Our future operating results could differ materially from the results described in this Annual Report on Form 10-K due to the risks and uncertainties described below. You should consider carefully the following information about risks below in evaluating our business. If any of the following risks actually occur, our business, financial conditions, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our common stock would likely decline. In addition, we cannot assure investors that our assumptions and expectations will prove to be correct. Important factors could cause our actual results to differ materially from those indicated or implied by forward-looking statements. See page i of this Annual Report on Form 10-K for a discussion of some of the forward-looking statements that are qualified by these risk factors. Factors that could cause or contribute to such differences include those factors discussed below.
Risks Related to our Financial Position and Need for Additional Capital
We have incurred significant losses since our inception. We expect to incur losses over the next several years and may never achieve or maintain profitability.
Since inception, we have incurred significant operating losses. Our net loss was $82.7 million for the year ended December 31, 2019 and $32.6 million for the year ended December 31, 2018. As of December 31, 2019, we had an accumulated deficit of $150.8 million. To date, we have funded our operations primarily through the issuance of common stock in our initial public offering, or IPO, convertible preferred stock and convertible notes, and an upfront payment received under the collaboration and license agreement with Acceleron Pharma Inc., or Acceleron. We have devoted substantially all of our financial resources and efforts to research and development, including clinical trials and preclinical studies. We are still in the early stages of development of our product candidates, and we have not completed development of any product candidates. We expect to continue to incur significant expenses and operating losses over the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase substantially as we:
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continue our clinical development of losmapimod, including our ongoing Phase 2b and Phase 2 open label clinical trials; |
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continue investigational new drug application, or IND, enabling studies and prepare for a planned Phase 1 clinical trial of FTX-6058; |
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advance clinical-stage product candidates into later stage trials; |
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pursue the discovery of drug targets for other rare diseases and the subsequent development of any resulting product candidates; |
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seek regulatory approvals for any product candidates that successfully complete clinical trials; |
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scale up our manufacturing processes and capabilities, or arrange for a third party to do so on our behalf, to support our clinical trials of our product candidates and commercialization of any of our product candidates for which we may obtain marketing approval; |
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establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain regulatory approval; |
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acquire or in-license products, product candidates, technologies and/or data referencing rights; |
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make any milestone payments to affiliates of GlaxoSmithKline plc, or GSK, under our right of reference and license agreement with GSK upon the achievement of specified clinical or regulatory milestones; |
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maintain, expand, enforce, defend and protect our intellectual property; |
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hire additional clinical, quality control and scientific personnel; and |
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add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts and our operations as a public company. |
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To become and remain profitable, we must succeed in developing, and eventually commercializing, a product or products that generate significant revenue. The ability to achieve this success will require us to be effective in a range of challenging activities, including completing preclinical testing and clinical trials of our product candidates, discovering additional product candidates, obtaining regulatory approval for these product candidates and manufacturing, marketing and selling any products for which we may obtain regulatory approval. We are only in the preliminary stages of most of these activities. We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. Our expenses will increase if, among other things:
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we are required by the U.S. Food and Drug Administration, or the FDA, the European Medicines Agency, or the EMA, or other regulatory authorities to perform trials or studies in addition to, or different than, those expected; |
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there are any delays in completing our clinical trials or the development of any of our product candidates; or |
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there are any third-party challenges to our intellectual property or we need to defend against any intellectual property-related claim. |
Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our pipeline of product candidates or even continue our operations. A decline in the value of our company could also cause our stockholders to lose all or part of their investment.
We will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.
We expect to devote substantial financial resources to our ongoing and planned activities, particularly as we continue our Phase 2b and Phase 2 open label clinical trials of losmapimod and prepare for a planned Phase 1 clinical trial of FTX-6058; and continue research and development and initiate additional clinical trials of, and seek regulatory approval for, these and other product candidates. We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance our preclinical activities and clinical trials. In addition, if we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution. Furthermore, we will incur additional costs associated with operating as a public company. 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 acceptable terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.
Our future capital requirements will depend on many factors, including:
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the progress, costs and results of our ongoing Phase 2b and Phase 2 open label clinical trials of losmapimod; |
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the scope, progress, results and costs of discovery research, preclinical development, laboratory testing and clinical trials for our product candidates, including our planned Phase 1 clinical trial of FTX-6058; |
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the number of and development requirements for other product candidates that we pursue; |
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the costs, timing and outcome of regulatory review of our product candidates; |
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our ability to enter into contract manufacturing arrangements for supply of active pharmaceutical ingredient, or API, and manufacture of our product candidates and the terms of such arrangements; |
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the success of our collaboration with Acceleron; |
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our ability to establish and maintain additional strategic collaborations, licensing or other arrangements and the financial terms of such arrangements; |
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the payment or receipt of milestones, royalties and other collaboration-based revenues, if any; |
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the costs and timing of future commercialization activities, including product manufacturing, sales, marketing and distribution, for any of our product candidates for which we may receive marketing approval; |
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the amount and timing of revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; |
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the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending any intellectual property-related claims; and |
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the extent to which we acquire or in-license other products, product candidates, technologies or data referencing rights. |
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As of December 31, 2019, we had cash and cash equivalents of approximately $96.7 million. We believe that our cash and cash equivalents as of December 31, 2019 will enable us to fund our operating expenses and capital expenditure requirements into the third quarter of 2021. However, we have based this estimate on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. As a result, we could deplete our capital resources sooner than we currently expect.