AN2 Therapeutics, Inc.

Current report

We may not realize the expected benefits from our business restructuring and workforce reduction and we may incur additional costs implementing it or other difficulties.

Current report

On August 8, 2024, we announced topline results from the Phase 2 part of the EBO-301 Phase 2/3 study evaluating epetraborole on top of optimized background regimen (“OBR”) in treatment-refractory MAC lung disease. The Phase 2 part of the study met its primary objective of demonstrating the potential validation of a novel patient-reported outcome (PRO) tool and a higher PRO-based clinical response rate in the epetraborole + OBR arm (39.5%) vs. placebo + OBR (25.0%; treatment difference 13.9%, p=0.19). Sputum culture conversion at Month 6, a key secondary endpoint, was similar between treatment arms (13.2% in epetraborole + OBR vs. 10.0% placebo + OBR; treatment difference 3.4%, p=0.64). Epetraborole was generally well tolerated in the trial.

Current report

We have and may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving our business objectives. For example, in August 2024, we announced topline data from the Phase 2 portion of our Phase 2/3 clinical trial evaluating our initial product candidate, epetraborole, in patients with treatment-refractory MAC lung disease. Although the Phase 2 part of the study met its primary objective in demonstrating the potential validation of a novel patient-reported outcome (PRO) tool and a higher PRO-based clinical response rate in the epetraborole + OBR arm (39.5%) vs. placebo + OBR (25.0%; treatment difference 13.9%, p=0.19), sputum culture conversion at Month 6, a key secondary endpoint, was similar between treatment arms (13.2% in epetraborole + OBR vs. 10.0% placebo + OBR; treatment difference 3.4%, p=0.64). Given these results, we decided to close out the trial and are in the process of planning to unblind the Phase 3 part of the study and meet with the FDA to determine next steps.

Current report

We may not realize the expected benefits from our business restructuring and workforce reduction and we may incur additional costs implementing it or other difficulties.

Current report

In August 2024, we announced a business restructuring plan and implemented a workforce reduction. The objective of these initiatives was to focus the organization and our resources on product candidates and development compounds to treat Chagas diseases, NTM, melioidosis, other infectious diseases, and oncology while we continue to evaluate the TR-MAC program.

Current report

However, the changes to our business strategy and the reduction in workforce may yield unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond our intended workforce reduction, a reduction in morale among our remaining employees, and the risk that we may not achieve the anticipated benefits, all of which may have an adverse effect on our development activities, ability to progress our product candidate development, and results of operations or financial condition. As a result of the workforce reduction, we have recognized severance and other charges of $2.2 million as of December 31, 2024, primarily consisting of severance payments and other employee termination-related expenses.

Current report

We may also incur other charges, costs, future cash expenditures or impairments not currently contemplated due to events that may occur as a result of, or in connection with, the revised business strategy and workforce reduction. In addition, we may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees.

Current report

We may also discover that the workforce reduction and cost cutting measures will make it difficult for us to pursue new opportunities and initiatives and require us to hire qualified replacement personnel, which may require us to incur additional and unanticipated costs and expenses. Moreover, there is no assurance we will be successful in our pursuit of any of our new goals. Our failure to successfully accomplish any of the above activities and goals may have a negative impact on our business, financial condition, results of operations and growth prospects.

Current report

Before obtaining regulatory approvals for the commercial sale of any product candidates, we must demonstrate through preclinical and nonclinical studies and clinical trials that the product candidate is safe and effective for use in each target indication. Drug development is a long, expensive and uncertain process, and delay or failure can occur at any stage during our nonclinical studies, clinical trials or drug product manufacturing process. These delays or failures could be caused by a variety of factors, including but not limited to, toxicity, safety, tolerability, efficacy, problems with clinical trial enrollment, drug product availability, stability, and impurity issues related to drug product manufacturing. For example, in August 2024, we announced topline data from the Phase 2 portion of EBO-301, our Phase 2/3 clinical trial evaluating epetraborole in patients with treatment-refractory MAC lung disease. Although the Phase 2 part of the study met its primary objective in demonstrating the potential validation of a novel patient-reported outcome (“PRO”) tool and a non-significant, but numerically higher PRO-based clinical response rate in the epetraborole + OBR arm (39.5%) vs. placebo + OBR (25.0%; treatment difference 13.9%, p=0.19), sputum culture conversion at Month 6, a key secondary endpoint, was similar between treatment arms (13.2% in epetraborole + OBR vs. 10.0% placebo + OBR; treatment difference 3.4%, p=0.64). Given these topline results, we decided to close out the Phase 3 portion of the trial and commence a review of data to help inform further development. Although we believe that to date our ongoing data review supports the continued development of epetraborole in patients with treatment-refractory MAC lung disease, it is possible that we will determine to defer or discontinue development of epetraborole in NTM, whether due to further FDA feedback or otherwise.

Current report

There is a high failure rate for product candidates proceeding through clinical trials. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in later-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials. For example, in August 2024, we announced topline data from the Phase 2 portion of our Phase 2/3 clinical trial evaluating epetraborole in patients with treatment-refractory MAC lung disease. Although we believe the Phase 2 part of the study met its primary objective in demonstrating the potential validation of a novel patient-reported outcome (PRO) tool and a higher PRO-based clinical response rate in the epetraborole + OBR arm (39.5%) vs. placebo + OBR (25.0%; treatment difference 13.9%, p=0.19), sputum culture conversion at Month 6, a key secondary endpoint, was similar between treatment arms (13.2% in epetraborole + OBR vs. 10.0% placebo + OBR; treatment difference 3.4%, p=0.64). Given these results, we decided to close the Phase 3 portion of the trial and to commence a review of data to help inform further development.

Current report

Although we believe that our ongoing data review to date supports the continued development of epetraborole in patients with treatment-refractory MAC lung disease, it is possible that we will defer or discontinue development of epetraborole in NTM, whether due to further FDA feedback or otherwise. For example, based on the results from the Phase 2 portion of the EBO-301 trial, we submitted an amended statistical analysis plan for the EBO-301 trial selecting the Quality of Life – Bronchiectasis (QOL-B) respiratory domain patient reported outcome (PRO) instrument as the revised primary efficacy endpoint. However, the FDA may not consider the data from the Phase 3 portion of the trial to be clinically meaningful or otherwise supportive for regulatory decision-making purposes, even if the Phase 3 data show a statistically significant outcome with respect to QOL-B.

Current report

we may not reach agreement on acceptable terms with prospective CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;

Current report

In particular, we may face delays and difficulties in enrollment in our planned trials of certain of our product candidates because Chagas disease and certain other conditions we may target include rare diseases (i.e., the size of the targeted patient population is small). Because of this, we may experience difficulties in recruiting sufficient patients into certain of our planned clinical trials.

Current report

Further, on June 1, 2023, the European Union Patent Package (“EU Patent Package”) regulations were implemented with the goal of providing a single pan-European Unitary Patent and a new European Unified Patent Court (“UPC”) for litigation involving European patents. As a result, all European patents, including those issued prior to ratification of the EU Patent Package, now by default automatically fall under the jurisdiction of the UPC. It is uncertain how the UPC will impact granted European patents in the biotechnology and pharmaceutical industries. Our European patent applications, if issued, could be challenged in the UPC. During the first seven years of the UPC’s existence, the UPC legislation allows a patent owner to opt its European patents out of the jurisdiction of the UPC. We may decide to opt out our future European patents from the UPC, but doing so may preclude us from realizing the benefits of the UPC. Moreover, if we do not meet all of the formalities and requirements for opt-out under the UPC, our future European patent applications and patents could remain under the jurisdiction of the UPC. The UPC will provide our competitors with a new forum to centrally revoke our European patents, and allow for the possibility of a competitor to obtain pan-European injunction. Such a loss of patent protection could have a material adverse impact on our business and our ability to commercialize our technology and product candidates and, resultantly, on our business, financial condition, results of operations and growth prospects.

Current report

disagreement with the design, endpoint selection, or implementation of our clinical trials;

Current report

The accelerated approval pathway may be used in cases in which the advantage of a new drug over available therapy may not be a direct therapeutic advantage, but is a clinically important improvement from a patient and public health perspective. If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional confirmatory studies to verity and describe the drug’s clinical benefit. If such post-approval studies fail to confirm the drug’s clinical benefit or are not completed in a timely manner, the FDA may withdraw its approval of the drug on an expedited basis. In addition, the Food and Drug Omnibus Reform Act of 2022, provided the FDA new statutory authority to mitigate potential risks to patients from continued marketing of ineffective drugs previously granted accelerated approval. Under these provisions, the FDA may require a sponsor of a product seeking accelerated approval to, among other things, have a confirmatory trial underway prior to such approval being granted.

Current report

Government Downsizing Initiatives Could Adversely Impact FDA Operations, Leading to Potential Delays in Regulatory Review and Approval

Current report

Recent government downsizing initiatives, including efforts to reduce the size and scope of federal agencies such as the U.S. Food and Drug Administration (“FDA”), could negatively impact the agency’s ability to efficiently review and approve new drug applications. These initiatives may lead to staff reductions, voluntary resignations, and resource constraints that could slow down regulatory processes, including clinical trial oversight, new drug application reviews, and post-market surveillance activities.

Current report

In addition, future agency cost-cutting measures, budget reductions, or structural changes remain uncertain and could further disrupt the FDA operations. Any prolonged delays or unpredictability in regulatory timelines may adversely affect our ability to bring our product candidates to market in a timely manner, which could have a material impact on our business, financial condition, and future growth prospects.

Current report

Provisions in our corporate charter documents and under Delaware law, and the adoption of a rights plan, could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Current report

Additionally, in August 2024, we entered into a Rights Agreement, which was previously approved by the Board. In connection with the Rights Agreement, a dividend was declared of one preferred stock purchase right for each share of the Common Stock of the Company outstanding at the Record Date (individually, a “Right” and collectively, the “Rights”).

Current report

Each Right entitles the registered holder thereof, after the Rights become exercisable and until August 15, 2025 (or the earlier redemption, exchange or termination of the Rights), to purchase from the Company one one-thousandth of a share of Series A Preferred, of the Company at a price of $6.50 per one one-thousandth of a share of Series A Preferred, subject to adjustment. The Rights will expire on August 15, 2025, subject to the Company’s right to extend such date, unless earlier redeemed or exchanged by the Company or terminated. The Rights Agreement could have the effect of discouraging, delaying or preventing a change in management or control over us. While there is no plan to do so at this time, our Board may choose to extend the current Rights Agreement or adopt a new rights agreement in the future.

Current report

If we fail to adhere to the listing requirements of the Nasdaq Global Select Market our common stock could be delisted.

Current report

If we are unable to comply with the listing requirements of the Nasdaq Global Select Market, our stock could be delisted for such failure. If our common stock is delisted from Nasdaq, we could be required to list on the over-the-counter market, which may adversely affect the price and trading liquidity of our common stock. Delisting from the Nasdaq may have other negative results, including the potential loss of confidence in us by employees and partners, the loss of institutional investor interest, fewer business development opportunities and greater difficulty in obtaining financing on favorable terms or at all.

Previous report

The data we have collected and continue to collect in our Phase 1 programs, from our Phase 2/3 clinical trial, and from future trials in NTM, may not support continued clinical investigation due to insufficient clinical or microbiological responses or occurrence of adverse safety events or may lead to adjustments in trial design, rendering it not feasible to conduct or not acceptable to the FDA or to us.

Previous report

We rely on single-sourced third parties to conduct the preclinical and nonclinical studies, clinical trials and manufacture of our clinical trial material for epetraborole and our other product candidates, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such studies, trials and manufacturing services or failing to comply with applicable regulatory requirements.

Previous report

Future legislation, and/or regulations and policies adopted by the FDA, the PMDA or comparable regulatory authorities, may increase the time and cost required for us to conduct and complete clinical trials of epetraborole or other product candidates.

Previous report

We depend to a large degree on the success of epetraborole, which is in clinical development, and for which we recently paused enrollment in the Phase 3 part of the Phase 2/3 study of treatment-refractory MAC lung disease. If we do not obtain regulatory approval for and successfully commercialize epetraborole or any of our other product candidates, or if we experience significant delays in doing so, we may never become profitable.

Previous report

Success in preclinical or nonclinical studies or initial clinical trials may not be indicative of results in future clinical trials. To support our clinical development strategy for epetraborole, we are relying, in part, on clinical data from prior clinical trials conducted by Anacor and GlaxoSmithKline plc which were not conducted in patients with NTM. Differences with these prior clinical trials evaluating epetraborole will limit our use of prior clinical data for epetraborole and our ability to support our clinical trial plan for epetraborole with the FDA, PMDA and other comparable foreign regulatory authorities.

Previous report

Success in preclinical or nonclinical studies or initial clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the safety, tolerability, and efficacy of a product candidate. For example, certain prior clinical trials of epetraborole were not conducted in patients with NTM lung disease nor were they conducted over durations greater than 14 days, shorter than the typical treatment of patients with NTM lung disease. Epetraborole and our other product candidates may fail to show the desired safety, tolerability, and efficacy in clinical development despite promising results in preclinical studies or having successfully advanced through initial clinical trials in healthy volunteers. For instance, with respect to epetraborole, we cannot guarantee that the dose used in our ongoing clinical trial will be safe, tolerable, or effective. We cannot guarantee that the dose selected will be successful in our ongoing clinical trial in patients with treatment-refractory MAC lung disease. The ongoing clinical trial is the first evaluation of epetraborole in patients with MAC lung disease and specifically in treatment-refractory patients. In February 2024, we voluntarily paused enrollment of the Phase 3 portion of our ongoing Phase 2/3 clinical trial after a blinded aggregate analysis of data from the Phase 2 portion suggested lower-than-anticipated efficacy results. There is no guarantee that we will be able to successfully resume enrollment and complete the study in the manner or on the timing that we expect. Even if we are able to complete our Phase 2/3 study, there is no guarantee that the study will produce results sufficient to demonstrate the safety or efficacy of epetraborole to the satisfaction of the FDA, PMDA or other regulatory authorities.

Previous report

In addition, safety, tolerability and pharmacokinetic observations of epetraborole, used as monotherapy, in previous clinical trials conducted by Anacor and GSK, including penetration into alveolar (lung) macrophages and the long-term effects on red blood cell-related hematological parameters, such as hemoglobin and reticulocytes, may not be predictive of safety or efficacy results in our ongoing clinical trial. There are significant differences in the epetraborole Phase 1 clinical trial conducted by Anacor and the five Phase 1 clinical trials and two Phase 2 clinical trials conducted by GSK compared to the clinical trial design of our ongoing clinical trial. Other differences with these prior clinical trials, including differences in patient population, targeted indication, drug product formulation, duration of dosing and trial design, will limit our use of prior clinical data for epetraborole and our ability to support our clinical trial plan for epetraborole with the FDA, PMDA and other comparable foreign regulatory authorities.

Previous report

The data we have collected and continue to collect in our Phase 1 programs, and from our ongoing Phase 2/3 clinical trial, may not support continued clinical investigation due to insufficient clinical or microbiological responses or occurrence of adverse safety events or may lead to adjustments in trial design, rendering it not feasible to conduct or not acceptable to the FDA or to us, including adjustments to clinical trial endpoints and sample size. For example, we recently voluntarily paused enrollment in the Phase 3 portion of our ongoing Phase 2/3 clinical trial evaluating epetraborole in patients with treatment-refractory MAC lung disease after a blinded aggregate analysis data from the Phase 2 portion of the trial suggested potentially lower-than-anticipated efficacy results. There is no guarantee that we will be able to successfully resume enrollment and complete the study in the manner or on the timing that we expect. Even if we are able to complete our Phase 2/3 study, there is no guarantee that the study data will be sufficient to support an application seeking regulatory approval of epetraborole in treatment-refractory MAC lung disease.

Previous report

The FDA can recommend study design element changes at any time, including, for example, change of endpoints, eligibility criteria, or statistical analyses. For example, Arikayce was approved based on the primary endpoint of microbiological culture conversion, whereas we may be required to demonstrate efficacy based on clinical response endpoints. Specifically, based on the feedback we have received from the FDA, our ongoing Phase 2/3 trial includes a novel patient-reported outcome measure (“PRO”), as a primary endpoint to assess certain changes in patient symptoms. However, to our knowledge, no treatment for NTM lung disease has been approved by the FDA on the basis of improvements demonstrated through a PRO endpoint. In addition, we remain in ongoing discussions with the FDA regarding the design of our novel PRO, and any changes to the PRO that we may make create the risk that patients enrolled prior to implementing such changes will have completed treatment or will otherwise not be able to be assessed using the modified PRO. In such an event, we may be required to gather additional clinical data before we are able to seek approval of epetraborole, if ever. Even if we believe we have reached alignment with the FDA regarding the design of our Phase 2/3 trial, including our novel PRO endpoint, there is no guarantee that the data from such trial will be sufficient to support approval.

Previous report

There is a high failure rate for drug and biologic products proceeding through clinical trials. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in later-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials. For example, a Phase 2 clinical trial conducted by GSK to evaluate epetraborole in patients with complicated urinary tract infections was terminated early due to microbiological findings of resistance to epetraborole, which caused GSK to discontinue its epetraborole development program. In addition, data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit, or prevent regulatory approval. Furthermore, the dosing duration for administering epetraborole in humans has been limited to a maximum of 28 days in previous clinical trials. The study drug dosing duration in our Phase 2/3 clinical trial is up to 16 months total. The longer dosing duration in our clinical trial, as well as the use of epetraborole in patients with NTM lung disease, may increase the risk of hematological abnormalities or the potential for the emergence of new, unknown treatment-emergent adverse events. In addition, we may experience regulatory delays or rejections as a result of many factors, including changes in regulatory policy during the period of our product candidate development. Any such delays could negatively impact our business, financial condition, results of operations and growth prospects.

Previous report

In particular, epetraborole is not yet approved by the FDA, the PMDA or any other regulatory agency and has not yet been tested extensively in patients. In previous development programs evaluating epetraborole, which largely used higher doses administered intravenously and orally, subjects and patients receiving epetraborole experienced drug-related side effects. For example, the most common drug-related adverse events observed in oral administration of epetraborole in humans were gastrointestinal in nature. Further, in a 26-week study conducted with epetraborole in rats and in a 39-week study conducted with epetraborole in non-human primates, safety observations of reduced hematocrit, hemoglobin, and other associated red blood cell-related parameters (red cell distribution width, mean corpuscular volume, mean corpuscular hemoglobin concentration, mean corpuscular hemoglobin) levels were observed, which remained below normal during the recovery period of the study while other blood cell parameters returned to normal levels. In a Fertility and Embryo-Fetal Development study of epetraborole in rats, there were no external fetal malformations or variations, no soft-tissue (visceral or fixed-head) fetal malformations or variations, and no skeletal fetal malformations attributed to administration of epetraborole at any dose level evaluated in the study. However, there were multiple maternal and fetal adverse events, including reduced mean maternal body weight during gestation, reduced mean fetal weight, increased mean total resorptions per litter and higher mean post-implantation loss at the highest dose level tested, which was 1,000 mg/kg, compared to a control group. Decreased fetal body weights and increased incomplete fetal ossification was observed at all epetraborole dose levels. The significance of these observations with respect to humans is still unknown. Based on the observed maternal and fetal adverse events in rats, epetraborole could be harmful to human fetuses when taken during pregnancy.

Previous report

Amongst the patients enrolled in the first six cohorts of our Phase 1b dose-ranging study of epetraborole in healthy volunteers, the most common treatment emergent adverse events (“TEAEs”), were gastrointestinal events, such as nausea, abdominal discomfort and diarrhea, and headache and vascular site access pain. Most TEAEs observed in the Phase 1b dose-ranging study were mild or moderate in severity and no severe or serious TEAEs were observed in the study. Two subjects in the study experienced TEAEs that caused premature discontinuation from epetraborole: one epetraborole subject at the 250 mg q24h dose level had mild aminotransferase increases during a concomitant upper respiratory tract infection and one epetraborole subject at the 1,000 mg q48h dose level had mild nausea. These TEAEs were both considered possibly or probably related to epetraborole. Consistent with observations in chronic toxicology studies in non-human primates and rats, dose-dependent effects on red blood cell-related hematological parameters, such as hemoglobin and reticulocytes, were observed in the Phase 1b dose-ranging study. The observed effects on hematological parameters were mild and most RBC values remained within normal limits with a slight downward trend, and the hematological parameters recovered following completion of dosing of epetraborole. No subjects discontinued therapy as a result of the hematological effects that were observed.

Previous report

Additional adverse events may emerge (along with additional data further defining previously identified risks) in any ongoing or subsequent clinical trials and there may be unforeseen serious adverse events or side effects that differ from those seen in studies completed to date. For example, the dosing duration for administering epetraborole in humans has been limited to a maximum of 28 days in previous clinical trials, and in our Phase 2/3 clinical trial involves dosing up to 16 months. Future trials may involve the same or longer dosing duration. The longer dosing duration in the Phase 2/3 clinical trial, as well as the use of epetraborole in patients with NTM lung disease, may increase the risk of hematological abnormalities, as well as the potential for the emergence of new, unknown treatment-emergent adverse events.

Previous report

In particular, we may face delays and difficulties in enrollment in our current trials of epetraborole because NTM lung disease caused by MAC is considered a rare disease (i.e., the size of the targeted patient population is small) and patients are generally managed in the outpatient setting by specialized clinics and caregivers. Patients with this disease may also be reluctant to participate in a clinical trial with an investigational drug. Additionally, most patients with NTM lung disease have pre-existing co-morbidities, including underlying structural lung disease. Because of this, we expect difficulties in determining clinical responses in some patients in our clinical trials of epetraborole, which could result in a failure to meet prespecified clinical trial endpoints, or otherwise increase the challenges associated with trial enrollment. For example, even if epetraborole has a beneficial effect on culture conversion, patient-reported symptom-based outcomes may not correlate with microbiological responses. Moreover, in February 2024, we decided to voluntarily pause enrollment in the Phase 3 portion of our ongoing Phase 2/3 clinical trial, and there is no guarantee that if and when we resume patient enrollment, that we will not encounter further delays or difficulties in enrolling the trial, including due to our announcement of having observed lower-than-anticipated efficacy rates in a blinded aggregate analysis of available data. In addition, pending further data review and discussions with FDA, we may decide to modify the protocol for our ongoing Phase 2/3 clinical trial, and any such modifications may require us to expand patient enrollment, which could result in additional expenses and further trial delays.

Previous report

Risks Related to the Commercialization of Epetraborole and Our Other Product Candidates

Previous report

Our initial product candidate, epetraborole, is being developed for the treatment of patients with treatment-refractory MAC lung disease. Insmed’s Arikayce is the only currently approved therapy for the treatment of MAC lung disease as part of a combination antibacterial drug regimen in patients who do not achieve negative sputum cultures after a minimum of six consecutive months of a multidrug background regimen therapy. Other drugs used to treat these patients include generic drugs such as macrolides (clarithromycin and azithromycin), ethambutol, rifabutin and fluoroquinolones such as levofloxacin, bedaquiline, linezolid and clofazimine. There are also a number of product candidates in clinical development by third parties that are intended to treat NTM lung disease. Some mid- to late-stage product candidates include SPR720 from Spero Therapeutics, Inc., inhaled clofazimine from MannKind Corporation, and omadacycline from Paratek Pharmaceuticals, Inc. In addition, there may also be unexpected or unknown competitors that we are not presently aware of.

Previous report

To address our material weaknesses, we implemented measures designed to improve our internal control over financial reporting and remediate the control deficiencies that led to the material weaknesses. These measures include (i) the ongoing hiring of additional accounting personnel; (ii) the design and implementation of our financial control environment, including the establishment of formal accounting policies and procedures, financial reporting controls and controls to account for and disclose complex transactions; and (iii) implementation of an upgraded accounting system with IT controls to insure appropriate and restricted access to our accounting applications, programs and data. As of December 31, 2023, we validated the effectiveness of controls to account for and disclose complex transactions, and the material weakness associated with the accounting for certain non-routine or complex transactions, including the proper application of U.S. GAAP, was remediated as of December 31, 2023.

Previous report

Risks Related to Regulatory Approval of Epetraborole and Our Other Product Candidates and Other Legal Compliance Matters

Previous report

Designation of any of our product candidates as a Qualified Infectious Disease Product (“QIDP”) may not actually lead to faster development or regulatory review or other benefits, and does not assure FDA approval of any product candidates which may receive such designation.

Previous report

The Generating Antibiotic Incentives Now (the “GAIN Act”) established certain programs intended to incentivize the development of antibacterial and antifungal drugs for human use to treat serious or life-threatening infections. Specifically, pursuant to the GAIN Act, the FDA may designate certain antimicrobial products as QIDPs, which provides sponsors with certain benefits during the development and review process. In December 2021, the FDA granted QIDP designation to epetraborole for treatment-refractory MAC lung disease. A QIDP is defined as an antibacterial or antifungal drug, including a biological product, for human use that acts on bacteria or fungi, or on substances produced by such bacteria or fungi, and is intended to treat serious or life-threatening infections, including those caused by either (1) an antibacterial or antifungal resistant pathogen, including novel or emerging infectious pathogens, or (2) a so-called “qualifying pathogen” found on a list of potentially dangerous, drug-resistant organisms established and maintained by the FDA under the GAIN Act. The FDA has interpreted QIDP designation to apply to a specific drug product, including a specific dosage form of the product, and the FDA does not apply the designation to the drug substance in general or beyond the specified indications identified in the designation. The benefits of QIDP designation include eligibility for Fast Track designation, priority review of a submitted marketing application, and an extension by an additional five years of any non-patent exclusivity period awarded, such as a five-year exclusivity period awarded for a new chemical entity. This extension is in also addition to any pediatric exclusivity extension that may be awarded. A sponsor must request such designation before submitting a marketing application, and the FDA will respond to a request for QIDP designation within 60 days of the date the FDA receives the request. Receipt of QIDP designation does not assure ultimate approval by the FDA or related GAIN Act exclusivity benefits.

Previous report

Under the GAIN Act, the FDA may only revoke a QIDP designation if the request for such designation contained an untrue statement of material fact. While we believe that our request for our QIDP designation did not contain any untrue statement of material fact, if the FDA were to seek to revoke our QIDP designation for epetraborole, and if FDA were successful in doing so, we would not obtain the GAIN Act exclusivity benefits for epetraborole, which could have a material, adverse effect on our business prospects. Obtaining a QIDP designation does not change the standards for product approval but may expedite the development or approval process. Accordingly, such QIDP designations may not actually result in faster clinical development or regulatory review or approval.

Previous report

We have received Fast Track designation from the FDA, but receipt of such designation may not actually lead to a faster development, regulatory review, or approval process, and does not assure ultimate FDA approval.

Previous report

We received Fast Track designation from the FDA to investigate epetraborole for treatment-refractory MAC lung disease, and we may seek additional Fast Track designations for our product candidates or for epetraborole in other indications.

Previous report

If a product candidate is intended for the treatment of a serious or life-threatening condition and the product demonstrates the potential to address unmet medical needs for this condition, the product sponsor may apply for Fast Track designation. Fast Track designation applies to the combination of the product candidate and the specific indication for which it is being studied. The sponsor of a Fast Track product candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once an NDA is submitted, the application may be eligible for priority review. An NDA submitted for a Fast Track product candidate may also be eligible for rolling review, where the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.

Previous report

The TFDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it. Even though we have received Fast Track designation to develop epetraborole in treatment-refractory MAC lung disease, and even if we receive Fast Track designation for other product candidates or indications, we may not experience a faster development process, review, or approval compared to conventional FDA procedures and does not assure ultimate approval by the FDA. The FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from our clinical development program. Many product candidates that have received Fast Track Designation have ultimately failed to obtain approval.

Previous report

We may seek FDA approval using the limited-population antibacterial drug (“LPAD”) pathway. We may not be able to obtain or maintain LPAD designations for epetraborole and/or any future candidates, and we may be unable to take advantage of the benefits associated with LPAD designation.

Previous report

We may seek FDA approval for epetraborole using the LPAD pathway, through which the FDA may review and approve new antibacterial drugs to treat serious bacterial diseases in patients with an unmet medical need and for which effective antibacterial drugs are limited or lacking. Specifically, under Section 506(h)(1) of the Federal Food, Drug, and Cosmetic Act (“FDCA”), the FDA may approve an antibacterial or anti-fungal drug, alone or in combination with one or more other drugs under the LPAD pathway. For FDA to approve a drug under the LPAD pathway, the drug must be intended to treat a serious or life-threatening infection in a limited population of patients with unmet needs, the FDA’s traditional standards for approval must be otherwise met and the FDA must receive a written request from the sponsor to approve the drug as a limited population drug. By pursuing this pathway, we may be able to conduct a more streamlined development program, including the potential to seek approval using smaller, shorter or fewer clinical trials than would otherwise be required to pursue approval within a broader patient population. If our ongoing Phase 2/3 clinical trial of epetraborole is successful, we may submit an NDA seeking approval under the LPAD pathway. However, there is a risk that the FDA may not agree that epetraborole qualifies for approval under the LPAD pathway, even if we believe the results from our Phase 2/3 clinical trial are sufficiently positive and warrant such approval, in which case we may be required to conduct additional clinical trials of epetraborole before we are able to seek approval, if ever. Any requirements for us to conduct additional clinical trials would increase our costs and have an adverse effect on our business. In addition, even if we are able to obtain approval for epetraborole under the LPAD pathway, the FDCA requires that drugs approved under the LPAD pathway include certain labeling statements that may limit the commercial potential of epetraborole, if approved.

Current report — wording carried from elsewhere

Even if any of our product candidates receive regulatory approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors, and others in the medical community necessary for commercial success.

Current report — wording carried from elsewhere

Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We are a clinical-stage biopharmaceutical company with a limited operating history upon which you can evaluate our business and prospects. We currently have no products approved for commercial sale, have not generated any revenue from the sale of products and have incurred losses in each year since our inception in 2017. In addition, we have limited experience as a company and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical industry.

Current report — wording carried from elsewhere

If we do not obtain regulatory approval for and successfully commercialize any of our product candidates, or if we experience significant delays in doing so, we may never become profitable.

Current report — wording carried from elsewhere

We rely on third parties to conduct our preclinical and nonclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties, comply with applicable regulatory requirements or meet expected deadlines, our development programs and our ability to seek or obtain regulatory approval for or commercialize our product candidates may be delayed.

Current report — wording carried from elsewhere

Disruptions at the FDA and other government agencies caused by the transition to a new administration with different philosophies, funding shortages, staffing limitations, or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, prevent new or modified products from being developed, reviewed, approved or commercialized in a timely manner or at all, which could negatively impact our business.

Current report — wording carried from elsewhere

The ability of the FDA and foreign regulatory authorities to review and/or approve new products can be affected by a variety of factors, including government budget and funding levels, staff reductions, statutory, regulatory, and policy changes, the FDA’s or foreign regulatory authorities’ ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s or foreign regulatory authorities’ ability to perform routine functions. Average review times at the FDA and foreign regulatory authorities 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.

Current report — wording carried from elsewhere

Disruptions at the FDA and other agencies such as the EMA, following its relocation to Amsterdam and resulting staff changes, may also slow the time necessary for new drugs and biologics or modifications to approved drugs or biologics to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. 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 report — wording carried from elsewhere

If a prolonged government shutdown occurs, or if staffing reductions or global health concerns 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 report — wording carried elsewhere

Even if epetraborole or any of our other product candidates receives regulatory approval, they may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success. If we are unable to establish sales, marketing and distribution capabilities for epetraborole or our other product candidates, or enter into sales, marketing and distribution agreements with third parties, we may not be successful in commercializing our product candidates, if and when they are approved.

Previous report — wording carried elsewhere

The trading price of our common stock may be volatile.

Previous report — wording carried elsewhere

Risks Related to the Development of Our Current and Future Product Candidates