Phathom Pharmaceuticals Inc

Previous wording

You should carefully consider the following risk factors, together with the other information contained in this annual report on Form 10-K, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before making a decision to purchase or sell shares of our common stock. We cannot assure you that any of the events discussed in the risk factors below will not occur. These risks could have a material and adverse impact on our business, results of operations, financial condition and growth prospects. If that were to happen, the trading price of our common stock could decline. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations or financial condition. In this section, we first provide a summary of the more significant risks and uncertainties we face and then provide a full set of risk factors and discuss them in greater detail.

Current wording

You should carefully consider the following risk factors, together with the other information contained in this annual report on Form 10-K, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before making a decision to purchase or sell shares of our common stock. We cannot assure you that any of the events discussed in the risk factors below will not occur. These risks could have a material and adverse impact on our business, results of operations, financial condition and growth prospects. If that were to happen, the trading price of our common stock could decline. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations or financial condition. In this section, we first provide a summary of the more principal risks and uncertainties we face and then provide a full set of risk factors and discuss them in greater detail.

Previous wording

We currently depend entirely on the success of VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQEUZNA DUAL PAK, which were launched in the fourth quarter of 2023. If we are unable to successfully commercialize these products, or are unable to obtain regulatory approval for vonoprazan to treat heartburn associated with symptomatic Non-Erosive GERD, our business will be materially harmed;

Current wording

We currently depend entirely on the success of VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQEUZNA DUAL PAK, which were launched in the fourth quarter of 2023. If we are unable to successfully commercialize these products, our business will be materially harmed;

Previous wording

Since our inception, we have incurred significant operating losses. Our net loss was $201.6 million and $197.7 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $928.7 million. We expect to continue to incur expenses and operating losses for the foreseeable future. It could be several years, if ever, before VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK or other product candidates, if approved, generate significant revenues to offset these expenses and operating losses. As a result, we are uncertain when or if we will achieve profitability and, if so, whether we will be able to sustain it. The net losses we incur may fluctuate significantly from quarter to quarter and year to year. We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will increase substantially as we:

Current wording

Since our inception, we have incurred significant operating losses. Our net loss was $334.3 million and $201.6 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $1.3 billion. We expect to continue to incur expenses and operating losses for the foreseeable future. It could be several years, if ever, before VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK or other product candidates, if approved, generate significant revenues to offset these expenses and operating losses. As a result, we are uncertain when or if we will achieve profitability and, if so, whether we will be able to sustain it. The net losses we incur may fluctuate significantly from quarter to quarter and year to year. We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will continue as we:

Previous wording

initiate, continue, or complete planned or ongoing clinical trials of vonoprazan, including related support activities;

Current wording

initiate, continue, or complete planned or ongoing clinical trials for VOQUEZNA, vonoprazan or any future product candidates, including related support activities;

Previous wording

make required payments under the Loan and Security Agreement with Hercules Capital, Inc., entered into in September 2021, as amended;

Current wording

make required payments under the Loan and Security Agreement with Hercules Capital, Inc., or Loan Agreement, entered into in September 2021, as amended;

Previous wording

We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations.

Current wording

We may require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations.

Previous wording

The development and commercialization of biopharmaceutical product candidates is capital-intensive. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue to achieve product sales for VOQUEZNA and our other approved products and progress our Non-Erosive GERD development program. In addition, we are required to make milestone and royalty payments to Takeda, from whom we have in-licensed the rights to develop and commercialize vonoprazan in the United States, Europe, and Canada pursuant to the Takeda License. Furthermore, if and to the extent we seek to acquire or in-license additional product candidates in the future, we may be required to make significant upfront payments, milestone payments, and/or royalty payments. If we obtain additional regulatory approvals for vonoprazan or regulatory approval for any future product candidate, we also expect to incur significant additional commercialization expenses related to product manufacturing, marketing, sales and distribution. Because the outcome of any clinical trial is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of vonoprazan for additional populations, such as patients with Non-Erosive GERD or EoE, or other product candidates. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

Current wording

The development and commercialization of biopharmaceutical product candidates is capital-intensive. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue to achieve product sales for VOQUEZNA and our other approved products and progress our current and planned development programs. In addition, we are required to make milestone and royalty payments to Takeda, from whom we have in-licensed the rights to develop and commercialize vonoprazan in the United States, Europe, and Canada pursuant to the Takeda License. Furthermore, if and to the extent we seek to acquire or in-license additional product candidates in the future, we may be required to make significant upfront payments, milestone payments, and/or royalty payments. If we obtain additional regulatory approvals for vonoprazan or regulatory approval for any future product candidates, we also expect to incur significant additional commercialization expenses related to product manufacturing, marketing, sales and distribution. Because the outcome of any clinical trial is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of vonoprazan for additional populations, such as patients with EoE, or other product candidates. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

Previous wording

We believe that our existing cash and cash equivalents together with the drawdown of the remaining $160 million under our loan and security agreement, or the Loan Agreement, with Hercules Capital, or Hercules, are sufficient to fund operations for at least the next 12 months and, along with anticipated product revenues, will be sufficient to fund our operations through the end of 2026. In particular, we expect that these funds will allow us to finance the ongoing launch of VOQUEZNA, including for the treatment of heartburn associated with symptomatic Non-Erosive GERD, if approved, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK, and complete the clinical development of vonoprazan as an as needed treatment for Non-Erosive GERD. We have based these estimates on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Our operating plans and other demands on our cash resources may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Attempting to secure additional financing may divert our management from our day-to-day activities, which may adversely affect our ability to develop vonoprazan or any future product candidates.

Current wording

We believe that our existing cash and cash equivalents together with the drawdown of the remaining $100 million under our Loan Agreement, with Hercules Capital, or Hercules, are sufficient to fund operations for at least the next 12 months and along with anticipated product revenues and we believe will be sufficient to enable us to reach cashflow positivity. In particular, we expect that these funds will allow us to finance the ongoing launch of VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK, and any other clinical activities. We have based these estimates on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Our operating plans and other demands on our cash resources may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Attempting to secure additional financing may divert our management from our day-to-day activities, which may adversely affect our ability to develop vonoprazan or any future product candidates.

Previous wording

the costs, timing and outcome of regulatory review of our NDA for vonoprazan for the treatment of heartburn associated with symptomatic Non-Erosive GERD, and the costs, timing and outcome of regulatory review of any future product candidates;

Current wording

the costs, timing and outcome of regulatory review of future vonoprazan applications or such applications for any future product candidates;

Previous wording

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through equity offerings, our Loan Agreement with Hercules, our Revenue Interest Financing Agreement, other debt financings, or other capital sources, including potential collaborations, licenses and other similar arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Our Loan Agreement and our Revenue Interest Financing Agreement include, and any future debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures or declaring dividends. For example, our Loan Agreement with Hercules contains minimum cash financial covenants.

Current wording

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through equity offerings, our Loan Agreement with Hercules, our Revenue Interest Financing Agreement, other debt financings, or other capital sources, including potential collaborations, licenses and other similar arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Our Loan Agreement and our Revenue Interest Financing Agreement include, and any future debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures or declaring dividends. For example, our Loan Agreement with Hercules contains minimum cash and performance financial covenants.

Previous wording

With respect to VOQUEZNA, VOQUEZNA TRIPLE PAK, VOQUEZNA DUAL PAK, and any future product candidates, the FDA, EMA or other comparable regulatory authority may impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly and time-consuming post-approval studies, post-market surveillance or clinical trials to monitor the safety and efficacy of the product. The FDA and comparable regulatory authorities may also require a REMS or similar risk management measures as a condition of approval of any future product candidates, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, for our approved products or future products that obtain approval, particularly following commercial launch of any such products, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our products will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and similar requirements and GCP requirements for any clinical trials that we conduct post-approval. Later discovery of previously unknown problems with our products, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

Current wording

With respect to VOQUEZNA, VOQUEZNA TRIPLE PAK, VOQUEZNA DUAL PAK, and any future product candidates, the FDA, EMA or other comparable regulatory authority may impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly and time-consuming post-approval studies, post-market surveillance or clinical trials to monitor the safety and efficacy of the product. The FDA and comparable regulatory authorities may also require a risk evaluation and mitigation strategy, or REMS, or similar risk management measures as a condition of approval of any future product candidates, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, for our approved products or future products that obtain approval, particularly following commercial launch of any such products, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our products will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and similar requirements and GCP requirements for any clinical trials that we conduct. Later discovery of previously unknown problems with our products, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

Previous wording

The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of any future product candidates or additional indications for our current products. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, may be subject to enforcement action, and we may not achieve or sustain profitability.

Current wording

The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of any future product candidates or additional indications for our current products. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approvals that we may have obtained, may be subject to enforcement action, and we may not achieve or sustain profitability.

Previous wording

Additionally, the EU pharmaceutical legislation is currently undergoing a complete review process, in the context of the Pharmaceutical Strategy for Europe initiative, launched by the European Commission in November 2020. The European Commission's proposal for revision of several legislative instruments related to medicinal products (potentially reducing the duration of regulatory data protection, revising the eligibility for expedited pathways, etc.) was published on April 26, 2023. The proposed revisions remain to be agreed and adopted by the European Parliament and European Council and the proposals may therefore be substantially revised before adoption, which is not anticipated before early 2026. The revisions may however have a significant impact on the pharmaceutical industry and our business in the long term.

Current wording

Additionally, the EU pharmaceutical legislation is currently undergoing a complete review process, in the context of the Pharmaceutical Strategy for Europe initiative, launched by the European Commission in November 2020. The European Commission's proposal for revision of several legislative instruments related to medicinal products (potentially reducing the duration of regulatory data protection, revising the eligibility for expedited pathways, etc.) was published on April 26, 2023. The proposed revisions remain to be agreed and adopted by the European Parliament and European Council and the proposals may therefore be substantially revised before adoption, which is not anticipated before early 2026. The revisions may however have a significant impact on the pharmaceutical industry.

Previous wording

The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products such as our currently approved products, and any additional product candidates containing vonoprazan and any future product candidates, if approved. In particular, a product may not be promoted for uses that are not approved by the FDA or such other regulatory agencies as reflected in the product’s approved labeling. For example, the FDA has approved VOQUEZNA for the treatment for healing and maintenance of healing of all grades of erosive esophagitis and relief of heartburn associated with erosive esophagitis in adults and, in combination with either amoxicillin, or amoxicillin and clarithromycin, treatment of H. pylori infection in adults, and we are not currently permitted to promote this product for any other uses unless and until such uses are approved by the FDA. For any product for which we have obtained a marketing approval, however, physicians may nevertheless prescribe it to their patients in a manner that is inconsistent with the approved label. If we are found to have promoted such off-label uses, we may become subject to significant liability. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If we cannot successfully manage the promotion of our current products or any product candidates, we could become subject to significant liability, which would materially adversely affect our business and financial condition.

Current wording

The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products such as our currently approved products, and any additional product candidates containing vonoprazan and any future product candidates, if approved. In particular, a product may not be promoted for uses that are not approved by the FDA or such other regulatory agencies as reflected in the product’s approved labeling. For example, the FDA has approved VOQUEZNA for the treatment for healing and maintenance of healing of all grades of erosive esophagitis and relief of heartburn associated with erosive esophagitis in adults, for the relief of heartburn associated with Non-Erosive GERD in adults and, in combination with either amoxicillin, or amoxicillin and clarithromycin, treatment of H. pylori infection in adults, and we are not currently permitted to promote this product for any other uses unless and until such uses are approved by the FDA. For any product for which we have obtained a marketing approval, however, physicians may nevertheless prescribe it to their patients in a manner that is inconsistent with the approved label. If we are found to have promoted such off-label uses, we may become subject to significant liability. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If we cannot successfully manage the promotion of our current products or any product candidates, we could become subject to significant liability, which would materially adversely affect our business and financial condition.

Previous wording

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary and novel products and product candidates. Our competitors have developed, are developing or may develop products, product candidates and processes competitive with VOQUEZNA. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future. We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of GI diseases for which we may attempt to develop vonoprazan or any future product candidates. Our competitors include larger and better funded pharmaceutical, biopharmaceutical, biotechnological and therapeutics companies. Moreover, we may also compete with universities and other research institutions who may be active in the indications we are targeting and could be in direct competition with us. We also compete with these organizations to recruit management, scientists and clinical development personnel, which could negatively affect our level of expertise and our ability to execute our business plan. We will also face competition in establishing clinical trial sites, enrolling patients for clinical trials and in identifying and in-licensing new product candidates. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

Current wording

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary and novel products and product candidates. Our competitors have developed, are developing or may develop products, product candidates and processes competitive with VOQUEZNA. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future. We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of GI diseases for which we may attempt to develop vonoprazan or any future product candidates. Our competitors include larger and better funded pharmaceutical, biopharmaceutical, biotechnological and therapeutics companies. Moreover, we may also compete with universities and other research institutions who may be active in the indications we are targeting and could be in direct competition with us. We also compete with these organizations to recruit management, scientists and clinical development personnel, which could negatively affect our level of expertise and our ability to execute our business plan.

Previous wording

We expect that, for the treatment of H. pylori infection, healing and maintenance of all grades of erosive esophagitis and relief of heartburn associated with erosive esophagitis and, if approved, treatment of heartburn associated with symptomatic Non-Erosive GERD, VOQUEZNA will primarily compete with generic PPIs marketed by multiple pharmaceutical companies in both the prescription and OTC markets. In addition to generic PPI-based triple and quad therapies, we expect VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK will compete with Talicia, a co-formulated capsule comprising generic omeprazole, amoxicillin, and rifabutin for the treatment of H. pylori infection, launched in March 2020 by RedHill Biopharma Ltd.

Current wording

We expect that, for the treatment of H. pylori infection, healing and maintenance of all grades of erosive esophagitis and relief of heartburn associated with erosive esophagitis and treatment of heartburn associated with Non-Erosive GERD, VOQUEZNA will primarily compete with generic PPIs marketed by multiple pharmaceutical companies in both the prescription and OTC markets. In addition to generic PPI-based triple and quad therapies, we expect VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK will compete with Talicia, a co-formulated capsule comprising generic omeprazole, amoxicillin, and rifabutin for the treatment of H. pylori infection, launched in March 2020 by RedHill Biopharma Ltd.

Previous wording

Additionally, we are aware of several clinical-stage PPIs in territories outside of the United States that if developed and approved in our licensed territories may compete with vonoprazan. These include Dexa Medica’s DLBS-2411, currently launched in the Philippines and in Phase 3 in Indonesia, Sihuan Pharmaceutical’s anaprazole, currently in Phase 3 in China, and Eisai’s azeloprazole, currently in a Phase 2 in China.

Current wording

Additionally, we are aware of two PPIs in territories outside of the U.S. that if developed and approved in our licensed territories may compete with vonoprazan. These include Dexa Medica’s DLBS-2411, launched in the Philippines and in Phase 3 in Indonesia and Sihuan Pharmaceutical’s anaprazole, launched in China.

Previous wording

We have only recently expanded our marketing, sales and distribution capabilities in advance of the launch of VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK. This expansion greatly increased our expenses and was very time consuming for management. We currently market, sell and distribute VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK through our own sales and marketing organization. Our current sales force may not be sufficient in size and may not have adequate expertise in the medical markets we intend to target. Any deficiency in our sales, marketing and distribution capabilities or delay in the future development of such capabilities would adversely impact the commercialization of our products. To the extent that in the future we enter into any collaboration agreements with respect to marketing, sales or distribution for our current products and any future product candidates our product revenue may be lower than if we directly marketed or sold any approved products. We plan on entering into collaboration agreements with respect to marketing, sales and distribution of our products in Europe and Canada. Any revenue we receive in these markets will depend in whole or in part upon the efforts of these third-party collaborators, which may not be successful and are generally not within our control.

Current wording

We have only recently expanded our marketing, sales and distribution capabilities in advance of the launch of VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK. This expansion greatly increased our expenses and was very time consuming for management. We currently market, sell and distribute VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK through our own sales and marketing organization. Our current sales force may not be sufficient in size and may not have adequate expertise in the medical markets we intend to target. Any deficiency in our sales, marketing and distribution capabilities or delay in the future development of such capabilities would adversely impact the commercialization of our products. To the extent that in the future we enter into any collaboration agreements with respect to marketing, sales or distribution for our current products and any future product candidates our product revenue may be lower than if we directly marketed or sold any approved products. In addition, we plan on entering into collaboration agreements with respect to marketing, sales and distribution of our products in Europe and Canada. Any revenue we receive in these markets will depend in whole or in part upon the efforts of these third-party collaborators, which may not be successful and are generally not within our control.

Previous wording

We depend entirely on the success of VOQUEZNA and other products containing vonoprazan. If we do not obtain regulatory approval for vonoprazan for the treatment of heartburn symptoms associated with Non-Erosive GERD, or if we do not successfully commercialize VOQUEZNA for Erosive GERD or, if approved, Non-Erosive GERD, or we experience significant delays in doing so, we may never become profitable.

Current wording

We depend entirely on the success of VOQUEZNA and other products containing vonoprazan. If we do not successfully commercialize VOQUEZNA in its approved indications, or we experience significant delays in doing so, we may never become profitable.

Previous wording

We expect that a substantial portion of our efforts and expenses over the next few years will be devoted to the commercialization of vonoprazan and the development and regulatory approval of vonoprazan for additional indications; specifically, the ongoing review of the NDA for vonoprazan as a once-daily treatment of heartburn associated with symptomatic Non-Erosive GERD and the planned Phase 3 trial studying for vonoprazan as an as needed treatment for heartburn symptoms associated with Non-Erosive GERD. As a result, our business currently depends heavily on the successful development, regulatory approval and, if approved, commercialization of vonoprazan for this additional indication and dosing regimen. We cannot be certain that we will be able to submit or obtain approval for any additional NDA or NDA supplement, or sNDA, for vonoprazan within the timeframes we expect, that any NDAs or sNDAs we submit will be accepted by the FDA for filing in a timely manner or at all, or that any of our product candidates will receive regulatory approval or will be successfully commercialized even if they receive regulatory approval.

Current wording

We expect that a substantial portion of our efforts and expenses over the next few years will be devoted to the commercialization of vonoprazan and the development and regulatory approval of vonoprazan for additional indications. We cannot be certain that we will be able to submit or obtain approval for any additional NDA or NDA supplement, or sNDA, for vonoprazan within the timeframes we expect, that any NDAs or sNDAs we submit will be accepted by the FDA for filing in a timely manner or at all, or that any of our product candidates will receive regulatory approval or will be successfully commercialized even if they receive regulatory approval.

Previous wording

In addition, Takeda, a third party over which we have no control, has the right to develop and commercialize vonoprazan outside of the United States, Europe, and Canada. Takeda has marketing approval for vonoprazan in certain countries in Asia and Latin America, and Takeda has ongoing clinical trials of vonoprazan in certain indications that we are also pursuing. If such ongoing trials fail to meet their primary endpoints, have serious adverse events or encounter other problems, the development potential of vonoprazan could be materially and adversely affected. In addition, if serious adverse events or other problems occur with patients using vonoprazan marketed outside of our licensed territories, or if the results of ongoing or future clinical trials of vonoprazan conducted by Takeda or others generate negative results or results that conflict with the results of our clinical trials, the FDA or other regulatory authorities may delay, limit, or deny approval of vonoprazan, require us to conduct additional clinical trials as a condition to marketing approval, or withdraw their approval of vonoprazan or otherwise restrict our ability to market and sell vonoprazan, if approved. In addition, treating physicians may be less willing to prescribe vonoprazan due to concerns over such trial results or adverse events, which would limit our ability to commercialize vonoprazan.

Current wording

In addition, Takeda, a third party over which we have no control, has the right to develop and commercialize vonoprazan outside of the United States, Europe, and Canada. Takeda has marketing approval for vonoprazan in certain countries in Asia and Latin America, and Takeda has ongoing clinical trials of vonoprazan in certain indications that we are also pursuing. If such ongoing trials fail to meet their primary endpoints, have serious adverse events or encounter other problems, the development potential of vonoprazan could be materially and adversely affected. In addition, if serious adverse events or other problems occur with patients using vonoprazan marketed outside of our licensed territories, or if the results of ongoing or future clinical trials of vonoprazan conducted by Takeda or others generate negative results or results that conflict with the results of our clinical trials, the FDA or other regulatory authorities may delay, limit, or deny approval of vonoprazan for additional indications, require us to conduct additional clinical trials as a condition to marketing approval, withdraw their approval of our products containing vonoprazan or otherwise restrict our ability to market and sell our products containing vonoprazan, if approved. In addition, treating physicians may be less willing to prescribe vonoprazan due to concerns over such trial results or adverse events, which would limit our ability to commercialize our vonoprazan products.

Previous wording

In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted. For instance, the regulatory landscape related to clinical trials in the EU recently evolved. The EU Clinical Trials Regulation, or CTR, which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. While the EU Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials. The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state. The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules. Each member state’s decision is communicated to the sponsor via the centralized EU portal. Once the CTA is approved, clinical study development may proceed. The CTR foresees a three-year transition period. The extent to which ongoing and new clinical trials will be governed by the CTR varies. Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the EU Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the EU Clinical Trials Directive remain governed by said Directive until January 31, 2025. After this date, all clinical trials (including those which are ongoing) will become subject to the provisions of the CTR. Compliance with the CTR requirements by us and our third-party service providers, such as CROs, may impact our developments plans.

Current wording

In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted. For instance, the regulatory landscape related to clinical trials in the EU recently evolved. The EU Clinical Trials Regulation, or CTR, which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. While the EU Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials. The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state. The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules. Each member state’s decision is communicated to the sponsor via the centralized EU portal. Once the CTA is approved, clinical study development may proceed. The CTR foresees a three-year transition period. The extent to which ongoing and new clinical trials will be governed by the CTR varies. Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the EU Clinical Trials Directive, or (ii) between January 31, 2022 and

Previous wording

The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of our current approved products, including VOQUEZNA, and any future product candidates are subject to extensive regulation by the FDA in the United States and by comparable foreign regulatory authorities in other foreign markets. In the United States, we are not permitted to market vonoprazan for additional indications or any future product candidates until we receive the necessary regulatory approval from the FDA and in the EU, we are not permitted to market any of our approved products or any future product candidates until we receive a marketing authorization from the European Commission or competent authorities of the EU member states. The process of obtaining regulatory approval is expensive, often takes many years following the commencement of clinical trials and can vary substantially based upon the type, complexity and novelty of the product candidates involved, as well as the target indications and patient population. The ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels and the ability to hire and retain key personnel. In addition, approval policies or regulations may change, and the FDA and EMA and comparable regulatory authorities have substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed. For example, in February 2023, we received complete response letters from the FDA relating to our Erosive GERD NDA and post approval supplement to our approved H. pylori NDAs. As a result, the approval of VOQUEZNA for treatment of Erosive GERD was delayed until November 2023, and our ability to launch VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK was delayed until October 2023.

Current wording

The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of our current approved products, including VOQUEZNA, and any future product candidates are subject to extensive regulation by the FDA in the United States and by comparable foreign regulatory authorities in other foreign markets. In the United States, we are not permitted to market vonoprazan for additional indications or any future product candidates until we receive the necessary regulatory approval from the FDA and in the EU, we are not permitted to market any of our approved products or any future product candidates until we receive a marketing authorization from the European Commission or competent authorities of the EU member states. The process of obtaining regulatory approval is expensive, often takes many years following the commencement of clinical trials and can vary substantially based upon the type, complexity and novelty of the product candidates involved, as well as the target indications and patient population. The ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels and the ability to hire and retain key personnel. In addition, approval policies or regulations may change, and the FDA and EMA and comparable regulatory authorities have substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory approval is never guaranteed.

Previous wording

such authorities may not agree that the data collected from clinical trials of vonoprazan, including data collected from clinical trials conducted by Takeda and independent investigators outside of our licensed territories, and any future product candidates are acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval, and such authorities may impose requirements for additional preclinical studies or clinical trials;

Current wording

such authorities may not agree that the data collected from clinical trials of vonoprazan, including data collected from clinical trials conducted by Takeda and independent investigators outside of our licensed territories, and any future product candidates are acceptable or sufficient to support the submission of an NDA, sNDA or other submission or to obtain regulatory approval, and such authorities may impose requirements for additional preclinical studies or clinical trials;

Previous wording

For example, we believe the rapid onset of acid suppression observed in clinical studies of vonoprazan may enable as needed use for the management of heartburn symptoms associated with Non-Erosive GERD. However, no proton pump inhibitor has received approval from the FDA for this dosing regimen. We may be incorrect in our belief regarding the potential of vonoprazan as an as needed treatment for Non-Erosive GERD and any future clinical trial we conduct studying as needed dosing of vonoprazan in Non-Erosive GERD patients may not succeed including as a result of our design and enrollment criteria.

Current wording

For example, we believe the rapid onset of acid suppression observed in clinical studies of vonoprazan may enable as needed use for the management of heartburn symptoms associated with Non-Erosive GERD. However, no proton pump inhibitor has received approval from the FDA for this dosing regimen. We may be incorrect in our belief regarding the potential of vonoprazan as an as needed treatment for Non-Erosive GERD and any potential clinical trial we conduct studying as needed dosing of vonoprazan in Non-Erosive GERD patients may not succeed including as a result of our design and enrollment criteria.

Previous wording

We enrolled patients in Europe in our Erosive GERD and H. pylori trials, and we may conduct one or more of our future clinical trials outside the United States. Although the FDA may accept data from clinical trials conducted outside the United States and not subject to an IND, acceptance of this data is subject to certain conditions imposed by the FDA. For example, where data from foreign clinical trials are intended to serve as the sole basis for marketing approval in the United States, the FDA will not approve the application on the basis of foreign data alone unless those data are applicable to the United States population and United States medical practice; the trials were performed by clinical investigators of recognized competence; and the data are considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. Similar requirements may apply in foreign jurisdictions.

Current wording

We enrolled patients in Europe in our Erosive GERD and H. pylori trials, and we may conduct one or more of our future clinical trials outside the United States. Although the FDA may accept data from clinical trials conducted outside the United States and not subject to an investigational new drug application, or IND, acceptance of this data is subject to certain conditions imposed by the FDA. For example, regardless of whether the applicable clinical trials were conducted under an IND, where data from foreign clinical trials are intended to serve as the sole basis for marketing approval in the United States, the FDA will not approve the application on the basis of foreign data alone unless those data are applicable to the United States population and United States medical practice; the trials were performed by clinical investigators of recognized competence; and the data are considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. Similar requirements may apply in foreign jurisdictions.

Previous wording

The ability of the FDA and other government agencies to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, a government agency’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the government agency’s ability to perform routine functions. Average review times at the FDA and other government agencies have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies, such as the EMA, may also slow the time necessary for new drugs and or modifications to approved drugs or to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the United States government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.

Current wording

The ability of the FDA and other government agencies to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, a government agency’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the government agency’s ability to perform routine functions. Average review times at the FDA and other government agencies have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies, such as the EMA, may also slow the time necessary for new drugs and or modifications to approved drugs or to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, in recent years, the United States government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.

Previous wording

Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points. Even though the FDA has since resumed standard inspection operations, any resurgence of the virus or emergence of new variants may lead to further inspectional or administrative delays. If a prolonged government shutdown occurs, or if global health concerns hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Current wording

Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points. If a prolonged government shutdown occurs, or if funding shortages, staffing limitations or renewed global health concerns hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Previous wording

The Takeda License will continue until the expiration of the obligation to pay royalties in all countries and on all products, unless terminated earlier. We may terminate the Takeda License in its entirety without cause upon prior written notice. We and Takeda may terminate the Takeda License in the case of the other party’s insolvency or for the other party’s material uncured breach. Takeda may terminate the Takeda License in its entirety if we challenge the licensed patents, or if we assist any third party in challenging such patents. In addition, if any of the commercial milestones or other cash payments become due under the terms of the Takeda License, we may not have sufficient funds available to meet our obligations, which would allow Takeda to terminate the

Current wording

The Takeda License will continue until the expiration of the obligation to pay royalties in all countries and on all products, unless terminated earlier. We may terminate the Takeda License in its entirety without cause upon prior written notice. We and Takeda may terminate the Takeda License in the case of the other party’s insolvency or for the other party’s material uncured breach. Takeda may terminate the Takeda License in its entirety if we challenge the licensed patents, or if we assist any third party in challenging such patents. In addition, if any of the commercial milestones or other cash payments become due under the terms of the Takeda License, we may not have sufficient funds available to meet our obligations, which would allow Takeda to terminate the Takeda License. If the license agreement is terminated, we would lose our rights to develop and commercialize products containing vonoprazan, which in turn would have a material adverse effect on our business, operating results and prospects.

Previous wording

CROs, investigators or other third parties may not devote adequate time and resources to such trials or perform as contractually required. If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, or otherwise performs in a substandard manner, our clinical trials may be extended, delayed, or terminated. In addition, many of the third parties with whom we contract may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other drug development activities that could harm our competitive position. In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and may receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA or comparable regulatory authority concludes that the financial relationship may have affected the interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection of any NDA or similar marketing application we submit by the FDA or by comparable regulatory authority. Any such delay or rejection could prevent us from commercializing vonoprazan for additional indications and any future product candidates.

Current wording

CROs, investigators or other third parties may not devote adequate time and resources to such trials or perform as contractually required. If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, or otherwise performs in a substandard manner, our clinical trials may be extended, delayed, or terminated. In addition, many of the third parties with whom we contract may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other drug development activities that could harm our competitive position. In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and may receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA or comparable regulatory authority concludes that the financial relationship may have affected the interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection of any NDA, sNDA or similar marketing application we submit by the FDA or by comparable regulatory authority. Any such delay or rejection could prevent us from commercializing vonoprazan for additional indications and any future product candidates.

Previous wording

Any performance failure on the part of Catalent, Evonik, Sandoz or any future manufacturers could delay clinical development or additional marketing approvals, and any related remedial measures may be costly or time consuming to implement. We do not currently have arrangements in place for redundant supply or a second source for all required raw materials used in the manufacture of our current products. If Catalent, Evonik, or Sandoz cannot perform as agreed, we may be required to replace them and we may be unable to replace them on a timely basis or at all. Further, Catalent, Evonik, Sandoz and any other third-party manufacturers we may use may experience manufacturing or shipping difficulties due to resource constraints or as a result of natural disasters, labor disputes, unstable political environments, or public health emergencies such as the COVID-19 pandemic or ongoing hostilities in the Ukraine and the Middle East. If Catalent, Evonik, Sandoz or other third-party manufacturers were to encounter any manufacturing or shipping difficulties or delays due to these factors, our ability to provide vonoprazan to patients in clinical trials, or to provide product for treatment of patients if approved, would be jeopardized.

Current wording

Any performance failure on the part of Catalent, Evonik, Sandoz or any future manufacturers could delay clinical development or additional marketing approvals, and any related remedial measures may be costly or time consuming to implement. We do not currently have arrangements in place for redundant supply or a second source for all required raw materials used in the manufacture of our current products. If Catalent, Evonik, or Sandoz cannot perform as agreed, we may be required to replace them and we may be unable to replace them on a timely basis or at all. Further, Catalent, Evonik, Sandoz and any other third-party manufacturers we may use may experience manufacturing or shipping difficulties due to resource constraints or as a result of natural disasters, labor disputes, unstable political environments, or public health emergencies or ongoing hostilities in the Ukraine and the Middle East. If Catalent, Evonik, Sandoz or other third-party manufacturers were to encounter any manufacturing or shipping difficulties or delays due to these factors, our ability to provide vonoprazan to patients in clinical trials, or to provide product for treatment of patients if approved, would be jeopardized.

Previous wording

business interruptions resulting from geopolitical actions, including war, such as the ongoing hostilities in the Ukraine or the Middle East, and terrorism, or natural disasters such as earthquakes, typhoons, floods and fires or public health emergencies or pandemics such as the COVID-19 pandemic;

Current wording

business interruptions resulting from geopolitical actions, including war, such as the ongoing hostilities in the Ukraine or the Middle East, and terrorism, or natural disasters such as earthquakes, typhoons, floods and fires or public health emergencies or pandemics;

Previous wording

In September 2021, we entered into, and in December 2023 we increased the amounts available under and extended the maturity date of, a Loan Agreement with Hercules. We borrowed $100 million at the inception of the Loan Agreement, $40 million in December 2023, and may be eligible to borrow up to an additional $160 million. All obligations under the Loan Agreement are secured by a first priority lien on substantially all of our assets, including intellectual property and certain other assets. As a result, if we default on any of our obligations under the Loan Agreement, Hercules could foreclose on its security interest and liquidate some or all of the collateral, which would harm our business, financial condition and results of operations and could require us to reduce or cease operations.

Current wording

In September 2021, we entered into, and in December 2023 we increased the amounts available under and extended the maturity date of, a Loan Agreement with Hercules. We borrowed $100 million at the inception of the Loan Agreement, $40 million in December 2023, $10 million in March 2024, $25 million in June 2024, and $25 million in December 2024 and may be eligible to borrow up to an additional $100 million. All obligations under the Loan Agreement are secured by a first priority lien on substantially all of our assets, including intellectual property and certain other assets. As a result, if we default on any of our obligations under the Loan Agreement, Hercules could foreclose on its security interest and liquidate some or all of the collateral, which would harm our business, financial condition and results of operations and could require us to reduce or cease operations.

Previous wording

In May 2022, we entered into a Revenue Interest Financing Agreement with the Initial Investors pursuant to which we can receive up to $260.0 million in funding from the Initial Investors, and in October 2022, we entered into the Joinder Agreement under which we can receive up to $40 million from the Additional Investor, bringing the total funding available under the Revenue Interest Financing Agreement to up to $300 million. Under the terms of the Revenue Interest Financing Agreement and Joinder Agreement, we received $100 million at the initial closing and received an additional $175 million in November 2023 following FDA approval of vonoprazan for treatment of Erosive GERD. In addition, we are eligible for $25 million in additional funding for achievement of a sales milestone.

Current wording

In May 2022, we entered into a Revenue Interest Financing Agreement with the Initial Investors pursuant to which we can receive up to $260 million in funding from the Initial Investors, and in October 2022, we entered into the Joinder Agreement under which we can receive up to $40 million from the Additional Investor, bringing the total funding available under the Revenue Interest Financing Agreement to up to $300 million. Under the terms of the Revenue Interest Financing Agreement and Joinder Agreement, we received $100 million at the initial closing and received an additional $175 million in November 2023 following FDA approval of vonoprazan in its Erosive GERD indication. In addition, we were eligible for $25 million in additional funding for achievement of a sales milestone. On December 23, 2024, CO Finance LVS XXXVII LLC agreed to assign and transfer to OC III LVS LX LP all of its rights, title and interest as an Additional Investor and in connection therewith, OC III LVS LX LP executed a Joinder Agreement. As of December 31, 2024, no additional funding is available under the Revenue Interest Financing Agreement.

Previous wording

Under the Revenue Interest Financing Agreement, the investors are entitled to receive a 10% royalty on net sales of products containing vonoprazan. The royalty rate is subject to a step-down on net sales exceeding certain annual thresholds and if we receive FDA approval for vonoprazan for an indication relating to the treatment of heartburn associated with Non-Erosive GERD. The investors’ right to receive royalties on net sales will terminate when the investors have aggregate payments equal to 200% of the Investment Amount.

Current wording

Under the Revenue Interest Financing Agreement, the investors are entitled to receive a 10% royalty on net sales of products containing vonoprazan. The royalty rate is subject to a step-down on net sales exceeding certain annual thresholds and when we received FDA approval for vonoprazan for an indication relating to the treatment of heartburn associated with Non-Erosive GERD, which occurred on July 17, 2024. The investors’ right to receive royalties on net sales will terminate when the investors have aggregate payments equal to 200% of the Investment Amount.

Previous wording

Pursuant to the Revenue Interest Financing Agreement, we also agreed to specified affirmative and negative covenants, including covenants to use commercially reasonable efforts to promote products containing vonoprazan in the United States and covenants requiring us to maintain certain levels of cash. The Revenue Interest Financing Agreement also contains representations and warranties, other covenants, indemnification obligations, and other provisions customary for transactions of this nature. In the event of an event of default under the Revenue Interest Financing Agreement, the investors may be entitled to foreclose on the pledged collateral which includes the applicable royalty under the Royalty Interest Financing Agreement from net sales of VOQUEZNA and other products containing vonoprazan.

Current wording

Pursuant to the Revenue Interest Financing Agreement, we also agreed to specified affirmative and negative covenants, including covenants to use commercially reasonable efforts to promote products containing vonoprazan in the United States and covenants requiring us to maintain certain levels of cash. The Revenue Interest Financing Agreement also contains representations and warranties, other covenants, indemnification obligations, and other provisions customary for transactions of this nature. In the event of an event of default under the Revenue Interest Financing Agreement, the investors may be entitled to foreclose on the pledged collateral which includes the applicable royalty under the Revenue Interest Financing Agreement from net sales of VOQUEZNA and other products containing vonoprazan.

Previous wording

Our number of employees increased substantially in 2023 to prepare for the commercialization of VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK. This expansion of our operations has resulted in a significant increase in our commercial organization, which may divert our management and business development resources from our clinical development group. To manage our recent growth and anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

Current wording

Our number of employees continued to increase substantially in 2024 in support of our commercialization of VOQUEZNA, VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK. This expansion of our operations has resulted in a significant increase in our commercial organization, which may divert our management and business development resources from our clinical development group. To manage our recent growth and anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

Previous wording

the U.S. federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS, information related to certain payments and other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) , certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives)and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members; and

Current wording

the U.S. federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS, information related to certain payments and other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) , certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives)and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members; and

Previous wording

a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

Current wording

a Medicare Part D coverage gap discount program, which was replaced by a new manufacturer discount program on January 1, 2025 (as discussed below), in which manufacturers were required to offer point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

Previous wording

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. For example, beginning April 1, 2013, Medicare payments to providers were reduced under the sequestration required by the Budget Control Act of 2011, which will remain in effect through 2032, unless additional Congressional action is taken. Additionally, on January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminates the statutory Medicaid drug rebate cap, beginning January 1, 2024. Previously, the rebate was capped at 100% of a drug’s AMP.

Current wording

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. For example, beginning April 1, 2013, Medicare payments to providers were reduced under the sequestration required by the Budget Control Act of 2011, which will remain in effect through 2032, unless additional Congressional action is taken. Additionally, on January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, beginning January 1, 2024. Previously, the rebate was capped at 100% of a drug’s AMP.