among other things, labeling, packaging and distribution. Under the agreement,current agreements, each party is subject to customary indemnification provisions.

The Peptisyntha agreement will continue, unless earlier terminated pursuant to its terms, until the later of six years from the July 17, 2013 effective date or the completion of all services under all work plans executed in accordance with the terms of the agreement prior to the sixth anniversary of its effective date. The agreement may be extended by us continuously for additional two‑year periods upon written notice to Peptisyntha. We also may terminate the agreement or any work order thereunder upon at least 30 days’ prior written notice to Peptisyntha.

We have also entered into a process development and manufacturing services agreement with Recipharm Monts S.A.S., or Recipharm, under which Recipharm will provide certain process development and manufacturing services in connection with the manufacture of setmelanotide. Under the agreement, we pay Recipharm for services in accordance with the terms of mutually agreed upon work orders, which we and Recipharm may enter into from time to time. Under the agreement, each party is subject to customary indemnification provisions. The Recipharm agreement will continue, unless earlier terminated pursuant to its terms, until the later of three years from the December 21, 2016 effective date or the completion of all services under all work plans executed in accordance with the terms of the agreement prior to the third anniversary of its effective date. The agreement may be extended by us continuously for additional two‑year periods upon written notice to Recipharm. We also may terminate the agreement or any work order thereunder upon at least 60 days’ prior written notice to Recipharm.

Our contract manufacturing agreements give us visibility into the expected future cost of producing setmelanotide at commercial scale. Based upon a range of prices of currently‑marketedcurrently-marketed therapies indicated for orphan diseases, we believe that our cost of goods for setmelanotide will be highly competitive.

We currently have no plans to build our own clinical or commercial scale manufacturing capabilities. To meet our projected needs for clinical supplies to support our activities through regulatory approval and commercial manufacturing, the contract manufacturing organizations, or CMOs with whom we currently work willmay need to increase scale of production or we expect that we willmay need to secure alternate suppliers. We have not currently identified alternate suppliers in the event the current CMOs we utilize are unable to scale production. Because we rely on these CMOs, we have personnel with pharmaceutical development and manufacturing experience who are responsible for maintaining our CMO relationships.

of a biologics license application, or BLA, by the FDA, and rather will be treated as drug products subject to approval of a new drug application, or NDA, by the FDA pursuant to the FDCA.

The failure to comply with applicable requirements under the FDCA and other applicable laws at any time during the product development process, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions, including refusal by the FDA to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and other types of letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and penalties brought by the FDA and the Department of Justice or other governmental entities.

An applicant seeking approval to market and distribute a new drug productmarketed in the United States must typically undertakegenerally involves the following:

•completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations;

•

●

completion of preclinical laboratory tests, animal studies and formulation studies in accordance with FDA’s Good Laboratory Practice requirements and other applicable regulations;

●

submission to the FDA of an Investigational New Drug Application (IND), which must become effective before human clinical trials may begin;

●

approval  by an independent Institutional Review Board (IRB) or ethics  committee  at  each  clinical  site  before  each  trial  may be initiated;

●

performance of adequate  and  well-controlled  human  clinical  trials  in  accordance  with  good clinical practices (GCPs), to establish the safety and efficacy of the proposed drug for its intended use;

●

preparation of and submission to the FDA of an NDA after completion of all pivotal trials;

●

a determination by the FDA within 60 days of its receipt of an NDA to file the application for review

●

satisfactory completion of an FDA advisory committee review, if applicable;

●

satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good Manufacturing Practice (cGMP) requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, and of selected clinical investigation sites to assess compliance with GCPs; and

●

FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the United States.

Prior to beginning the first clinical trial with a product candidate in the United States, a sponsor must submit an IND to the FDA. An IND is a request for authorization from the FDA to administer an investigational new drug product to humans. The central focus of an IND whichsubmission is on the general investigational plan and the protocol(s) for clinical studies. The IND also includes results of animal and in vitro studies assessing the toxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product; chemistry, manufacturing, and controls information; and any available human data or literature to support the use of the investigational product. An IND must take effect become effective

analytical data, any available clinical data or literature and plans for clinical trials, among other things, are submitted tounless the FDA, as part of an IND. Some long‑term preclinical testing, such as animal tests of reproductive adverse events and carcinogenicity, may continue afterwithin the IND is submitted.

The IND and IRB Processes

An IND is an exemption from the FDCA that allows an unapproved drug to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer an investigational drug to humans. Such authorization must be secured prior to interstate shipment and administration of any new drug that is not the subject of an approved NDA. In support of a request for an IND, applicants must submit a protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical trials, among other things, are submitted to the FDA as part of an IND. The FDA requires a 30‑30- day waitingtime period, after the filing of each IND before clinical trials may begin. This waiting period is designed to allow the FDA to review the IND to determine whether human research subjects will be exposed to unreasonable health risks. At any time during this 30‑day period, the FDA may raiseraises safety concerns or questions about the conduct of the trials as outlined inproposed clinical trial. In such a case, the IND and impose amay be placed on clinical hold. In this case,hold and the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can begin.

Following commencement of a clinical trial under an IND, the FDA may also place a clinical hold or partial clinical hold on that trial. A clinical hold is an order issued by the FDA to the sponsor to delay a proposed clinical investigation or to suspend an ongoing investigation. A partial clinical hold is a delay or suspension of only part of the clinical work requested under the IND. For example, a specific protocol or part of a protocol is not allowed to proceed, while other protocols may do so. No more than 30 days after imposition of a clinical hold or partial clinical hold, the FDA will provide the sponsor a written explanation of the basis for the hold. Following issuance of a clinical hold or partial clinical hold, an investigation may only resume after the FDA has notified the sponsor that the investigation may proceed. The FDA will base that determination on information provided by the sponsor correcting the deficiencies previously cited or otherwise satisfying the FDA that the investigation can proceed.

A sponsor may choose, but is not required, to conduct a foreign clinical study under an IND. When a foreign clinical study is conducted under an IND, all FDA IND requirements must be met unless waived. When the foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain regulatory requirements in order to use the study as support for an IND or application for marketing approval. Specifically, on April 28, 2008, the FDA amended its regulations governing the acceptance of foreign clinical studies not conducted under an investigational new drug application as support for an IND or a new drug application. The final rule provides that such studies must be conducted in accordance with good clinical practice, or GCP, including review and approval by an independent ethics committee, or IEC, and informed consent from subjects. The GCP requirements in the final rule encompass both ethical and data integrity standards for clinical studies. The FDA’s regulations are intended to help ensure the protection of human subjects enrolled in non‑IND foreign clinical studies, as well as the quality and integrity of the resulting data. They further help ensure that non‑IND foreign studies are conducted in a manner comparable to that required for IND studies.

In addition to the foregoing IND requirements, an IRB representing each institution participating inquestions before the clinical trial must review and approve the plan for any clinical trial before it commences at that institution, and the IRB must conduct continuing review and reapprove the study at least annually. The IRB must review and approve, among other things, the study protocol and informed consent informationcan begin. Submission of an IND therefore may or may not result in FDA authorization to be provided to study subjects. An IRB must operate in compliance with FDA regulations. An IRB can suspend or terminate approval ofbegin a clinical trial at its institution, or an institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious harm to patients.

Additionally, some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether or not a trial may move forward at designated check points based on access that only the group maintains to available data from the study. Suspension or termination of development during any phase of clinical trials can occur if it is determined that the

participants or patients are being exposed to an unacceptable health risk. Other reasons for suspension or termination may be made by us based on evolving business objectives and/or competitive climate.

Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on its ClinicalTrials.gov website.

Human Clinical Studies in Support of an NDAtrial.

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCP requirements,GCPs, which include among other things, the requirement that all research subjects provide their informed consent in writing beforefor their participation in any clinical trial.study. Clinical trials are conducted under  written study protocols  detailing,  among  other  things, the inclusion and exclusion criteria,  the  objectives  of  the  study,  the  parameters  to  be  used  in monitoring safety and the effectiveness criteria to be evaluated.

Human A separate submission to the existing IND must be made for each successive clinical trials are typicallytrial conducted induring product development and for any subsequent protocol amendments. Furthermore, an independent IRB for each site proposing to conduct the following sequential phases,clinical trial must review and approve the plan for any clinical trial and its informed consent form before the clinical trial begins at that site and must monitor the study until completed. Some studies also include oversight by an independent group of qualified experts organized by the clinical study sponsor, known as a data safety  monitoring  board,  which  provides  authorization  for  whether  or  not  a  study  may  overlap or be combined:

•Phase 1: The drugmove  forward  at designated check points based on access to certain data from the study and may halt the clinical trial if it determines that there is initially introduced into healthy humanan unacceptable safety risk for subjects or in certain indicationsother grounds, such as cancer, patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible,no demonstration of efficacy. Depending on its charter, this group may determine whether a trial may move forward at designated check points based on access to gain an early indication of its effectiveness and to determine optimal dosage.

•Phase 2: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.

•Phase 3: The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well‑controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk‑benefit profile of the product, and to provide adequate information for the labeling of the product.

•Phase 4: Post‑approval studies, when applicable, are conducted following initial approval, typically to gain additional experience andcertain data from treatment of patients in the intended therapeutic indication.

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur. In addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse reactions; findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the drug; and any clinically important increase in the case of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, or at all. Furthermore, thetrial. The FDA or the sponsor may suspend or terminate 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 or an institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.  The FDA willThere are also requirements governing the reporting of ongoing clinical studies and clinical study results to public registries.

Human clinical trials are typically inspect oneconducted in three sequential phases that may overlap or more clinical sites to assure compliance with GCP and the integrity of the clinical data submitted.

During the course of clinical development the sponsor often refines the indication and endpoints on which the NDA will be based. For endpoints based on PROs and OROs, the process typically is an iterative one. The FDA has issued guidance on the framework it uses to evaluate PRO instruments, and it may offer advice on optimizing PRO and ORO instruments during the clinical development process, butcombined:

In some cases, the FDA usually reserves final judgment until it reviewsmay require, or sponsors may voluntarily pursue, additional clinical trials after a product is approved to gain more information about the product. These so-called Phase 4 studies, may be conducted after initial marketing approval, and may be 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.

Concurrent with clinical trials, companies oftenusually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug as well asand finalize a process for

manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the drugproduct candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality purity and potencypurity of the final drug. Additionally,In addition, appropriate packaging must be

required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with cGCP.

In addition, as a condition of approval, the FDA may require an applicant to develop a REMS. REMS use risk minimization strategies beyond the professional labeling to ensure that the benefits of the product outweigh the potential risks. To determine whether a REMS is needed, the FDA will consider the size of the population likely to use the product, seriousness of the disease, expected benefit of the product, expected duration of treatment, seriousness of known or potential adverse events, and whether the product is a new molecular entity. REMS can include medication guides, physician communication plans for healthcare professionals, and elementsThis review typically takes twelve months from the date the NDA is submitted to assure safe use, or ETASU. ETASU may include, but are not limitedFDA because the FDA has approximately two months to special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, andmake a “filing” decision after it the use of patient registries. The FDA may require a REMS before approval or post‑approval if it becomes aware of a serious risk associated with use of the product. The requirement for a REMS can materially affect the potential market and profitability of a product.application is submitted.

The FDA is required tomay refer an application for a novel drug to an advisory committee or explain why such referral was not made. Typically, ancommittee. An advisory committee is a panel  of  independent  experts,  including  clinicians  and  other  scientific  experts,  that  reviews,  evaluates  and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

Before approving an NDA, the FDA will typically inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP and adequate to assure consistent production of the product within required specifications. Additionally, before approving a NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs. If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline the deficiencies in the submission and often will request  additional  testing  or  information.  Notwithstanding  the  submission  of  any  requested  additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

Priority Review

The FDA may designateapproval, including a product candidate with a Fast Track designation and/or Breakthrough Therapy designation, may be eligible for other types of FDA programs intended to expedite the FDA review and approval process, such as priority review and accelerated approval. A product candidate is eligible for priority review if it is a product that treatsdesigned to treat a serious or life-threatening disease or condition, and if approved, would provide a significant improvement in safety or effectiveness. The FDA determines, on a case‑ by‑case basis, whether the proposed product represents a significant improvement wheneffectiveness compared with otherto available therapies. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial reduction of a treatment‑limiting product reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, and evidence of safety and effectiveness in a new subpopulation. A priority designation is intended to direct overall attention and resources to the evaluation of such applications, and to shorten the FDA’s goal for taking action on a marketing application from ten months to six months.

With passage of the 21st Century Cures Act, or the Cures Act, in December 2016, Congress authorized the FDA to accelerate review and approval of products designated as regenerative advanced therapies. A product is eligible for this designation if it is a regenerative medicine therapy that is intended to treat, modify, reverse or cure a serious or life‑threatening disease or condition and preliminary clinical evidence indicates that the drug has the potential to address unmet medical needsalternatives for such disease or condition. The benefits of a regenerative advanced therapy designation include early interactions with the FDA to expedite development and review, benefits available to breakthrough therapies, potential eligibility forFor new-molecular-entity NDAs, priority review designation means the FDA’s goal is to take action on the marketing application within six months of the 60-day filing date.

Additionally, product candidates studied for their safety and effectiveness in treating serious or life-threatening diseases or conditions may receive accelerated approval based on surrogate or intermediate endpoints.

Accelerated Approval Pathway

The FDA may grant accelerated approval to a drug for a serious or life‑threatening condition that provides meaningful therapeutic advantage to patients over existing treatments based upon a determination that the drugproduct has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant accelerated approval for suchbenefit, or on a condition when the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality, or IMM, and 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. Drugs granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.

For the purposesAs a condition of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. An intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely to predict the clinical benefit of a drug, such as an effect on IMM. The FDA has limited experience with accelerated approvals based on intermediate clinical endpoints, but has indicated that such endpoints generally may support accelerated approval where the therapeutic effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to predict the ultimate clinical benefit of a drug.

Accelerated approval is most often used in settings in which the course of a disease is long and an extended period of time is required to measure the intended clinical benefit of a drug, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly. Thus, accelerated approval has been used extensively in the development and approval of drugs for treatment of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large trials to demonstrate a clinical or survival benefit. Thus, the benefit of accelerated approval derives from the potential to receive approval based on surrogate endpoints sooner than possible for trials with clinical or survival endpoints, rather than deriving from any explicit shortening of the FDA approval timeline, as iswill generally require the case with priority review.

Accelerated approval is usually contingent on a sponsor’s agreementsponsor to conduct, in a diligent manner, additional post‑approval confirmatoryperform adequate and well-controlled post-marketing clinical studies to verify and describe the drug’santicipated effect on irreversible morbidity or mortality or other clinical benefit. AsProducts receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required post-marketing studies or if such studies fail to verify the predicted clinical benefit. In addition, the FDA currently requires as a result,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, Breakthrough Therapy designation, priority review, and accelerated approval do not change the standards for approval, but may expedite the development or approval process. Even if a product candidate qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Orphan Drug Designation and Exclusivity

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug candidate approved on this basisintended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 individuals in the United States and when there is subject to rigorous post‑marketing compliance requirements, includingno reasonable expectation that the completioncost of Phase 4 or post‑approval clinical trials to confirmdeveloping and making available the effect ondrug in the clinical endpoint. Failure to conduct required post‑approval studies, or confirm a clinical benefit during post‑marketing studies, would allowUnited States will be recovered from sales in the United States for that drug. Orphan drug designation must be requested before submitting an NDA. After the FDA to initiate expedited proceedings to

withdraw approvalgrants orphan drug designation, the generic identity of the drug. All promotional materials for drug candidates approved under accelerated regulationstherapeutic agent and its potential orphan use are subject to prior reviewdisclosed publicly by the FDA.

The FDA’s Decision on anIf a product that has orphan drug designation subsequently receives the first FDA approval for a particular active ingredient for the disease 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, including a full NDA,

On to market the basissame drug for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the FDA’s evaluationorphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated. Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA and accompanying information, includingapplication user fee.

A designated orphan drug many not receive orphan drug exclusivity if it is approved for a use that is broader than the results ofindication for which it received orphan designation. In addition, orphan drug exclusive marketing rights in the inspection of the manufacturing facilities,United States may be lost if the FDA may issue an approval letter or a complete response letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application. If and when those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Even with submission of this additional information, the FDA ultimately may decidelater determines that the application does not satisfy the regulatory criteriarequest for approval.

If the FDA approvesdesignation was materially defective or, as noted above, if a second applicant demonstrates that its product it may limit the approved indications for use for the product, require that contraindications, warnings or precautions be included in the product labeling, require that post‑approval studies, including Phase 4 clinical trials, be conducted to further assess the drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms, including REMS, which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post‑market studies or surveillance programs. After approval, many types of changesis clinically superior to the approved product suchwith orphan exclusivity or the manufacturer of the approved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.