t

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form10-K

(Mark One)

For the fiscal year ended December 31 2017, 2022

or

For the transition period fromto.

Commission File Number001-36510

ZAFGEN,LARIMAR THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Zafgen, Inc.(844) 511-9056

175 Portland Street, 4th Floor(Registrant’s telephone number, including area code)

Boston, Massachusetts 02114

(Address of principal executive offices, including zip code)

Registrant’s Telephone Number, Including Area Code:

(617)622-4003

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

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

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

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to thisForm 10-K. ☒

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐


Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of Common Stock held bynon-affiliates of the registrant computed by reference to the price of the registrant’s Common Stock as of June 30, 2017,On the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $64.9 millionthe aggregate market value (based on the last reportedclosing sale price of its common stock on that date) of the Nasdaq Global Market asvoting and non-voting stock held by non-affiliates of such date)the registrant was $20,607,416.

As of March 1, 2018, there were 27,558,88313, 2023, the registrant had 43,269,200 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2017. Portions of such definitive proxy statement are incorporated by reference into

Part III of this Annual Report onForm 10-K.

ZAFGEN, INC.

ANNUAL REPORT ON FORM10-K

For incorporates certain information by reference from the Year Endedregistrant’s proxy statement for the 2023 annual meeting of shareholders to be filed no later than 120 days after the end of the registrant’s fiscal year ended December 31, 20172022.

TABLE OF CONTENTS

PART ICAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

ThisStatements made in this Annual Report on Form10-K that are not statements of historical or Annual Report, contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant tocurrent facts are “forward-looking statements” within the safe harbor provisionsmeaning of the Private Securities Litigation Reform Act of 19951995. Forward-looking statements discuss our business, operations and other federal securities laws. All statements other than statements of historical facts contained in this Annual Report are forward-looking statements.financial performance and conditions, as well as our plans, objectives and expectations for our business operations and financial performance and condition. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “positioned,” “potential,” “seek,” “should,” “target,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue”“would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. In addition, statements that “we believe” or similar statements reflect our beliefs and opinions on the relevant subject only. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include but are not limited to, statements about:

You should understand that the following important factors could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

This Annual Report also contains estimates, projectionscompletion of our clinical trials could result in increased costs and could delay, prevent or limit our ability to generate revenue and continue our business.

We initiated Investigational New Drug, or IND, application enabling nonclinical activities in the first quarter of 2018, in preparation for filing an IND with the U.S. Food and Drug Administration, or FDA, and plan to begin Phase 1 clinical development by the end of 2018. We anticipate our Phase 1 clinical trialtrials, we believe that administering CTI-1601 may increase FXN levels in the mitochondria ofZGN-1258 will be focused patients with Friedreich’s ataxia and patients could potentially experience:

In our Phase 1 clinical trials, are anticipatedCTI-1601 appeared to evaluateincrease FXN levels in the effectsperipheral tissues that were tested (buccal cells, skin biopsies and platelets). Based on this, we believe that our technology may allow us to address other rare genetic diseases that either require the replacement of treatment withZGN-1258 on core therapeutic endpoints in PWS such as improvement of hyperphagia-related behaviors and/or obesity. We expect to conduct a multinational PWS natural history study, which we plan to begin inmid-year 2018. The study will inform our development program and provide important insights into the medical and clinical history of people with PWS.

BothZGN-1061 andZGN-1258 were discovered by our researchers as part of a multi-year campaign to identify highly potent and effective novel compounds with nonclinical safety profiles supportive of continued development. One core element of focus for optimization was to reduce or eliminate the potential forpro-thrombotic effects, a limiting factormolecules that led to termination of development of our first-generation compound. To date, both new compounds have similar intrinsic potency against the MetAP2 pathway and display appropriate activity in animal models of type 2 diabetes and obesity. Both compounds display improved safety profiles relative to beloranib for effects on thrombosis.

ZGN-1061 andZGN-1258 are differentiated with respect to their tissue distribution and predominant sites of action in animal models. While treatment with both compounds leadsneed to target engagement and MetAP2 inhibition in key organs of relevance to the treatment of type 2 diabetes and obesity,ZGN-1258 also displays enhanced uptake into the brain and displays greater potency and activity in animal models of hyperphagic behaviors than doesZGN-1061. These differences supportspecific intracellular organelles, or that share similar clinical symptoms that overlap with Friedreich’s ataxia. Finally, the use ofZGN-1061 CTI-1601 to improve mitochondrial function in other rare diseases that demonstrate evidence of mitochondrial dysfunction is also being explored.

Development of CTI-1601

Non-clinical Development

Knock-Out Mice and Other Non-clinical Studies

CTI-1601 has been demonstrated to prolong the life of knock-out mice ("KO") mice whose heart and skeletal muscles were deficient in FXN. These mice, when untreated, develop a severe hypertrophic cardiomyopathy similar to patients with Friedreich’s ataxia and, like many Friedreich’s ataxia patients, die early in life. In non-clinical studies of CTI-1601, the median survival in animals treated with vehicle of 98 days was extended to a median survival of 166 days in animals treated with CTI-1601 subcutaneously three times per week (p=0.0001).

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Furthermore, 87.5% of mice treated with CTI-1601 survived beyond the mean age of death in the vehicle treated group (107.5 days) whereas only 33% of vehicle treated animals survived. Results are reflected in Figure 2.

Figure 2.

In a separate study conducted at an independent laboratory, a similar mouse model was studied. In this study doses of 2 mg/kg, 10 mg/kg, 30 mg/kg, 60 mg/kg and 100 mg/kg administered subcutaneously every other day were compared to vehicle. After 2 weeks of dosing, mitochondrial extracts from cardiac tissue were analyzed for the presence of human FXN. In addition, activity of succinate dehydrogenase ("SDH") an enzyme whose activity is dependent on the presence of FXN, was also analyzed. Human FXN was found in the mitochondria of the cardiomyocytes and increased with increasing dose. SDH activity which was suppressed to near zero in vehicle treated animals was also suppressed to near zero in the 2 mg/kg dose group. In the 10 mg/kg dose group activity was increased and in the 30 mg/kg dose group the activity was returned to that of wild type animals. There was no further increase in activity when the animals were dosed with 60 mg/kg or 100 mg/kg but the effect was maintained at levels equivalent to that of wild type animals. See Figures 3 and 4.

Figure 3.

Figure 4.

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Another study, also performed at an independent laboratory, demonstrated the maintenance of cardiac function when the same KO mouse model was studied. These mice were treated with CTI-1601 at doses of 10 mg/kg every other day for 6 weeks. Echocardiograms were performed prior to initiating dosing and after 4 weeks of dosing. When compared to vehicle, mice treated with CTI-1601 maintained their left ventricular volume and ejection fraction while vehicle treated mice deteriorated over the same 4-week period. See Figures 5 and 6.

Figure 5.

Figure 6.

Using a neurologic mouse model, treatment with CTI-1601 prevented the development of type 2 diabetes,ataxia in which metabolic effects relatedmice whose nervous system was deficient in FXN compared to liver, adipose tissue,those treated with placebo.

In multiple non-clinical studies in rodents and muscle effects are likelynon-human primates ("NHPs"), human FXN was found to be important, andZGN-1258 in higher need indications such as PWS, in which brain activity is likely to be more important for therapeutic effects.distributed into all tissues tested following CTI-1601 dosing. See Figure 7.

Populations of InterestFigure 7.

Type 2 Diabetes

According to the International Diabetes Federation, in 2017, 425 million people worldwide were living with type 2 diabetes and that number is projected to increase to 693 million by 2045. In the United States alone, the Center for Disease Control estimated that there were 23 million people living with diabetes and an estimated 84 million people who werepre-diabetic in 2015. Standard therapies for type 2 diabetes include physician recommended diet and exercise, oral hypoglycemic drugs such as biguanides (metformin), through to a number of insulin options. Metformin is most often the first line pharmacotherapy for the treatment of type 2 diabetes primarily due to the extensive experience, low cost and favorable benefit risk associated with it. While metformin is likely to remain the initial choice for the treatment of type 2 diabetes, patients then often progress to additional treatment with oral anti-diabetes medications, such as sulfonylureas, DPP4 inhibitors or SGLT2 inhibitors as second line agents; injectable therapeutics, such asGLP-1 receptor agonists and insulin are often added as third/fourth line agents, along with various combination products. We expect thatZGN-1061, if approved, will compete within the type 2 diabetes injectable space with third line agents. It is estimated that40-45% of patients progress to needing insulin (estimated to be a $15 billion market) and that therapeutics have attained an 80% penetration rate into the diagnosed group of patients. The objective of each is to maintain a daily blood glucose level range recommended by a physician, and to reach a therapeutic target of 7%, which is the U.S. goal (6.5% in Europe) glycated hemoglobin A1C, or A1C. Each of the current therapies alone has its limitations including numerous side effects. These side effects and the availability of a high number of treatment options, combined with the difficulty in daily management of glucose levels despite these treatments, creates a number of opportunities for a new third line agent to positively impact unmet medical need.

We believe the diabetes drug market is estimated to be $35 billion and is on pace to grow to more than $71 billion by 2024. Pharmaceutical companies have been investigating new approaches to treating diabetes and market value has been maintained in the industry due to the introduction of these new products. We believe thatZGN-1061 MetAP2 inhibition serves the purpose ofre-establishing balance to the ways the body stores and metabolizes fat and glucose. MetAP2 inhibitors reduce the production of new fatty acid molecules by the liver and help convert stored fats into useful energy, while reducing hunger. In the setting of type 2 diabetes, these processes lead to improvement of glycemic control.

The following table summarizes the current pharmacological treatments for the treatment of type 2 diabetes:

Details derived fromSince CTI-1601 is intended to increase FXN levels in patients with Friedreich’s ataxia who are deficient in FXN, it is important to be able to measure changes in human FXN in the American Diabetes Association, or ADA, Standardsclinic in easily accessible tissues. To accomplish this, we have developed a proprietary assay that can measure and quantify human FXN in buccal swabs, skin biopsies and platelets. This process is designed to allow repeated analysis of Medical Carechanges in Diabetes-2017: Pharmacologic Approacheshuman FXN in patients over time as they are dosed with CTI-1601. The effectiveness of this assay was first demonstrated by its ability to Diabetes Treatment, Diabetes Care 2017;40(Suppl. 1): S64–S74detect the presence of human FXN in those tissues in cynomolgus monkeys. In an exploratory study, NHPs were dosed for 14 days with supplementary information from The Medical Letter15 mg/kg twice a day of CTI-1601. Buccal swabs skin biopsies and platelets were obtained on DrugsDay 3 prior to administration of any CTI-1601 but after two days of dosing with vehicle. No human FXN was found. Since these were healthy NHPs there were levels of endogenous monkey FXN present. This is demonstrated by the yellow bars in the graph in Figure 8 below on Day 3. After 7 and Therapeutics: Drugs for Type 2 Diabetes, January 2017. A1C reduction estimates reflect changes following long-term therapy and are taken from14 days of dosing with CTI-1601 human FXN was seen in significant amounts in all tissues analyzed. This is demonstrated by the package inserts.

PWS

PWS is the most common known genetic cause of life-threatening obesity. PWS is a rare and complexnon-inherited genetic disorder, which results from abnormalitiesappearance of the fifteenth chromosome. Symptoms associated with PWS are believed to result, in part, from a defectgreen bars on Day 10 and 16 in the hypothalamus, an important supervisory centerfigure below. This study demonstrated that CTI-1601 delivers human FXN to NHPs when administered subcutaneously and that we can use our proprietary assay to evaluate changes in FXN levels in patients with Friedreich’s ataxia.

Figure 8.

Non-Human Primate and Rat Toxicology Studies

We previously conducted 28-day and 13-week GLP toxicology studies of CTI-1601 in two species, rat and NHP. In the rat studies, some injection sites showed edema and erythema with associated histologic changes localized to the injection site. The rat studies showed no significant clinical observations and no significant systemic histopathological findings. In the NHP studies, some injection sites were raised and firm with dose dependent histologic changes localized to the injection sites. The NHP 28-day study showed no systemic toxicity. The NHP 13-week study showed no systemic toxicity in the brain that controls many important bodily functions, such as hunger, metabolismlow and mid-dose groups, and minimal to mild histopathological findings in the high dose group. There were also several episodes of fatsoccasional transient muscle rigidity in some animals observed immediately after dosing in the two highest dose groups at very high exposures. These clinical observations resolved with no intervention and carbohydrates, regulationall of the sleep-wake cycleNHPs who experienced these clinical observations received all doses and expressioncompleted the in-life portion of emotions.the study.

Beginning in childhood, the brain of a patient with PWS fails to regulate metabolism and appetite normally. As a result, the vast majorityTo support extended dosing of patients with PWS suffer from hyperphagia and obesity. Patients with PWS are constantly preoccupied with food and an unrelenting and overriding physiological drive to eat. Hyperphagia,CTI-1601, we conducted a leading symptom26-week NHP toxicology study in 2021. In May 2021, we notified the FDA of PWS, hascertain mortalities which occurred at the two highest dose levels in the then-ongoing study. On May 25, 2021, the FDA placed a significant negative impactclinical hold on the patients’ qualityCTI-1601 clinical program. In the clinical hold letter, the FDA stated that it needed to review a full study report from the then-ongoing NHP study and

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that we could not initiate additional interventional clinical trials until we submitted such report and received notification from the FDA that additional clinical trials could commence. At the time of lifethe FDA clinical hold, we had no interventional clinical trials with patients enrolled or enrolling.

In July 2021, we completed dosing in the 26-week NHP toxicology study. The study included four dose groups in addition to vehicle. Data from the study were collected throughout the second half of 2021 and drives obesityincluded in the complete response to the clinical hold submitted to the FDA in January 2022.

In February 2022, we received feedback from the FDA following our submission of the complete response which included a comprehensive study report from the 26-week NHP toxicology study. The FDA stated that it was maintaining its clinical hold at that time and requested additional information.

We subsequently submitted a request for an FDA Type C meeting, which was granted and was held in July 2022. Following the Type C meeting, we submitted a complete response to the FDA.

In September 2022, following the Type C meeting and the submission of our complete response, the FDA allowed the 25 mg cohort of a Phase 2, four-week, placebo-controlled, dose exploration trial of CTI-1601 in FA patients to proceed. In connection with this decision, the FDA lifted its full clinical hold on the CTI-1601 clinical development program and imposed a partial hold. The dose exploration trial is designed to further characterize CTI-1601’s safety, PD and PK profiles to provide information about the preferred long-term dose and dose regimen. We have since initiated the 25 mg cohort of the Phase 2 dose exploration trial. Initiation of the second cohort and/or other clinical trials is contingent on the FDA’s agreement based on its review of the trial's 25 mg cohort data and on review by the trial’s independent data monitoring committee. We anticipate that we will provide an update that will outline the next steps for the clinical trial in the second quarter of 2023 and anticipate reporting top-line data in the second half of 2023.

Clinical Development

Non-Interventional Studies

We have conducted non-interventional studies to examine the range of tissue FXN concentrations in individuals who are homozygous for the normal FXN gene. Tissue samples in these studies were collected using the same sampling techniques and proprietary assay used in the interventional studies. In a 2020 study we obtained data from 8 healthy adults, but the study was then terminated early by the study site due to competing priorities during the COVID-19 pandemic. In 2021 we initiated a second study that enrolled approximately 60 healthy adults. Enrollment in this study was completed in 2022 and data is currently being evaluated.

Clinical Trials

Completed Initial Phase 1 Clinical Studies in Adults with Friedreich’s ataxia

We submitted our IND application for CTI-1601 and began Phase 1 clinical trials in 2019 in patients with FA. We completed two clinical studies of CTI-1601 in adult subjects with FA, a SAD study (completed in 2020) and a rangeMAD study (completed in 2021). The primary objective for the SAD and MAD studies was to assess the tolerability of associatedco-morbidities. Normal satiety,CTI-1601 at doses ranging from 25 mg to 100 mg administered via subcutaneous injection. The secondary objectives were to establish the PK of CTI-1601 administration in humans and to explore the pharmacodynamics PD of CTI-1601 administration by measuring tissue FXN concentrations in accessible tissues, namely buccal and skin cells, and in platelets. Administration of CTI-1601 via subcutaneous {"SC"} injection appeared to be well tolerated up to doses of 100 mg administered daily for up to 13 days. No SAEs were reported in either study. The most common treatment emergent adverse events ("TEAEs") were injection site reactions ("ISRs") that were generally mild, self-limited, and usually resolved within approximately 1 hour. There was rapid uptake of CTI-1601 into the circulation following subcutaneous injection, and exposure appears to be proportional to dose. Data from the MAD study demonstrated that after 7 days of daily dosing of 50 mg and 100 mg of CTI-1601 in subjects with FA, mean tissue FXN concentrations increased in the tissues studied by approximately 2- to 3-fold to levels that are similar to or exceed levels we would expect to see in asymptomatic heterozygous carriers (See Figure 9). Patients in the feeling25 mg cohort were dosed once a day for the first 4 days followed by 1 dose every third day through Day 13 for a total of fullness after eating, does not exist7 doses, while the patients in the 50 mg cohort were dosed once a person with PWS.day for the first 7 days followed by 1 dose every other day through Day 13 for a total of 10 doses, and patients in the 100 mg cohort were dosed once a day for 13 days consecutively for a total of 13 doses (see Figure 10). The physiological drivestudy was designed in this fashion to eat is so powerful and overwhelmingensure that mostthe PK of CTI-1601 in patients with PWSFA were characterized at the lower doses before the dose was escalated. This is typical of first in human studies such as multiple-ascending dose trials that evaluate a study drug’s clinical safety

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profile. We believe the data provide preliminary clinical evidence of the potential of CTI-1601 as a treatment for patients with FA and warrant continued evaluation of the potential benefits of sustained treatment.

Figure 9.

Figure 10.

Phase 2 Clinical Trial

When the FDA lifted the full clinical hold, it imposed a partial clinical hold. We have since initiated the Phase 2 dose exploration trial, with top-line data expected in the second half of 2023. The initiation of a second cohort and/or other CTI-1601 clinical trials is contingent on the FDA's agreement based on its review of the study’s 25 mg cohort data and on review by the study's independent data monitoring committee. We expect to provide an update on

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the study in the second quarter of 2023 and anticipate reporting top-line data in the second half of 2023. We do not know if, or when, the FDA will go to great lengths to eat large quantities of food, evenlift the partial clinical hold on our CTI-1601 program, if it will allow additional cohorts of this dose exploration study or if it will ever allow further clinical development of CTI-1601.

CTI-1601 Clinical Development Plan

We are in the process of evaluating the timeline of an open label extension ("OLE") study which we refer to as the Jive study and a pediatric MAD placebo-controlled study. The Jive study is spoiled, indigestible,a clinical trial that will enroll patients who participated in the SAD or unpalatableMAD study, as well as the currently ongoing dose exploration study if they are eligible and is designed to others. Furthermore,gather long-term data to assess safety and tolerability, dose, PK and PD, and potential efficacy of SC administration of CTI-1601 in subjects with FA. The pediatric MAD placebo-controlled study is currently planned to be in patients with PWS have a reduced propensity for nausea and vomiting. In additionfrom two to obesity, a variety of other symptoms can be associated with PWS, including cognitive challenges, intellectual disabilities, growth hormone deficiency/short stature, low sensitivity to pain, hypersomnolence, or excessive sleepiness, and infertility due to hypogonadism, or insufficient production of sex hormones.

Hyperphagia impairs a patient with PWS’s ability to live independently, requiring costly and constant supervision to prevent overeating. Without supervision, patients with PWS are likely to die prematurely as a

result of choking, stomach rupture or tissue necrosis, or from complications caused by morbid obesity, such as right heart failure and respiratory failure; in addition, preliminary data suggests that patients with PWS may be at a higher risk of death from pulmonary embolism than the general population. Based on our evaluation of published survival data, the average life expectancy of patients with PWS is approximately 32seventeen years of age. While a small number ofThese patients with PWS are cared for in costly group homes, the majority of patients with PWS live in environments where caregivers often place locks and alarms on cabinets and refrigerators that contain foodmay also be eligible to impede a PWS patient’s efforts to obtain food at all times. We estimate the typical annual cost of treating a patient with PWS is $100,000 to $200,000, excluding the often significant costs of drug therapies related to other medical and psychological conditions, and the costs of any lost time from work experienced by their families due to responsibilities related to the care of a patient with PWS.

Published population studies estimate that the prevalence of PWSenroll in the United States andJive study after completing participation in the European Union ranges from 1 in 8,000 to 1 in 50,000. PWS is diagnosed at an early age, typically in the first year of life, and we believe that, due to the severity of the condition and its unique attributes, the vast majority of patients affected by PWS are therefore diagnosed. We believe that approximately40-50% of patients with PWS are 12 years of age or older.

Although there are pharmacological treatments for various symptoms of PWS, such as replacement of human growth hormone in patients with PWS that are deficient in growth hormone, based on our discussions with physicians who treat patients with PWS, there are currently no effective pharmacological treatments for obesity and hyperphagia in PWS. Furthermore, bariatric surgery is contraindicated in patients with PWS due to poor outcomes related to an increased risk of rupture of the reduced stomach in the setting of sleeve gastrectomy or gastric bypass procedures, or rupture of the restricted esophagus in the setting of gastric banding procedures with the consequence of life-threatening gastric perforation. Apart from restricted access to food and constant supervision to prevent both life-threatening overeating and morbid obesity, there is currently no treatment for obesity and hyperphagia in patients with PWS.

Our Strategy

Our strategy is to significantly improve the health and well-being of patients affected by both prevalent metabolic and rare diseases including type 2 diabetes, PWS and potentially other metabolically related disorders. Key elements of our strategy include:

AboutZGN-1061

ZGN-1061 was discovered by our researchers as part of a multi-year campaign to identify novel compounds that avoided limiting nonclinical safety concerns observed with our first-generation compound. The compound has similar potency, and range of desired pharmacological activities in animal models as other MetAP2 inhibitors, including beloranib.ZGN-1061 displays broadly improved safety margins in nonclinical studies, supporting the value of the compound as a more highly optimized drug product candidate.

ZGN-1061 acts through potent inhibition of MetAP2, an enzyme that modulates the activity of key cellular processes that control metabolism. MetAP2 inhibitors work, at least in part, by directing MetAP2 binding to cellular stress and growth factor mediators, thereby reducing the tone of signals that drive lipid synthesis by the liver and fat storage throughout the body. In this manner, MetAP2 inhibition serves the purpose ofre-establishing balance to the ways the body stores and metabolizes fat and glucose. MetAP2 inhibitors reduce the production of new fatty acid molecules by the liver and help convert stored fats into useful energy, while stimulating use of glucose and fats as an energy source. In the setting of type 2 diabetes, these processes lead to improvement of glycemic control.

During nonclinical development ofZGN-1061, we conducted research to understand the imbalance of thrombotic events observed in the course of beloranib clinical development. This research identified biomarkers associated with activation of blood clotting that subsequently were confirmed to be impacted in the setting of beloranib treatment in animals and cultured human endothelial cells. Further, beloranib was found to be tightly cell-associated in cultured endothelial cells, an effect that is related to the nature of the side chain of the compound. Modifying the side chain, as was done withZGN-1061, leads to altered endothelial cell residence time and greatly reduces the ability of the compounds to impact endothelial cell replication and the display ofpro-and anti-coagulant factors, particularly following short-term exposure. Before committingZGN-1061 to clinical development, the compound was evaluated for its potential to augment blood clotting in these same models and was found to be inactive with respect to thrombosis at doses leading to exposures over 100 times the anticipated clinical exposure.

AboutZGN-1258

ZGN-1258 was also discovered by our researchers as part of a multi-year campaign to identify novel compounds that avoided limiting nonclinical safety concerns observed with our first-generation compound. The compound has similar potency, and range of desired pharmacological activities in animal models as other MetAP2 inhibitors, including beloranib.ZGN-1258 displays broadly improved safety margins in nonclinical studies, supporting the value of the compound as a more highly optimized drug product candidate.

ZGN-1258 acts through potent inhibition of MetAP2. Like other MetAP2 inhibitors,ZGN-1258 modulates the activity of key cellular processes that control metabolism and impact lipid synthesis and storage throughout

the body and leads to increased use of stored fats as an energy source.ZGN-1258 displays enhanced uptake into the brain and displays greater potency and activity in animal models of hyperphagic behaviors relative to other MetAP2 inhibitors, includingZGN-1061. These differences support the use ofZGN-1258 in higher need indications such as PWS, in which brain activity is likely to be more important for therapeutic effect. Treatment of obese and hyperphagic animals withZGN-1258 leads to reduction in both pathologic food intake and rapid body weight loss, making it of interest in the treatment of severe forms of human obesity.

Mechanism of Action

First-generation MetAP2 inhibitors, such as beloranib, were evaluated for their potential for treating obesity following publication of studies in theProceedings of the National Academy of Sciences in 2002 showing anti-obesity efficacy in animals treated with a prototype MetAP2 inhibitor. These studies showed that MetAP2 inhibitor treatment was associated with loss of fat tissue accompanied by an increase in fat oxidation, indicating a redirection of fuel usage toward utilization of stored fats as a source of energy. Reduced food intake also was observed in treated animals, suggesting either direct effects of the agent on central feeding regulation or activation of a feedback loop linking the release and oxidation of stored fat to appetite.

The MetAP2 inhibitor fumagillin was shown in 2004 to induce a novel protein-protein interaction involving MetAP2 and extracellular-signal-regulated kinase 1, or ERK1, a cell stress- and growth factor-stimulated kinase. This complex reduces the activation state of ERK1. A 2005 publication inDiabetes showed that animals lacking ERK1 resist both high fat diet-induced obesity and insulin resistance, supporting the hypothesis that attenuation of ERK activity could be an important component of the beneficial metabolic effects of MetAP2 inhibitor treatment. Additionally, several hormones well-documented to be involved in energy metabolism are affected by MetAP2 inhibitors, including leptin, adiponectin and fibroblast growthfactor-21, or FGF-21. These hormones are thought to contribute to the weight-reducing effects of MetAP2 inhibitors likeZGN-1061, and also are known to be involved in control of body weight, fat metabolism and glucose metabolism. This series of mechanistic effects leads to rapid and sustained reduction of excess body weight withZGN-1061 treatment, such as has been observed in animal studies and our clinical trial experience to date.

An illustration of the MetAP2 inhibitor mechanism of action and therapeutic effects follows:

In the figure above, LDLc means low density lipoprotein and CRP meansC-reactive protein.

Clinical Trials

Below is a summary of the Phase 1 clinical trial that was completed withZGN-1061, and the Phase 2 clinical trial that is ongoing withZGN-1061 as of the date of this Annual Report.

Phase 1 Clinical Trial

TheZGN-1061 Phase 1 clinical trial,ZAF-1061-101, was a randomized, double-blind (subject, principal investigator and site staff), placebo-controlled trial consisting of a single ascending dose, or SAD, phase and a multiple ascending dose, or MAD phase. The SAD phase was designed to assess effects ofZGN-1061 at six ascending dose levels relative to placebo in male or female healthy volunteers with a BMI of 23 to <30 kg/m² (normal weight or overweight individuals). The MAD phase assessed effects of twice-weekly subcutaneous injections (eight doses in total) ofZGN-1061 over four weeks at three ascending dose levels relative to placebo, in male or female healthy volunteers with BMI27-40 kg/m² (overweight or obese individuals). In addition to conventional safety and pharmacokinetic assessments, exploratory pharmacodynamic endpoints were also assessed. These measures were intended to provide a preliminary assessment of the potential ofZGN-1061 for weight management and inform the Phase 2 clinical trial design.

In this clinical trial,ZGN-1061 was rapidly absorbed and cleared with no evidence of pro-thrombotic effects.ZGN-1061 was well-tolerated, with no serious adverse events, or SAEs, and no severe adverse events, or AEs. There were no AEs leading to early withdrawal from the clinical trial. Treatment withZGN-1061 resulted in improvements across multiple metabolic measures. On average, patients treated withZGN-1061 for four weeks lost weight relative to placebo-treated patients(-4.6 lbs,-2.2 lbs, and-3.8 lbs for 0.2 mg, 0.6 mg, and 1.8 mg, respectively vs.-0.51 lbs for placebo-treated patients). Body weight loss was steady and progressive during treatment withZGN-1061 and rebounded post-treatment, supporting a drug effect. The clinical trial demonstrated trends for reductions inLDL-cholesterol and high-sensitivityC-reactive protein, or hsCRP.

Phase 2 Clinical Trial

The ongoingZGN-1061 Phase 2 clinical trial,ZAF-1061-201, is a randomized, double blinded, placebo-controlled trial with a core study consisting of three doses (0.05 mg, 0.3 mg and 0.9 mg) administered subcutaneously every three days ofZGN-1061 vs. placebo in a 1:1:1:1 ratio for 12 weeks. The clinical trial is being conducted in 23 study sites in Australia and New Zealand. In addition to the primary objectives of assessing safety, tolerability and glycemic control, the effects ofZGN-1061 on multiple metabolic measures and cardiovascular risk factors will be evaluated.

In order to guide business decisions and to understand more fully the dose responsive effects ofZGN-1061, we conducted an interim analysis at the end of February 2018, using data derived from randomized patients at 8 weeks of treatment with the study drug (n = 57). This analysis was performed principally to confirm expectations of safety and tolerability of the drug, and to assess whether clear evidence of a pharmacological effect could be observed at one or more doses of the drug, with A1C as the key endpoint. The interim analysis waspre-specified in the statistical analysis plan.

ZGN-1061 appears to be safe and well-tolerated, with the frequency and types of reported adverse events being generally comparable to those observed in the placebo group. There were no severe or serious adverse events. No patients in this interim dataset withdrew from the clinical trial due to adverse events. No treatment-related alterations were observed for circulatingd-dimer, a robust and validated biomarker of blood clotting, or any other markers of coagulation. No venous thromboembolism events or occurrences of superficial thrombophlebitis were observed or reported.

With respect to A1C, 8 weeks of treatment with 0.9 mgZGN-1061 resulted in a 0.41% reduction from a baseline of 8.55% and a-0.57% placebo adjusted change in A1C, which was statistically significant with ap-value of less than 0.05, with 13 patients in the placebo arm and 13 patients in the 0.9 mgZGN-1061 arm.

Though the interim analysis focused on 8 week data, a number of patients in the interim analysis had also completed 12 weeks in the trial, including eight and twelve patients in the 0.9 mgZGN-1061 and placebo arms, respectively, and were assessed through a preliminary analysis. The placebo-adjusted difference in A1C

increased to-0.86% at 12 weeks of treatment with 0.9 mgZGN-1061, which was associated with ap-value of less than 0.005 in the analysis. These preliminary A1C changes are approaching the magnitude of A1C changes seen with our prior MetAP2 compound at 12 weeks.

The increased A1C effect of 0.9 mgZGN-1061 observed in the preliminary assessment at 12 weeks compared to 8 weeks was comprised by a decline, of 0.45% in A1C in the 0.9 mg arm, as well as an increase in A1C levels in the placebo arm of 0.41% from baseline. Though not typical, A1C increases were seen across the trial from weeks 8 to 12 in the placebo, 0.05 and 0.3mg dose arms in this preliminary analysis. A mixed-effect model for repeated measures analysis, or MMRM, was employed for the interim analysis and is thepre-specified primary efficacy analysis method established for analysis of A1C responses in the full clinical trial.

Multiple secondary endpoint metabolic biomarkers, including body weight, showed some degree of positive response in the 0.9 mg dose arm ofZGN-1061, with varying degrees of significance, and will be saved to be presented at a later date as part of the full trial results.

Together, the early safety and preliminary efficacy readout from this interim analysis indicate that 0.9 mgZGN-1061 lacked untoward safety signals, was well-tolerated, and effective in improving glycemic control. Based on these findings, we have decided to further explore the higher end of therapeutic range of the drug by amending the study protocol to add an additional arm to the trial to evaluate the effects of a higher dose ofZGN-1061. This trial arm will include an additional 40 patients to be randomized to be treated with 1.8 mgZGN-1061, 0.9 mgZGN-1061, or placebo in a 2:1:1 ratio. This selection of doses is being implemented to maximize overlap with the core clinical trial, evaluating placebo, 0.05 mg, 0.3 mg, and 0.9 mg, and the new arm which will also evaluate the 1.8 mg dose level. Based on exposure data and target engagement results from the previously completed Phase 1 clinical trial withZGN-1061, we anticipate that the 1.8 mg dose should lead to nearly maximum engagement of the MetAP2 target and allow for a more fulsome evaluation of the compound’s effective dose range as we have observed in animal models treated with doses leading to similar exposures and target engagement. We believe the additional data generated by the 1.8 mg dose arm will be informative as we set doses for subsequent clinical trials, particularly for the planned Phase 2b trial. The additional 1.8 mg dose arm is expected to run in parallel with the completion ofPhase 2b-enabling long-term toxicology studies and IND application preparations. We do not expect it to materially affect the initiation of the Phase 2b trial withZGN-1061.study. We expect to report full resultsinitiate a global registration study once sufficient data is available to inform decisions regarding dosing and trial design. The design and protocol of the core part of this clinical trialmid-year 2018, andstudy will be based on the results of the entire trial includingearlier studies and will incorporate feedback from regulatory authorities in various countries. The progression of the additional arm early in 2019.

Next Steps

We planJive study and the global registration study will be subject to submit an IND application to the FDA after completionreview of our CTI-1601 Phase 2 clinical trial,ZAF-1061-201,cohort 1 data, and possibly other data.

Intellectual Property

Our success depends in support of additional clinical trialslarge part upon our ability to be conducted in the United States.

Nonclinical

ZGN-1061

We have conducted toxicology studies ofZGN-1061 in support of clinical development. Based on the nonclinical assessment,ZGN-1061 is not genotoxic. Dose selectionobtain and precautionsmaintain proprietary protection for our completed Phase 1current and ongoing Phase 2 clinical trials have been informedfuture products and technologies, and to operate without infringing the proprietary rights of others. Our policy is to protect our proprietary position by, nonclinical toxicology studies. Toxicological studies of up to three months in multiple species using intermittent dosing have established no observed adverse effect levels at higher exposures relative to the anticipated human doses. At higher doses, the findings of toxicological importance were primarily injection site reactions in rodents at high doses, as well as minimal/mild changes in the spinal cord and peripheral nerve at higher doses in larger animal species. Six and nine month studies in multiple species, respectively, arein-progress and will be completed prior to the start of clinical trial programs of longer than three months duration. Embryofetal toxicity studies in multiple species have also been completed and suggest that there is a potential risk for the developing embryo or fetus to patients who are pregnant at exposure above that anticipated in the clinic; therefore, appropriate birth control and avoidance of pregnant persons within the clinical trial is mandatory.

ZGN-1258

We have initiated GLP toxicology studies to support filing an IND application with the FDA forZGN-1258. These studies are in progress and will be completed prior to submission of an IND application during 2018.

Future Product Candidates

We are currently evaluating liver-targeted MetAP2 inhibitors as potential development candidates for the treatment of hepatic disorders. These studies involve screening compounds with insights learned in our thrombosis investigations. We anticipate nominating one or more of these candidates for future development later in 2018.

For information regarding amounts spent during each of the last three fiscal years on company-sponsored research and development activities, see Part II “Item 6—Selected Financial Data” of this Annual Report.

Manufacturing and Supply

ZGN-1061 is a small molecule drug that is chemically synthesized from raw materials. The current process to produceZGN-1061 drug product for Phase 2 clinical trials involves sterile filtration and lyophilization that is reconstituted prior to administration. The Phase 2 drug product has been manufactured and released at our drug product contract manufacturing organization, or CMO. The manufacturing processes for both drug substance and drug product are under active development and optimization and are not yet validated for commercialization. We control our clinical trial supply chain by periodically meeting to assess clinical trial material needs and status of supply. The clinical supply forecast is managed internally by a cross functional working group and is used to aid in decision making for production planning.

ZGN-1258 is a small molecule drug that is chemically synthesized from raw materials. The current process to produceZGN-1258 for Phase 1 clinical trials involves synthesis of drug substance and production of sterile liquid drug product which can be stored frozen. The Phase 2 drug product will be developed as a sterile, lyophilized product for reconstitution prior to administration.

We currently have no manufacturing facilities and limited personnel with manufacturing experience. We rely on contract manufacturers to produce both drug substance and drug product required for our clinical trials. Any delays encountered with manufacturing activities, CMO scheduling or raw material supply could delay the manufacturing of finished drug product. No long-term supply agreements are in place with our contractors, and each batch is individually contracted under a work order, which is governed by a quality agreement. We plan to continue to rely upon contract manufacturers and, potentially, collaboration partners to manufacture commercial quantities ofZGN-1061 andZGN-1258, if approved, or if we elect to commercialize these product candidates on our own. Our current scale of manufacturing is adequate to support all of our current needs for clinical trial supplies. For commercial quantities for larger populations, we will need to identify contract manufacturers or partners to produceZGN-1061 on a larger scale.

Sales and Marketing

Based on our early stage of development, we have not yet established a commercial organization or distribution capabilities, nor have we entered into any partnership orco-promotion arrangements with an established pharmaceutical or biotechnology company. To develop the appropriate commercial infrastructure to launchZGN-1258, we may either do so on our own or by establishing alliances with one or more pharmaceutical or other biotechnology company collaborators, depending on, among other things, the applicable indications, the related development costs and our available resources.

Licenses

CKD License

In July 2009, we entered into an Exclusive License Agreement with Chong Kun Dang Pharmaceutical Corp. of South Korea, or CKD, pursuant to which we exclusively licensed beloranib from CKDmethods, filing for patent applications on a worldwide basis, with the exception of South Korea. In consideration of such exclusive license, we paid an initial license fee to CKD, paid aone-time fee following initiation of a proof of concept trial, agreed to make milestone payments of up to $30.0 million (of which $7.5 million has been paid, including $3.3 million that was paid in the form of our common stock (valued at $3.6 million) as a result of an amendment to our license agreement and entry into a subscription agreement with CKD) to CKD upon the achievement of certain specified events, and agreed to pay a portion of sublicensing income to CKD. Furthermore, if we receive marketing approval for beloranib, we will pay single-digit royalties to CKD based on annual net sales of beloranib on acountry-by-country andproduct-by-product basis until the later to occur of (i) the expiration of the last to expire patent in such country within the CKD patent rights containing a valid claim covering beloranib or its use for which regulatory approval has been obtained in such country, or (ii) ten years from the first commercial sale of beloranib in such country. Pursuant to this agreement, we committed to using commercially reasonable efforts to develop and commercialize beloranib. This agreement will remain in effect on acountry-by-country andproduct-by-product basis until royalties are no longer due in such country, subject to earlier termination by either party upon mutual consent, or in the event of uncured breach or insolvency on the part of the other party, or by us for any reason up to 60 days’ prior notice.

Children’s License

In January 2007, we entered into an Exclusive License Agreement with Children’s Medical Center Corporation, or Children’s, pursuant to which we exclusively licensed certain patent rights from Children’s on a worldwide basis. The licensed patent rights relate to decreasing the growth of fat tissue, and thereby cover the use ofZGN-1061 and related molecules as anti-obesity agents. In consideration of such exclusive license, we paid an initial license fee upon execution of the license to Children’s and annual maintenance fees through the fifth anniversary of the date of the license. We also agreed to make milestone payments to Children’s of up to $2.7 million (of which $0.4 million has been paid) with respect to the first licensed product and up to $1.3 million with respect to each subsequent licensed product, if any, that is a new chemical entity upon the achievement of certain specified events and to pay a portion of sublicensing income to Children’s. If we receive marketing approval forZGN-1061, we will pay single-digit royalties to Children’s based on net sales ofZGN-1061 until the later to occur of (i) the expiration of the last to expire patent in such country within the licensed patents containing a valid claim coveringZGN-1061 or (ii) 15 years from the date of the agreement. This agreement will remain in effect for the longer of (i) 15 years and (ii) the life of the last expiring licensed patent, subject to earlier termination (x) by Children’s in the event of our insolvency or our failure to cure a breach within 60 days (30 days in the case ofnon-payment) of receiving written notice thereof, or (y) by us for any reason upon 120 days’ prior written notice.

Intellectual Property

We strive to protect and enhance the proprietary technologies that we believe are important to our business, including seeking and maintaining patents intended to cover our products and compositions, their methods of use and any other inventions that are important to the development of our business. We also rely on trade secrets to protect aspectsand conduct of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

Our success will depend significantly on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions andknow-how related to our business, defend and enforce our patents, preserve the confidentiality of our trade secrets and operate without infringing the valid and enforceable patents and proprietary rights of third parties. We also rely onknow-how, continuing technological

innovation andin-licensing opportunities to develop, strengthen and maintain the proprietary position ofZGN-1061 and our other development programs.

As of March 1, 2018, we own one issued U.S. Patent, two pending U.S. patent applications, with pending foreign counterpart patent applications, one pending Patent Cooperation Treaty, or PCT, patent application, as well as two pending U.S. provisional patent applications that relate toZGN-1061.

As of March 1, 2018, we own two pending U.S. patent applications, and related worldwide patent applications, that relate toZGN-1258.

As of March 1, 2018, we own 19 issued U.S. patents, and 9 pending U.S. patent applications with pending foreign counterpart applications, all of which relate to our internal efforts to discover novel MetAP2 inhibitors.

The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, the patent term is 20 years from the date of filing thenon-provisional application. In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office and its foreign counterparts. We also intend to rely on regulatory exclusivity (also called data package exclusivity), which is separate and distinct from the protection afforded by patents, to protect our products. We further protect our proprietary information by requiring our employees, consultants, contractors and other advisors to execute nondisclosure and assignment of invention agreements upon commencement of their respective employment or U.S. PTO, in granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier-filed patent.engagement. Agreements with our employees also prevent them from bringing the proprietary rights of third parties to us. In addition, we require confidentiality or service agreements from third parties that receive our confidential information or materials.

As of February 1, 2023, our intellectual property portfolio was composed of numerous international (PCT). foreign, and United States non-provisional applications and United States provisional patent applications that we own or co-own, six issued United States patents and additional non-provisional patent applications in the United States and in certain instances, aforeign jurisdictions that we license from academic institutions. The issued patents in the United States licensed by us, which include issued patents covering the composition of matter for CTI-1601 and methods for treating FA, have expiration dates between 2024 and 2040 without taking potential patent term canextension into consideration. The international and the United States non-provisional patent applications licensed by us relate to composition of matter and methods of use for CTI-1601.

The additional patent applications we own or co-own which include international (PCT), foreign and United States non-provisional patent applications and United States provisional patent applications are related to the development of CTI-1601 and to our peptide-delivery platform technology.

A provisional patent application allows for an effective filing date to be extendedestablished with regard to recapturean invention, but once a portionprovisional patent application is filed, either a corresponding non-provisional patent application or a petition to convert the provisional patent application into a non-provisional patent application must be filed within 12 months or such effective filing date will be lost. If we or our licensor timely files non-provisional patent applications in the United States and in countries outside of the United States with regard to our provisional patent applications and these non-provisional patent applications result in issued patents, such patents are expected to expire in 2043, without taking potential patent term effectively lost as aadjustment or patent term extension into consideration.

CTI-1601 is covered by licensed issued patents (composition of matter and methods of use) in the United States which, if properly maintained, will expire in 2024, 2025 and 2040, excluding any patent term extensions that might be available following the grant of marketing authorizations. We also possess an exclusive license to non-provisional applications in the United States and certain countries outside the United States for CTI-1601 (composition of matter and methods of use).). If these patent applications in the United States and other countries result in issued patents, those patents would be expected to expire in 2040. This estimated expiration excludes any patent term adjustment that might be available following the grant of the FDA regulatory review period. However, the restoration period cannot be longer than five yearspatent and the totalany patent term includingextensions that

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might be available following the restoration period must not exceed 14 years following FDA approval. The durationgrant of foreignmarketing authorizations. We cannot predict whether the patent applications we and our licensors are currently pursuing will issue as patents varies in accordance with provisionsany particular jurisdiction or whether the claims of applicable local law, but typically is also twenty years from the earliest effective filing date. Ourany issued patents will expire on dates rangingprovide sufficient protection from 2020competitors or other third parties.

Patents extend for varying periods according to 2036. However, the date of patent filing or grant and the legal term of patents in various countries where patent protection is obtained. The actual protection afforded by a patent, varies on a claim by claim andwhich can vary from country to country, basis for each applicable product and depends upon many factors, includingon the type of patent, the scope of its coverage the availability of regulatory related extensions,and the availability of legal remedies in a particular countrythe country.

We also use other forms of protection besides patent protection and the validityregulatory exclusivity, such as trademark, copyright, and enforceability of the patent.

Furthermore, the patent positions of biotechnology and pharmaceutical products and processes like those we intendtrade secret protection, to develop and commercialize are generally uncertain and involve complex legal and factual questions. No consistent policy regarding the breadth of claims allowed in such patents has emerged to date in the United States. The patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States and other countries can diminish our ability to protect our inventions, and enforceenhance our intellectual property, rights and more generally, could affectparticularly where we do not believe patent protection is appropriate or obtainable. We aim to take advantage of all of the value of intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents.

The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights. Our abilityrights that are available to maintainus and solidify our proprietary position for our drugs and technologybelieve that this comprehensive approach will depend on our success in obtaining effective claims and enforcing those claims once granted. We do not know whether any of the patent applications that we may file or license from third parties will result in the issuance of any patents. The issued patents that we own or may receive in the future, may be challenged, invalidated or circumvented, and the rights granted under any issued patents may not provide us with proprietary protection orexclusive positions for our product candidates, such as CTI-1601, where available.

In-License Agreements

We are party to a License Agreement dated November 30, 2016 with Wake Forest University Health Sciences ("WFUHS") and a License Agreement dated November 30, 2016, as amended, with Indiana University ("IU"). Such agreements provide for a transferable, worldwide license to certain patent rights regarding technology used by us with respect to the development of CTI-1601.

In partial consideration for the right and license granted under these agreements, we will pay each of WFUHS and IU a royalty of a low single digit percentage of net sales of licensed products depending on whether there is a valid patent covering such products. As additional consideration for these agreements, we are obligated to pay each of WFUHS and IU certain milestone payments of up to $2.6 million in the aggregate upon the achievement of certain developmental milestones, commencing on the enrollment of the first patient in a Phase 1 clinical trial. We will also pay each of WFUHS and IU sublicensing fees ranging up to a low double-digit percentage of sublicense consideration depending on our achievement of certain regulatory milestones as of the time of receipt of the sublicense consideration. We are also obligated to reimburse WFUHS and IU for patent-related expenses. In the event that we dispute the validity of any of the licensed patents, the royalty rate would be tripled during such dispute. We are also obligated to pay to IU a minimum annual royalty of less than $0.1 million per annum starting in the 2020 calendar year for the term of the agreement.

In the event that we are required to pay IU consideration, then we may deduct 20% of such IU consideration on a dollar-for-dollar basis from the consideration due to WFUHS. In the event that we are required to pay WFUHS consideration, then we may deduct 60% of such WFUHS consideration on a dollar-for-dollar basis from the consideration due to IU.

Competition

The biopharmaceutical industry is characterized by intense and dynamic competition to develop new technologies and proprietary therapies. Any product candidates that we successfully develop into products and commercialize may compete with existing therapies and new therapies that may become available in the future. While we believe that our platform technology, product candidates and scientific expertise in the field of rare diseases provide competitive advantages, against competitors with similar technology. Furthermore, our competitors may be able to independently developwe face competition from various sources, including larger and commercialize similar drugs or duplicate our technology, business model or strategy without infringing our patents. Because of the extensive time required for clinical developmentbetter-funded pharmaceutical companies, specialty pharmaceutical companies and regulatory review of a drug we may develop, it is possible that, before any of our drugs can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of any such patent.

As a result of the America Invents Act of 2011, the United States transitioned to afirst-inventor-to-file system in March 2013, under which, assuming the other requirements for patentability are met, the first inventor

to file a patent application will be entitled to the patent. This will require us to minimize the timebiotechnology companies, as well as from invention to the filing of a patent application.

We may rely, in some circumstances, on trade secretsacademic institutions, governmental agencies and unpatentedknow-how to protect our technology. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our consultants, scientific advisors and contractors and invention assignment agreements with our employees. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resultingknow-how and inventions. For more information, see “Risk Factors—Risks Related to our Intellectual Property.”

Our commercial success will also depend in part on not infringing the proprietary rights of third parties. It is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies, or our drugs or processes, obtain licenses or cease certain activities. Our breach of any license agreements or failure to obtain a license to proprietary rights that we may require to develop or commercialize our future drugs may have a material adverse impact on us. If third parties prepare and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference proceedings in the U.S. PTO, to determine priority of invention.

In addition, substantial scientific and commercial research has been conducted for many years in the areas in which we have focused our development efforts, which has resulted in third parties having a number of issued patents and pending patent applications. Patent applications in the United States and elsewhere are published only after 18 months from the priority date. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made. Therefore, patent applications relating to drugs similar toZGN-1061, ZGN-1258 and any future drugs, discoveries or technologies we might develop may have already been filed by others without our knowledge.

Competition

The biopharmaceuticals industry is highly competitive. There are many public and private biopharmaceutical companies, universities, governmental agenciesresearch institutions. We expect to compete with Reata Pharmaceuticals’ SKYCLARYStm (omaveloxolone), which was recently approved by the FDA for the treatment of Friedreich’s ataxia in adults and other research organizations actively engaged in the researchadolescents aged 16 and development of products that may be similarolder. Other competitors currently developing therapeutics to our product candidates or address similar markets. It is probable that the number of companies seekingtreat Friedrich's ataxia include, but are not limited to develop productsPTC Therapeutics, Inc., Design Therapeutics, Inc., Novartis, Pfizer, Voyager/Neocrine, and therapies similar to our products will increase. Takeda/StrideBio.

Many of these and other existing or potentialour competitors have substantiallysignificantly greater financial, technical and human resources than we dodo. Mergers and may be better equipped to develop, manufacture and market products. These competitors may develop and introduce products and processes comparable or superior to ours.

Existing Type 2 Diabetes Drugs

Biguanides (metformin) is first line pharmacotherapy for the treatment of type 2 diabetes primarily due to the extensive experience, low cost and favorable benefit risk associated with it. While metformin is likely to remain the initial choice for the treatment of type 2 diabetes,ZGN-1061 will compete with sulfonylureas,GLP-1 receptor agonists, DPP4 inhibitors, SGLT2 inhibitors, thiazoladinediones, insulin, and various combination products. Although these pharmacotherapies are all effective to some extentacquisitions in the treatment of type 2 diabetes, they each have notable limitations, and have not been found to halt the progression of type 2 diabetes. Therefore, additional effective and durable options are needed.

There are a number of pharmaceutical and biotechnology companies that have type 2 diabetes drugsindustries may result in even more resources being concentrated amongst a smaller number of our competitors. Our commercial opportunity could be reduced or eliminated if our competitors develop or market products or other novel therapies that are pursuingmore effective, safer or less costly than our product candidates or obtain regulatory approval for their products more rapidly than we may obtain approval for our product candidates.

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Manufacturing and Supply

CTI-1601 is a biologic fusion protein that is produced in E. coli. We have worked with unique mechanisms of actioncontract manufacturers to develop, in accordance with cGMPs a manufacturing process and analytical methods for drug substance to support clinical trials. We also use third party manufacturers for the treatmentclinical packaging, storage and distribution of type 2 diabetes.CTI-1601. We rely on third parties to store the CTI-1601 master cell bank and working cell bank, each stored at a different location. We continue to advance the manufacturing of CTI-1601, obtain stability data, and produce drug product for future clinical trials. We are continually trying to optimize our manufacturing process to increase yields, decrease costs and increase reliability in supply chains. The final process will need to be successfully scaled up to support commercial manufacturing.

PWS DrugsThe drug substance which is in frozen liquid form for CTI-1601 is currently manufactured for us by KBI Biopharma, Inc. ("KBI"). We are party to a Master Services Agreement, as amended, with KBI, pursuant to which KBI provides biological development and clinical manufacturing services with respect to CTI-1601. We currently produce a frozen liquid form of drug product at another manufacturer. We expect to undertake a program with a third-party manufacturer to begin to produce a lyophilized version of the drug product from the same KBI drug substance, that, once available, we intend to use in certain of our future planned clinical trials.

There are no current pharmacological treatmentsHuman Capital Resources

Employees and Compensation

In order to achieve the goals and expectations of our Company, it is crucial that we continue to attract and retain top talent. To facilitate talent attraction and retention, we strive to make our company a safe and rewarding workplace, with opportunities for regulating hungerour employees to grow and hyperphagia-related behaviorsdevelop in their careers, supported by strong compensation, benefits, paid time-off and health and wellness programs, including programs that build connections between our employees.

As of patients with PWS, and bariatric surgery is contraindicated in patients with PWS. Multiple products are currently under investigation for treatment of hyperphagia and/or obesity in individuals with PWS including assessment of diazoxide choline controlled-release for treatment of hyperphagia by Soleno Therapeutics, Inc., intranasal carbetocin for treatment of hyperphagia by Levo Therapeutics Inc., and liraglutide for weight management by Novo Nordisk. These three investigational products are either under Phase 3 assessment or are preparing for Phase 3 assessment. Several products are being explored in various stages of Phase 1 and Phase 2 of development. No products under investigation by other companies are MetAP2 inhibitors and the safety and efficacy of their product candidates have not yet been established.

Government Regulation

Government authoritiesDecember 31, 2022, we employed 26 full-time employees in the United States, of which 20 are directly engaged in research and development with the rest providing administrative, business and operations support. None of our employees are represented by a labor organization or under any collective-bargaining arrangements. We consider our employee relations to be good.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants. The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

Diversity and Inclusion

We value the diversity of our employees and take pride in our commitment to diversity and inclusion across all levels of our organizational structure and with respect to our board of directors. We value diversity and inclusion across our entire workforce. We are committed to developing strategies for building diverse teams and promoting the advancement of employees from diverse backgrounds.

Scientific Advisors

We have established a scientific advisory board and we regularly seek advice and input from these experienced thought leaders on matters related to our research and development programs. The members of our scientific advisory board consist of distinguished research scientists, professors and industry experts recognized as key opinion leaders in the fields of rare disease, pediatrics and mitochondrial disease. Their scientific perspectives will be invaluable to determine our strategic scientific pathway and support the development of other potential treatments for complex rare diseases to help fill unmet medical needs in this space. We intend to continue to leverage the broad expertise of our advisors by seeking their counsel on important topics relating to our product development and clinical development programs. Our scientific advisors are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. In addition, our scientific advisors may have arrangements with other companies to assist those companies in developing products or technologies that may compete with ours. All of our scientific advisors are affiliated with other entities and devote only a small portion of their time to us.

Our scientific advisors are set forth in the table below:

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Facilities

We lease office and laboratory space, which consists of approximately 5,000 square feet and 1,750 square feet located in Bala Cynwyd, PA and Philadelphia, PA, respectively. Our office lease expires in August 2023 with an option to extend for three years, and our laboratory lease expires in December 2023. We believe that we will need to increase our leased square footage in the near and intermediate term. We believe that appropriate space will be readily available on commercially reasonable terms.

As part of the Merger (as defined below) with Zafgen, Inc ("Zafgen"), we acquired a non-cancellable operating lease for approximately 17,705 square feet of office space at 3 Center Plaza, Boston, Massachusetts (the "Boston Lease"). The Boston Lease expires on October 30, 2029. On October 27, 2020, we entered into a sublease agreement whereby we subleased all 17,705 square feet of office space leased under the Boston Lease until October 30, 2029.

Legal Proceedings

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on us.

Corporate Information

We were founded in 2005 as a Delaware corporation under the name Zafgen, Inc. ("Zafgen"). On May 28, 2020, Zafgen completed a reverse merger with Chondrial Therapeutics, Inc. ("Chondrial") in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated December 17, 2019, by and among Zafgen, Zordich Merger Sub, Inc., Chondrial and Chondrial Therapeutics Holdings, LLC, pursuant to which Zordich Merger Sub, Inc. merged with and into Chondrial, with Chondrial surviving as our wholly owned subsidiary. Following completion of the merger, Zafgen, Inc. changed its name to Larimar Therapeutics, Inc.

Our principal executive offices are located at Three Bala Plaza East, Suite 506, Bala Cynwyd, PA 19004, and our telephone number is (844) 511-9056. Our website address is www.larimartx.com. The information on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K and is not incorporated by reference herein. We have included our website address as an inactive textual reference only.

Available Information

We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission ("the SEC") under the Securities Exchange Act of 1934, as amended ("the Exchange Act"). The SEC maintains an internet website, www.sec.gov, that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC.

Copies of each of our filings with the SEC on Form 10-K, Form 10-Q and Form 8-K and all amendments to those reports, can be viewed and downloaded free of charge at our website, www.larimartx.com as soon as reasonably practicable after the reports and amendments are electronically filed with or furnished to the SEC.

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Our code of ethics, other corporate policies and procedures, and the charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are available through our website at www.larimartx.com. We intend to post information regarding any amendments to, or waivers from, our code of ethics on our website.

Government Regulation

In the United States, drug and biologic products are subject to extensive regulation by the FDA. The Federal Food, Drug, and Cosmetic Act (“FDCA”) and other federal and state statutes and local level and in other countries extensively regulate,regulations, govern, among other things, the research, development, testing, manufacture, quality control,storage, recordkeeping, approval, labeling, packaging, storage, record-keeping, promotion advertising,and marketing, distribution, post-approval monitoring and reporting, marketingsampling, and import and export and import of drugpharmaceutical products. Biological products such asZGN-1061 andZGN-1258. Generally, beforeused for the prevention, treatment, or cure of a disease or condition of a human being are subject to regulation under the FDCA, with the exception that the section of the FDCA that governs the approval of drugs via new drug can be marketed, considerable data demonstrating its quality, safetyapplications (“NDAs”), does not apply to the approval of biologics. In contrast, biologics are approved for marketing under provisions of the Public Health Service Act (“PHS Act”), via a Biologics License Application (“BLA”). However, the application process and efficacyrequirements for approval of BLAs are very similar to those for NDAs. FDA approval or licensure also must be obtained organized into a format specific to each regulatory authority, submitted for reviewbefore the marketing of drug and approved by the regulatory authority.

U.S. Drug Development

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations. Drugs are also subject to other federal, state and local statutes and regulations.biological products. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable United States requirements at any time during the product development process, approval process or after approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include, among other actions, the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, untitled or warning letters, voluntary product recalls, withdrawals from the market, product seizures, total or partial suspension of production or distribution injunctions, fines, refusals of government contracts, restitution, disgorgement, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.

Our product candidates must be approved by the FDA through the New Drug Application, or NDA, process before they may be legally marketed in the United States. U.S. Development Process

The process required by the FDA before a drug or biologic product may be marketed in the United States generally involves the following:

necessary to demonstratepreliminarily evaluate the efficacy of the product for its intended use, itsspecific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.

Under the Prescription Drug User Fee Act, or PDUFA, as amended, ("PDUFA") each NDA mustor BLA may be accompanied by a usersignificant application fee. The FDA adjusts the PDUFA user fees onapplicant for an approved application is also subject to an annual basis. According to the FDA’s fee schedule for fiscal year 2018, the user fee for an application requiring clinical data, such as an NDA, is $2,421,495. PDUFA also imposes an annual prescription drug product program fee for human drugs of $304,162.fee. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on NDAs or BLAs for productsproduct candidates designated as orphan drugs, unless the product candidate also includes anon-orphan indication.

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Within 60 days following submission of the application, the FDA reviews an NDA or BLA submitted to determine if it is substantially complete before the agency files it. The FDA reviews all NDAs submitted beforemay refuse to file any NDA or BLA that it accepts them for filingdeems incomplete or not properly reviewable at the time of submission and may request additional information rather than accepting aninformation. In this event, the NDA for filing.or BLA must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA must make a decision on accepting an NDA for filing within 60 days of receipt.files it. Once the submission is accepted for filing,filed, the FDA begins anin-depth substantive review of the NDA. Under the goals and policies agreed to by the FDA under PDUFA, the FDA has 10 months from the filing date in which to complete its initial review of a standard new molecular-entity NDA and respond to the applicant, and six months from the filing date for a priority new molecular-entity NDA.or BLA. The FDA does not always meet its PDUFA goal dates for standard and priority NDAs, and the review process is often significantly extended by FDA requests for additional information or clarification.

After the NDA submission is accepted for filing, the FDA reviews the NDA or BLA to determine, among other things, whether the proposed product is safe and effective (for drugs) or safe, potent, and effective (for biologics), for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in accordance with cGMPcGMPs to assure and preserve the product’s identity, safety, strength, quality, potency and purity. One of the performance goals agreed to by the FDA under the PDUFA is to review standard NDAs or BLAs in 10 months from filing and priority NDAs or BLAs in six months from filing, whereupon a review decision is to be made. The review process may be extended by three months if the FDA classifies a response to an FDA request for additional information or clarification as a major amendment.

The FDA may refer applications for novel drug products or drug products whichthat present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. TheDuring the review, the FDA will likelyre-analyzealso determine whether a REMS is necessary to assure the clinical trial data, which could result in extensive discussions betweensafe use of the biological product. If the FDA and us duringconcludes a REMS is needed, the review process. The review and evaluationsponsor of anthe NDA byor BLA must submit a proposed REMS; the FDA is extensive and time consuming and may take longer than originally planned to complete, and we maywill not receiveapprove the NDA or BLA without a timely approval,REMS, if at all.required.

Before approving an NDA or BLA, the FDA will conduct apre-approval inspection ofmay inspect the manufacturing facilities forat which the new product to determine whether they comply with cGMPs.is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. In addition,Additionally, before approving an NDA or BLA, the FDA may also audit data fromwill typically inspect one or more clinical trial sites to assure that the clinical trials to ensurewere conducted in compliance with IND study requirements and GCP requirements. After the FDA evaluates the application, manufacturing processTo assure cGMP and manufacturing facilities, it may issueGCP compliance, an approval letter or a Complete Response Letter. An approval letter authorizes commercial marketingapplicant must incur significant expenditure of the drug with specific prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is completetime, money and the application is not ready for approval. A Complete Response Letter usually describes all of the specific deficiencieseffort in the NDA identified byareas of training, record keeping, production, and quality control.

Notwithstanding the FDA. The Complete Response Letter may require additional clinical data and/or an additional pivotal Phase 3 clinical trial(s), and/or other significant and time-consuming requirements related to clinical trials, nonclinical studies or manufacturing. If a Complete Response Letter is issued, the applicant may either resubmit the NDA, addressing allsubmission of the deficiencies identified in the letter, or withdraw the application. Even if suchrelevant data and information, is submitted, the FDA may ultimately decide that the NDA or BLA does not satisfy theits regulatory criteria for approval and deny approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we interpretthe sponsor interprets the same data.

There is no assurance that If the agency decides not to approve the NDA or BLA in its present form, the FDA will ultimately approveissue a drug product for marketingcomplete response letter that usually describes all of the specific deficiencies in the United States and weNDA or BLA identified by the FDA. The deficiencies identified may encounter significant difficultiesbe minor, for example, requiring labeling changes, or costs duringmajor, for example, requiring additional clinical trials. Additionally, the review process. complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval. If a complete response letter is issued, the applicant may either resubmit the NDA or BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.

If a product receives marketingregulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labelinglabeling. The FDA may impose restrictions and conditions on product distribution, prescribing, or may

conditiondispensing in the approvalform of a risk management plan, or otherwise limit the NDA on other changes to the proposed labeling, developmentscope of adequate controls and specifications, or a commitment to conduct post-market testing or clinical trials and surveillance to monitor the effects of approved products. For example,any approval. In addition, the FDA may require post marketing clinical trials, sometimes referred to as Phase 4 testing which involves clinical trials, designed to further assess a drug or biological product’s safety and effectiveness, and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized. As a condition for approval, the FDA may also require additional non-clinical testing as a Phase 4 commitment.

Post-Approval Requirements

Maintaining substantial compliance with applicable federal, state, and local statutes and regulations requires the expenditure of substantial time and financial resources. Rigorous and extensive FDA regulation of drug and biological products continues after approval, particularly with respect to cGMP. We will rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of any products that we may commercialize. Manufacturers of our products are required to comply with applicable requirements in the cGMP regulations, including quality control and quality assurance and maintenance of records and documentation.

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Following approval, the manufacturing facilities are subject to biennial inspections by the FDA’s and such inspections may result in an issuance of FDA Form 483 deficiency observations, untitled letter, or a warning letter, which can lead to plant shutdown and other more serious penalties and fines. Prior to the institution of any manufacturing changes, a determination needs to be made whether FDA approval is required in advance. If not done in accordance with FDA expectations, the FDA may restrict supply and may take further action. Annual product reports are required to be submitted annually. Other post-approval requirements applicable to drug and biological products, include reporting of cGMP deviations that may affect the identity, potency, purity and overall safety of a distributed product, record-keeping requirements, reporting of adverse events, reporting updated safety and efficacy information, and complying with electronic record and signature requirements.

After an NDA or BLA is approved, the product may also be subject to official lot release. As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot. The FDA may also perform certain confirmatory tests on lots of some products, before releasing the lots for distribution by the manufacturer. In addition, the FDA may conduct laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of drug and biological products. Systems need to be put in place other conditionsto record and evaluate adverse events reported by health care providers and patients and to assess product complaints. An increase in severity or new adverse events can result in labeling changes or product recall. Defects in manufacturing of commercial products can result in product recalls.

Manufacturers must also comply with the FDA’s advertising and promotion requirements, such as those related to direct-to-consumer advertising, the prohibition on approvals includingpromoting products for uses or inpatient populations that are not described in the requirement forproduct’s approved labeling (known as “off-label use”), industry-sponsored scientific and educational activities, and promotional activities involving the internet. Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a Risk Evaluation and Mitigation Strategy,product or REMS, to assure the safe usewithdrawal of the drug. Ifproduct from the market as well as possible civil or criminal sanctions. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant or manufacturer to administrative or judicial civil or criminal sanctions and adverse publicity. FDA sanctions could include refusal to approve pending applications, withdrawal of an approval or license revocation, clinical hold, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect.

Drug and biologic product manufacturers and other entities involved in the manufacture and distribution of approved drug and biological products are required to register their establishments with the FDA concludesand certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMPs and other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the areas of production and quality control to maintain cGMP compliance. Discovery of problems with a REMS is needed, the sponsorproduct after approval may result in restrictions on a product, manufacturer, or holder of an approved NDA or BLA, including withdrawal of the NDA must submit a proposed REMS. Theproduct from the market. In addition, changes to the manufacturing process or facility generally require prior FDA will not approveapproval before being implemented and other types of changes to the NDA without an approved REMS, if required. A REMS could include medication guides, physician communication plans, or elements to assure safe use,product, such as restricted distribution methods, patient registriesadding new indications and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products. Product approvals may be withdrawn fornon-compliance with regulatory standards or if problems occur following initial marketing.additional labeling claims, are also subject to further FDA review and approval.

Orphan Drug Designation

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

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If a product that has orphan designation subsequentlyODD receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biological product for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity.exclusivity by means of greater effectiveness, greater safety or providing a major contribution to patient care or in instances of drug supply issues. Competitors, however, may receive approval of either a different products for the indication for which the orphan product has exclusivity or obtain approval for the same indication or the same product but for a different indication for whichbut that could be used off-label in the orphan product has exclusivity.indication. Orphan productdrug exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval ofbefore we do for the same drug product as defined by the FDA for the same indication we are seeking approval, or if our product candidate is determined to be contained within the competitor’s scope of product for the same indication or disease. If a drug or biological product designated as an orphan product receiveswe pursue marketing approval for an indication broader than what is designated, itthe orphan drug designation we have received, we may not be entitled to orphan productdrug exclusivity. Orphan drug status in the European Union has similar, but not identical, benefits.

Expedited DevelopmentReview and ReviewApproval Programs

The FDA has a Fast Track programvarious programs, including fast track designation, priority review, accelerated approval, and breakthrough therapy designation, that isare intended to expedite or facilitatesimplify the process for reviewing new drugsthe development and FDA review of drug and biological products that are intended to treat afor the treatment of serious or life-threatening conditiondiseases or conditions and demonstrate the potential to address unmet medical needsneeds. The purpose of these programs is to provide important new drug and biological products to patients earlier than under standard FDA review procedures. To be eligible for a fast track designation, the condition. Fast Track designation applies toFDA must determine, based on the combination of the product and the specific indication for which it is being studied. The sponsorrequest of a newsponsor, that a drug or biologicbiological product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need. The FDA will determine that a product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapy that may requestbe potentially superior to existing therapy based on efficacy or safety factors. In addition to other benefits, such as the FDAability to designatehave greater interactions with the drug or biologic as a Fast Track product at any time during the clinical development of the product. Unique to a Fast Track product,FDA, the FDA may consider forinitiate review of sections of the marketing application on a rolling basisfast track NDA or BLA before the complete application is submitted, if the sponsor providescomplete, a schedule for the submission of the sections of the application, theprocess known as rolling review.

The FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.

Any product submitted to the FDA for marketing, including undermay give a Fast Track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval.

Any product is eligible for priority review if it treatsdesignation to drug or biological products that treat a serious or life-threatening condition and, if approved, would provide a significant improvement in safety and effectiveness comparedor effectiveness. A priority review means that the goal for the FDA to available therapies. The FDA will attempt to direct additional resources to the evaluation ofreview an application is six months, rather than the standard review of ten months under current PDUFA guidelines. Most products that are eligible for fast track designation may also be considered appropriate to receive a newpriority review.

In addition, drug or biologic designated for priority review in an effort to facilitate the review.

Drug orand biological products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical trials establishing that the drug or biological product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, or IMM, that is reasonably likely to predict an effect on IMMirreversible morbidity or mortality or other clinical benefit.benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a drug or biological product receiving accelerated approval to perform adequatepost-marketing studies to verify and well-controlled post-marketingdescribe the predicted effect on irreversible morbidity or mortality or other clinical trials. Ifendpoint, and the FDA concludes that a drug shown to be effective can be safely used only if distribution or use is restricted, it will require such post-marketing restrictions as it deems necessary to assure safe use of the drug, such as:

The limitations imposed would be commensurate with the specific safety concerns presented by the drug. In addition, the FDA currently requires as a condition for accelerated approval,pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product.

Additionally, a drug or biological product may be eligible for designationsubject to accelerated withdrawal procedures.

The Food and Drug Omnibus Reform Act (“FDORA”) was recently enacted, which included provisions related to the accelerated approval pathway. Pursuant to FDORA, the FDA is authorized to require a post-approval study to be underway prior to approval or within a specified time period following approval. FDORA also requires the FDA to specify conditions of any required post-approval study, which may include milestones such as a Breakthrough Therapy iftarget date of study completion and requires sponsors to submit progress reports for required post-approval studies and any conditions required by the FDA not later than 180 days following approval and not less frequently than every 180 days thereafter until completion or termination of the study. FDORA enables the FDA to initiate enforcement actions for the failure to conduct with due diligence a required post-approval study, including a failure to meet any required conditions specified by the FDA or to submit timely reports.

Moreover, a sponsor can request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug or biologic product that is intended, alone or in combination with one or more other drugs, or biologics, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or biologic product may demonstrate substantial improvement over currently approvedexisting therapies on one

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or more clinically significant endpoint.endpoints, such as substantial treatment effects observed early in clinical development. The benefitsFDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of Breakthrough Therapy designation include the same benefits as Fast Track designation, plus intensive guidance froman application for approval of a breakthrough therapy.

Even if a product qualifies for one or more of these programs, the FDA to ensure an efficient drug development program. Fast Trackmay later decide that the product no longer meets the conditions for qualification or decides that the time period for FDA review or approval will not be shortened. Furthermore, fast-track designation, priority review, accelerated approval and Breakthrough Therapybreakthrough therapy designation, do not change the standards for approval butand may not ultimately expedite the development or approval process.

Rare Pediatric Clinical TrialsDisease Vouchers

The Rare Pediatric Disease Voucher Program is intended to encourage development of new drug and biological products for prevention and treatment of certain rare pediatric diseases. Although there are existing incentive programs to encourage the development and study of drugs and biologics for rare diseases, pediatric populations, and unmet medical needs, this program provides an additional incentive for the development of drugs and biologics for rare pediatric diseases, which may be used alone or in combination with other incentive programs. A rare pediatric disease is defined as a disease that is a serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years, including age groups often called neonates, infants, children, and adolescents; and is a rare disease or condition as defined in the FDCA, which includes diseases and conditions that affect fewer than 200,000 persons in the United States and diseases and conditions that affect a larger number of persons and for which there is no reasonable expectation that the costs of developing and making available the product in the United States can be recovered from sales of the product in the United States.

The sponsor of an application for a drug product that obtains rare pediatric disease designation may be eligible for a voucher that can be used or sold to obtain a priority review for a subsequent application submitted under section 505(b)(1) of the FDCA or section 351 of the PHS Act. A rare pediatric disease drug product must meet certain eligibility requirements for a priority voucher at the time the sponsor seeks approval. The rare pediatric disease priority review voucher program was most recently re-authorized by Congress through September 30, 2024, with the potential for priority review vouchers to be granted through September 30, 2026.

Pediatric Information and Pediatric Exclusivity

Under the Pediatric Research Equity Act or PREA, as amended,(“PREA”), certain NDAs and BLAs and certain supplements to an NDA or supplement to an NDABLA must contain data to assess the safety and efficacy of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may grant deferrals for submission of pediatric data or full or partial waivers. The Food and Drug Administration Safety and Innovation Act (“FDASIA”), amended the FDCA requiresto require that a sponsor who is planning to submit a marketing application for a drug or biological product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial Pediatric Study Plan or PSP,(“PSP”) within sixty60 days of anend-of-Phase 2 meeting or, if there is no such meeting, as may be agreed betweenearly as practicable before the sponsor andinitiation of the FDA.Phase 3 or Phase 2/3 study. The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information. The FDA and the sponsor must reach an agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from nonclinicalpreclinical studies, early phase clinical trials and/or other clinical

development programs. Submission of a PSP as defined in FDASIA is not required for programs with orphan

A drug designation.

Post-Marketing Requirements

Following approval of a newor biologic product a pharmaceutical or biotechnology company and the approved product are subject to continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse experiences with the product, providing the regulatory authorities with updated safety and efficacy information, product sampling and distribution requirements, and complying with promotion and advertising requirements, which include, among others, standards fordirect-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as“off-label use”), and requirements for promotional activities involving the internet. The FDA also imposes limitations on industry-sponsored scientific and educational activities Although physicians may prescribe legally available drugs foroff-label uses, manufacturers may not market or promote suchoff-label uses Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use. Modifications or enhancements to the product or its labeling or changes of the site of manufacture are often subject to the approval of the FDA and other regulators, which may or may not be received or may result in a lengthy review process.

Any distribution of prescription drug products and pharmaceutical samples must comply with the U.S. Prescription Drug Marketing Act, or the PDMA, a part of the FDCA.

In the United States, once a product is approved, its manufacture is subject to comprehensive and continuing regulation by the FDA. The FDA regulations require that products be manufactured in specific facilities, which are inspected as part of the FDA’s review of the NDA, and in accordance with cGMP. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in accordance with cGMP regulations. cGMP regulations require among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. These regulations also impose certain organizational, procedural and documentation requirements with respect to manufacturing and quality assurance activities. NDA holders using contract manufacturers, laboratories or packagers are responsible for the selection and monitoring of qualified firms, and, in certain circumstances, qualified suppliers to these firms. These firms and, where applicable, their suppliers are subject to inspections by the FDA at any time, and the discovery of violative conditions, including failure to conform to cGMP, could result in enforcement actions that interrupt the operation of any such facilities or the ability to distribute products manufactured, processed or tested by them. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved NDA, including, among other things, voluntary recall or withdrawal of the product from the market.

The FDA also may require post-approval testing, sometimes referred to as Phase 4 testing, risk minimization action plans and post-marketing surveillance to monitor the effects of an approved product or place conditions on an approval that could restrict the distribution or use of the product. Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, untitled or warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures. Also, new government requirements, including those

resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development.

Other Regulatory Matters

Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in addition to the FDA, including, in the United States, the Centers for Medicare & Medicaid Services, other divisions of the Department of Health and Human Services, the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments. In the United States, sales, marketing and scientific/educational programs must also comply with state and federal fraud and abuse laws. Pricing and rebate programs must comply with the Medicaid rebate requirements of the U.S. Omnibus Budget Reconciliation Act of 1990 and more recent requirements in the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or ACA. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. The handling of any controlled substances must comply with the U.S. Controlled Substances Act and Controlled Substances Import and Export Act. Products must meet applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging Act. Manufacturing, sales, promotion and other activities are also potentially subject to federal and state consumer protection and unfair competition laws.

The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.

The failure to comply with regulatory requirements subjects firms to possible legal or regulatory action. Depending on the circumstances, failure to meet applicable regulatory requirements can result in criminal prosecution, fines or other penalties, injunctions, voluntary recall or seizure of products, total or partial suspension of production, denial or withdrawal of product approvals, or refusal to allow a firm to enter into supply contracts, including government contracts. In addition, even if a firm complies with FDA and other requirements, new information regarding the safety or efficacy of a product could lead the FDA to modify or withdraw product approval. Prohibitions or restrictions on sales or withdrawal of future products marketed by us could materially affect our business in an adverse way.

Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example: (i) changes to our manufacturing arrangements; (ii) additions or modifications to product labeling; (iii) the voluntary recall or discontinuation of our products; or (iv) additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of our business.

U.S. Patent Term Restoration and Marketing Exclusivity

Depending upon the timing, duration and specifics of the FDA approval of our drug candidates, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generallyone-half the time between the effective date of an IND and the submission date of an NDA plus the time between the submission date of an NDA and the approval of that application, minus any time the applicant did not act with due diligence. Only one patent applicable to an approved drug is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The U.S. PTO, in consultation with the FDA, reviews and approves the application for any patent term extension or

restoration. In the future, we intend to apply for restoration of patent term for one of our currently owned or licensed patents to add patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant NDA.

Marketing exclusivity provisions under the FDCA can also delay the submission or the approval of certain marketing applications. The FDCA provides a five-year period ofnon-patent marketing exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an abbreviated new drug application, or ANDA, or a 505(b)(2) NDA submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovator drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity ornon-infringement to one of the patents listed with the FDA by the innovator NDA holder. The FDCA also provides three years of marketing exclusivity for an NDA, or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example for new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the modification for which the drug received approval on the basis of the new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the active agent for the original indication or condition of use. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the nonclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness. Orphan drug exclusivity, as described above, may offer a seven-year period of marketing exclusivity, except in certain circumstances. Pediatric exclusivity is another type of regulatorypediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. Thissix-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric trialstudy in accordance with anFDA-issued “Written Request” for such a study.

Biologics Price Competition and Innovation Act

The Biologics Price Competition and Innovation Act of 2009 ("BPCIA") created an abbreviated approval pathway for biological products that are demonstrated to be "biosimilar" or "interchangeable" with an FDA-licensed

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reference biological product via an approved BLA. Biosimilarity to an approved reference product requires that there be no differences in conditions of use, route of administration, dosage form, and strength, and no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency. Biosimilarity is demonstrated in steps beginning with rigorous analytical studies or "fingerprinting", in vitro studies, in vivo animal studies, and generally at least one clinical trial.study, absent a waiver from the Secretary of Health and Human Services. The biosimilarity exercise tests the hypothesis that the investigational product and the reference product are the same. If at any point in the stepwise biosimilarity process a significant difference is observed, then the products are not biosimilar, and the development of a stand-alone BLA is necessary. In order to meet the higher hurdle of interchangeability, a sponsor must demonstrate that the biosimilar product can be expected to produce the same clinical result as the reference product, and for a product that is administered more than once, that the risk of switching between the reference product and biosimilar product is not greater than the risk of maintaining the patient on the reference product. Complexities associated with the larger, and often more complex, structures of biological products, as well as the process by which such products are manufactured, pose significant hurdles to implementation that are still being evaluated by the FDA. Under the BPCIA, a reference biologic is granted 12 years of exclusivity from the time of first licensure of the reference product.

European Union Drug DevelopmentRegulation Outside of the United States

In addition to regulations in the United States, we are subject to a variety of regulations in other jurisdictions governing clinical studies, commercial sales, and distribution of our products. Most countries outside of the United States require that clinical trial applications be submitted to and approved by the local regulatory authority for each clinical study. In the European Union, our future products may alsofor example, an application must be subject to extensive regulatory requirements. As in the United States, medicinal products can only be marketed if a marketing authorization from the competent regulatory agencies has been obtained.

Similarsubmitted to the United States, the various phases of nonclinicalnational competent authority and clinical researchan independent ethics committee in the European Union are subjecteach country in which we intend to significant regulatory controls. Although the EU Clinical Trials Directive 2001/20/EC has sought to harmonize the European Unionconduct clinical trials, regulatory framework, setting out common rules formuch like the controlFDA and authorization of clinical trials in the European Union, the European Union Member States have transposed and applied the provisions of the Directive differently. This has led to significant variations in the member state regimes.IRB, respectively. Under the current regime, before a clinical trial can be initiated it must be approved in each of the European Union countries where the clinical trial is to be conducted by two distinct bodies: the National Competent Authority, or NCA, and one or more Ethics Committees, or ECs. Under the current regime all suspected unexpected serious adverse reactions to the investigated drug that occur during the clinical trial have to be reported to the NCA and ECs of the Member State where they occurred. In April 2014, the European Union adopted a new Clinical Trials Regulation (EU) No 536/2014, which is set to replacereplaced the current Clinical Trials Directive 2001/20/EC. ItEC on January 31, 2022, a single application is expected thatnow made through the Clinical Trials Information System (“CTIS”), for clinical trial authorization in up to 30 European Union/European Economic Area ("EU/EEA") countries at the same time and with a single set of documentation.

The assessment of applications for clinical trials is divided into two parts (Part I contains scientific and medicinal product documentation and Part II contains the national and patient-level documentation). Part I is assessed by a coordinated review by the competent authorities of all European Union Member States in which an application for authorization of a clinical trial has been submitted (Member States concerned) of a draft report prepared by a Reference Member State. Part II is assessed separately by each Member State concerned. The role of the relevant ethics committees in the assessment procedure will continue to be governed by the national law of the Member State concerned, however overall related timelines are defined by the Clinical Trials Regulation. The new Clinical Trials Regulation will apply in 2019. It will overhaul the current system of approvalsalso provides for simplified reporting procedures for clinical trialstrial sponsors.

In addition, whether or not we obtain FDA approval for a product, we must obtain approval of a product by the comparable regulatory authorities of countries outside the U.S. before we can commence clinical studies or marketing of the product in those countries. The approval process and requirements vary from country to country, so the number and type of non-clinical, clinical, and manufacturing studies needed may differ, and the time may be longer or shorter than that required for FDA approval.

To obtain regulatory approval of product under the European Union's regulatory system, we are mandated to submit a Marketing Authorization Application ("MAA"), to be assessed in the European Union. Specifically, the new legislation,Centralized Procedure. The centralized procedure, which will be directly applicablecame into operation in all member states, aims at simplifying and streamlining the approval of clinical trials in1995, allows applicants to obtain a marketing authorization that is valid throughout the European Union. For instance,Union and the new Clinical Trials Regulation provides for a streamlined application procedure via a single entry point and strictly defined deadlines for the assessment of clinical trial applications.

European Union Drug Review and Approval

In the European Economic Area, or EEA, which is comprised of the 28additional Member States of the European Union plus Norway, IcelandArea (Iceland, Liechtenstein and Liechtenstein,Norway) ("EEA"). It is compulsory for medicinal products can only be commercialized after obtaining a Marketing Authorization, or MA. There are two types of marketing authorizations:

The Community MA, which is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committeemanufactured using biotechnological processes, for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, and which is valid throughout the entire territory of the EEA. The Centralized Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, for advance therapy medicinal products (gene-therapy, somatic cell-therapy or tissue-engineered medicines) and medicinalfor human products containing a new active substance indicatedwhich are not authorized in the European Union and which are intended for the treatment of HIV, AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and other immune dysfunctions, viral diseases.diseases or diabetes. The Centralized Procedurecentralized procedure is optional for any other products containing a new active substancesubstances not yet authorized in the EEA,European Union or for products thatwhich constitute a significant therapeutic, scientific or technical innovation or for which area centralized authorization is in the interestinterests of public healthpatients at European Union. When a company wishes to place on the market a medicinal product that is eligible for the centralized procedure, it sends an application directly to the EMA, to be assessed by the Committee for Medicinal Products for Human Use ("CHMP"). The CHMP is responsible for conducting the assessment of whether a medicine meets the required quality, safety and efficacy

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requirements, and whether the product has a positive risk/benefit/risk profile. The procedure results in a European Commission decision, which is valid in all European Union Member States. Centrally authorized products may be marketed in all Member States. Full copies of the MAA are sent to a rapporteur and a co-rapporteur designated by the competent EMA scientific committee. They coordinate the EMA's scientific assessment of the medicinal product and prepare draft reports. Once the draft reports are prepared (other experts might be called upon for this purpose), they are sent to the CHMP, whose comments or objections are communicated to the applicant. The rapporteur is therefore the privileged interlocutor of the applicant and continues to play this role, even after the Marketing Approval ("MA") has been granted.

The rapporteur and co-rapporteur then assess the applicant's replies, submit them for discussion to the CHMP and, taking into account the conclusions of this debate, prepare a final assessment report. Once the evaluation is completed, the CHMP gives a favorable or unfavorable opinion as to whether to grant the authorization. When the opinion is favorable, it shall include the draft summary of the product's characteristics, the package leaflet and the texts proposed for the various packaging materials. The time limit for the evaluation procedure is 210 days (excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP). The EMA then has fifteen days to forward its opinion to the European Commission which will make a binding decision on the grant of an MA within 67 days of the receipt of the CHMP.

The Commission has fifteen days to prepare a draft decision. The medicinal product is assigned a Community registration number, which will be placed on its packaging if the marketing authorization is granted. During this period, various Commission directorates-general are consulted on the draft marketing authorization decision. There are two other procedures in the European Union.

National MAs, which are issuedUnion for the grant of an MAA in multiple European Union Member States. The Decentralized Procedure provides for approval by one or more other, or concerned, member states of an assessment of an application performed by one member state, known as the competent authoritiesreference member state. Under this procedure, an applicant submits an application, or dossier, and related materials including a draft summary of product characteristics, and draft labeling and package leaflet, to the reference member state and concerned member states. The reference member state prepares a draft assessment and drafts of the Member Statesrelated materials within 120 days after receipt of a valid application. Within 90 days of receiving the EEAreference member state's assessment report, each concerned member state must decide whether to approve the assessment report and only cover their respective territory, are available for products not falling withinrelated materials. If a member state cannot approve the mandatory scopeassessment report and related materials on the grounds of potential serious risk to the Centralized Procedure.public health, the disputed points may eventually be referred to the European Commission, whose decision is binding on all member states. Where a product has already been authorized forreceived a marketing authorization in aone Member State, of the EEA, this National MA can be recognized in another Member States through the Mutual Recognition Procedure. If the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure. Under the Decentralized Procedure an identical dossier is submitted to the competent authorities of each of the Member States in which the MA is sought, one of which is selected by the applicant as the Reference Member State, or RMS. The competent authority of the RMS prepares a draft assessment report, a draft summary of the product characteristics, or SPC, and a draft of the labeling and package leaflet, which are sent to the other Member States (referred to as the Member States Concerned) for their approval. If the Member States Concerned raise no objections, based on a potential serious risk to public health, to the assessment, SPC, labeling, or packaging proposed by the RMS, the product is subsequently granted a national MA in all the Member States (i.e. in the RMS and the Member States Concerned).

Under the above described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

European Union New Chemical Entity Exclusivity

In the European Union, new chemical entities, sometimes referred to as new active substances, qualify for eight years of data exclusivity uponrecognize that marketing authorization and an additional two years of market exclusivity. This data exclusivity, if granted, prevents regulatory authorities inunder the European Unionmutual recognition procedure.

Applications from referencing the innovator’s datapersons or companies seeking "orphan medicinal product designation" for products they intend to assess a generic application for eight years, after which generic marketing authorization can be submitted, and the innovator’s data may be referenced, but not approved for two years. The overallten-year period will be extended to a maximum of 11 years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

European Union Orphan Designation and Exclusivity

In the European Union, the European Commission, upon the recommendation of the EMA’s Committee for Orphan Medicinal Products grants orphan drug designation to promote the development of products that are intendeddevelop for the diagnosis, prevention, or treatment of life-threatening or chronically debilitating conditions affectingthat affect not more than 5 in 10,000 persons in the European Union andare reviewed by the Committee for which no satisfactory method of

diagnosis, prevention, or treatment has been authorized (orOrphan Medicinal Products, ("COMP"). In addition, orphan drug designation can be granted if the product would be a significant benefit to those affected). Additionally, designationdrug is granted for products intended for the diagnosis, prevention, or treatment of a life-threatening,life threatening, seriously debilitating, or serious and chronic condition and when,in the European Union where without incentives it is unlikely that sales of the drugproduct in the European Union would be sufficient to justify the necessary investment in developing the medicinal product.

Inits development. Orphan designation is only available if there is no other satisfactory method approved in the European Union of diagnosing, preventing, or treating the condition, or if such a method exists, the proposed orphan product will be of significant benefit to patients. We have obtained orphan drug designation entitlesfor CTI-1601.

Orphan designation provides opportunities for fee reductions, protocol assistance and access to the centralized procedure before and during the first year after marketing approval. Fee reductions are not limited to the first year after marketing approval for small and medium enterprises. In addition, if a partyproduct which has an orphan drug designation subsequently receives EMA marketing approval for the indication for which it has such designation, the product is entitled to financial incentives such as reduction of fees or fee waivers and ten years oforphan market exclusivity, which means the EMA may not approve any other application to market a similar drug for the same indication for a period of 10 years. A “similar medicinal product” is granted followingdefined as a medicinal product approval. Thiscontaining a similar active substance or substances as contained in an authorized orphan medicinal product, and which is intended for the same therapeutic indication. The exclusivity period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity. OrphanAdditionally, an MA may be granted to a similar medicinal product for the same indication if:

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The EMA offers a scheme to facilitate development of product candidates in indications, often rare, for which few or no therapies currently exist. The PRIority MEdicines, or PRIME, scheme is intended to encourage drug designationdevelopment in areas of unmet medical need and is intended to reinforce early dialogue with, and regulatory support from, EMA in order to stimulate innovation, optimize development and enable accelerated assessment of such product candidates. It is intended to build upon the scientific advice scheme and accelerated assessment procedure offered by the EMA. The scheme is voluntary and eligibility criteria must be requested before submittingmet for a medicine to qualify for PRIME.

The PRIME scheme is open to medicines under development and for which the applicant intends to apply for an MA through the centralized procedure. Eligible products must target conditions for which there is an unmet medical need (there is no satisfactory method of diagnosis, prevention or treatment in the European Union or, if there is, the new medicine will bring a major therapeutic advantage) and they must demonstrate the potential to address the unmet medical need by introducing new methods or therapy or improving existing ones. Applicants will typically be at the exploratory clinical trial phase of development and will have preliminary clinical evidence in patients to demonstrate the promising activity of the medicine and its potential to address to a significant extent an unmet medical need. In exceptional cases, applicants from the academic sector or SMEs (small and medium sized enterprises) may submit an eligibility request at an earlier stage of development if compelling non-clinical data in a relevant model provide early evidence of promising activity, and first in man studies indicate adequate exposure for the desired pharmacotherapeutic effects and tolerability.

If a medicine is selected for the PRIME scheme, EMA:

For SMEs who enter the scheme based on data showing proof of principle, the appointment of the rapporteur occurs once they have generated data confirming eligibility at proof of concept stage. They are required to submit relevant data and justification as the product development reaches this stage.

Medicines that are selected for the PRIME scheme are also expected to benefit from EMA’s accelerated assessment procedure at the time of application for marketing authorization. Where, during the course of development, a medicine no longer meets the eligibility criteria, support under the PRIME scheme may be withdrawn.

A Pediatric Investigation Plan ("PIP") in the European Union is aimed at ensuring that the necessary data are obtained to support the authorization of a medicine for children, through studies in children. All applications for marketing authorization for new medicines have to include the results of studies as described in an agreed PIP, unless the study results are deferred, or the medicine is exempt because of a waiver. This requirement also applies when a marketing-authorization holder wants to add a new indication, pharmaceutical form, or route of administration for a medicine that is already authorized and covered by intellectual property rights. Several rewards and incentives for the development of pediatric medicines for children are available in the E.U. Medicines authorized across the E.U. with the results of studies from a PIP included in the product information are eligible for an extension of their supplementary protection certificate by six months. This is the case even when the studies’ results are negative. For orphan medicines, the incentive is an additional two years of market exclusivity. Scientific advice and protocol assistance at the Agency are free of charge for questions relating to the development of pediatric medicines.

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The aforementioned European Union rules are generally applicable in the EEA.

The UK left the European Union on January 31, 2020 and the UK and the European Union concluded a trade and cooperation agreement (“TCA”), which was provisionally applicable since January 1, 2021 and has been formally applicable since May 1, 2021. The TCA includes specific provisions concerning pharmaceuticals, which include the mutual recognition of cGMP, inspections of manufacturing facilities for medicinal products and cGMP documents issued, but does not provide for wholesale mutual recognition of UK and European Union pharmaceutical regulations. At present, Great Britain has implemented European Union legislation on the marketing, promotion and sale of medicinal products through the Human Medicines Regulations 2012 (as amended) (under the Northern Ireland Protocol, the European Union regulatory framework continues to apply in Northern Ireland). Except in respect of the new European Union Clinical Trials Regulation, the regulatory regime in Great Britain therefore largely aligns with current European Union medicines regulations, however it is possible that these regimes will diverge more significantly in future now that Great Britain’s regulatory system is independent from the European Union and the TCA does not provide for mutual recognition of UK and European Union pharmaceutical legislation. However, notwithstanding that there is no wholesale recognition of European Union pharmaceutical legislation under the TCA, under the new framework mentioned below which will be put in place by the Medicines and Healthcare products Regulatory Agency (“MHRA”), the UK’s medicines regulator, from January 1, 2024, the MHRA has stated that it will take into account decisions on the approval of MAs from the EMA (and certain other regulators) when considering an application for marketing approval. Orphan druga Great Britain MA. On February 27, 2023, the UK government and the European Commission announced a political agreement in principle to replace the Northern Ireland Protocol with a new set of arrangements, known as the “Windsor Framework”. This new framework fundamentally changes the existing system under the Northern Ireland Protocol, including with respect to the regulation of medicinal products in the UK. In particular, the MHRA will be responsible for approving all medicinal products destined for the UK market (Great Britain and Northern Ireland), and the EMA will no longer have any role in approving medicinal products destined for Northern Ireland. Once the Windsor Framework is approved by the EU-UK Joint Committee, the UK Government and the European Union will enact legislative measures to enact it into law. The MHRA has introduced changes to national licensing procedures, including procedures to prioritize access to new medicines that will benefit patients, an accelerated assessment procedure and new routes of evaluation for novel products and biotechnological products. All existing E.U. MAs for centrally authorized products were automatically converted (grand fathered) into UK MAs free-of-charge on January 1, 2021. For a period of three years from January 1, 2021, the MHRA may rely on a decision taken by the European Commission on the approval of a new MA in the centralized procedure, in order to more quickly grant a new Great Britain MA. A separate application will, however, still be required. On January 24, 2023, the MHRA announced that a new international recognition framework will be put in place from January 1, 2024, which will have regard to decisions on the approval of MAs made by the EMA and certain other regulators when determining an application for a new Great Britain MA.

There is now no pre-marketing authorization orphan designation does not convey any advantage in or shortenGreat Britain. Instead, the durationMHRA will review applications for orphan designation in parallel to the corresponding MA application. The criteria are essentially the same, but have been tailored for the GB market, i.e. the prevalence of the regulatory reviewcondition in GB (rather than the EU) must not be more than 5 in 10,000. Should an orphan designation be granted, the period or market exclusivity will be set from the date of first approval of the product in GB or EU/European Economic Area, wherever is earliest.

Healthcare Laws and approval process.Regulations

Reimbursement

Sales of our productsproduct candidate, if approved, or any other future product candidate will depend,be subject to healthcare regulation and enforcement by the federal government and the states and foreign governments in part,which we might conduct our business. The healthcare laws and regulations that may affect our ability to operate include the following:

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Many states have similar laws and regulations, such as anti-kickback and false claims laws that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs. Additionally, we may be subject to state laws that require pharmaceutical companies to comply with the federal government’s and/or pharmaceutical industry’s voluntary compliance guidelines, state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, as well as state and foreign laws governing the privacy and security of health information, many of which differ from each other in significant ways and often are not preempted by HIPAA. Additionally, to the extent that our product is sold in a foreign country, we may be subject to which our products will be covered by third-party payors, such as government health programs, commercial insurancesimilar foreign laws.

Healthcare Reform

The United States and managedmany foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare organizations. These third-party payors are increasingly reducing reimbursements for medical products and services.

Additionally, the containment of healthcare costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort.system. The U.S.United States government, state legislatures and foreign governments also have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoptionproducts for branded prescription drugs. In recent years, Congress has considered reductions in Medicare reimbursement levels for drugs administered by physicians. CMS also has authority to revise reimbursement rates and to implement coverage restrictions for some drugs. Cost reduction initiatives and changes in coverage implemented through legislation or regulation could decrease utilization of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. Decreases in third-party reimbursement for our product candidate or a decision by a third-party payor to not cover our product candidate could reduce physician usage of the product candidate and have a material adverse effect on our sales, results of operations and financial condition.

Theany approved products. While Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA, established the Medicare Part D program to provide a voluntary prescription drug benefit to Medicare beneficiaries. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities which provide coverage of outpatient prescription drugs. Unlike Medicare Part A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs, though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs may increase demand for products for which we receive marketing approval. However, any negotiated prices for our products covered by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain. Moreover, while the MMA appliesregulations apply only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own paymentreimbursement rates. AnyTherefore, any reduction in paymentreimbursement that results from the MMAfederal legislation or regulation may result in a similar reduction in payments fromnon-governmental private payors.

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The American Recovery and Reinvestment Act of 2009 provides funding for the federal government to compare the effectiveness of different treatments for the same illness. The plan for the research was published in 2012 by the Department of Health and Human Services, the Agency for Healthcare Research and Quality and the National Institutes for Health, and periodic reports on the status of the research and related expenditures are made to Congress. Although the results of the comparative effectiveness studies are not intended to mandate coverage policies for public or private payors, it is not clear what effect, if any, the research will have on the sales of our product candidates, if any such product or the condition that it is intended to treat is the subject of a trial. It is

also possible that comparative effectiveness research demonstrating benefits in a competitor’s product could adversely affect the sales of our product candidates. If third-party payors do not consider our products to be cost-effective compared to other available therapies, they may not cover our products after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.

The Patient Protection and Affordable Care Act as amendedsubstantially changed the way healthcare is financed by both governmental and private insurers, included provisions that affected the Health Care and Education Reconciliation Act of 2010, or collectively the ACA, enacted in March 2010, has a significant impact on the health carepharmaceutical industry. The ACA is intended to expand coverage for the uninsured while at the same time containing overall healthcare costs. With regard to pharmaceutical products, amongAmong other things, the ACA expands and increases industry rebates for drugs covered under Medicaid programs and makes changes to the coverage requirementsAffordable Care Act expanded manufacturers’ rebate liability under the Medicare Part D program. PharmaceuticalMedicaid Drug Rebate Program, expanded the 340B program, and increased the amount of Medicaid drug rebates manufacturers are required to track certain financial arrangements with physicians and teaching hospitals, including any “transfer of value” made or distributedpay to such entities, as well as any investment interests held by physicians and their immediate family members. Manufacturers are required to annually report this information to The Center for Medicare and Medicaid services, or CMS, which posts the information on its website.

states. Since its enactment,that time, there have been challenges to numerous aspects of the ACA, includingsignificant ongoing legislative and executive efforts to repeal and replacemodify or eliminate the ACA, andAffordable Care Act. The Tax Act of 2017, for example, repealed the ACA has been modified in a number of respects. While Congress has not passed repeal legislationshared responsibility payment provisions commonly referred to date, the 2017 Tax Reform Act includes a provision repealingas the individual mandate, effective January 1, 2019. Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devises. On October 13, 2017, President Trump signed an Executive Order terminating the cost-sharing subsidies that reimburse the insurers under the ACA. Several state Attorneys General filed suit to stop the administration from terminating the subsidies, but their request for a restraining order was denied by a federal judge in California on October 25, 2017. In addition, CMS has recently proposed regulations that would give states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through these marketplaces. Congress will likely consider other legislation to replace elements of the ACA. We cannot predict how the ACA, its possible repeal or replacement, any further action to modify the ACA, or the political uncertainty surrounding the ACA will affect our business.mandate.

In addition, otherOther legislative changes have been proposed and adopted in the United States since the ACA was enacted. On August 2, 2011,passage of the Affordable Care Act. The Budget Control Act of 2011 among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregateand subsequent legislation has resulted in reductions to Medicare payments to healthcare providers of up to 2%2.0% per fiscal year startedwhich will remain in April 2013.effect through 2031 unless additional Congressional action is taken. On January 2, 2013, then President Obama signed into law the American Taxpayer Relief Act of 2012, or the ATRA,was signed into law, which, delayed for another two months the budget cuts mandated by these sequestration provisions of the Budget Control Act of 2011. The ATRA, among other things, also reduced Medicare payments to several types of 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.

The IRA includes several provisions that will impact our business to varying degrees, including
provisions that reduce the out-of-pocket cap for Medicare Part D beneficiaries to $2,000 starting in 2025;
impose new manufacturer financial liability on certain drugs in Medicare Part D, allow the U.S. government
to negotiate Medicare Part B and Part D price caps for certain high-cost drugs and biologics without generic
or biosimilar competition, require companies to pay rebates to Medicare for certain drug prices that increase faster than inflation, and delay the rebate rule that would limit the fees that pharmacy benefit managers can
charge. Further, under the IRA, orphan drugs are exempted from the Medicare drug price negotiation
program, but only if they have one rare disease designation and for which the only approved indication is for
that disease or condition.

We expect that changes to the Affordable Care Act, the Medicare and Medicaid programs, including recent changes that allow the federal government to directly negotiate drug prices and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

We expect that additional federal, state and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, andwhich could result in turn could significantly reduce the projected value of certain development projectslimited coverage and reduce our profitability.

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, the European Union provides options for its member states to restrict the range of medicinal products for which

their national health insurance systems provide reimbursement and to control the prices of medicinal productsreduced demand for human use. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the European Union do not follow price structures of the United States and generally tend to be significantly lower.

Other Healthcare Laws and Compliance Requirements

If we obtain regulatory approval of our products, we may be subject to various federal and state laws targeting fraud and abuse in the healthcare industry. These laws may impact, among other things, our proposed sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include:once approved, or additional pricing pressures.

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Employees

As of March 1, 2018, we employed 35 full-time employees, including 29 in research and development and 6 in general and administrative. We have never had a work stoppage, and none of our employees is represented by a labor organization or under any collective-bargaining arrangements. We consider our employee relations to be good.

Our Corporate Information

We were incorporated under the laws of the State of Delaware in 2005. Our principal executive offices are located at 175 Portland Street, 4th Floor, Boston, MA 02114, and our telephone number is(617) 622-4003. Our website address is www.zafgen.com. We may post material information on our website, therefore please check our website to see if we have posted any material information.

Available Information

We make available free of charge through our website our annual report on Form10-K, quarterly reports on Form10-Q, current reports on Form8-K and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We make these reports available through our website as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the SEC. You can find, copy and inspect information we file at the SEC’s public reference room, which is located at 100 F Street, N.E., Room 1580, Washington, DC 20549. Please call the SEC at1-800-SEC-0330 for more information about the operation of the SEC’s public reference room. You can review our electronically filed reports and other information that we file with the SEC on the SEC’s web site at http://www.sec.gov. We also make available, free of charge on our website, the reports filed with the SEC by our executive officers, directors and 10% stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably practicable after copies of those filings are provided to us by those persons. The information contained on, or that can be accessed through, our website is not a part of or incorporated by reference in this Annual Report.

Investing in our common stock involves a high degree of risk. ITEM 1A. RISK FACTORS

You should consider carefully consider the following risks described below,and uncertainties when reading this Annual Report on Form 10-K, as well as the other information in this Annual Report on Form10-K, or Annual Report,contained herein, including our audited consolidated financial statements and in our other public filings before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. If any such risks or uncertainties actually occur, our business, financial condition or operating results could differ materially from the plans, projectionsrelated notes and other forward-looking statements included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operation.” If any of the following risks occur, our business, financial condition and elsewhere in this Annual Reportresults of operationscould be materially and inadversely affected. Although we believe that we have identified and discussed below the key risk factors affecting our other public filings. Thebusiness, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our performance or financial condition. In that event, the trading price of our common stock could declinedecline.

Risks Related to Our Financial Position and Need for Capital

We have incurred significant losses since our inception and anticipate that we will incur continued losses for the foreseeable future.

Since our inception we have devoted substantially all of our resources to the development of CTI-1601. We have incurred significant losses in each year of operation since our inception in 2016. For the years ended December 31, 2022 and 2021, we had net losses of $35.4 million and $50.6 million, respectively, and, as of December 31, 2022, we had an accumulated deficit of $151.6 million and we expect to continue to incur significant expenses and net operating losses ("NOLs") for the foreseeable future.

We have devoted substantially all of our financial resources and efforts to research and development, including non-clinical studies, our clinical development program, the development of manufacturing processes as well as the manufacture of initial lots of clinical trial material. We expect to incur significant losses for the foreseeable future to further develop and commercialize our lead drug candidate, CTI-1601.

We expect that our expenses will increase substantially if and as we:

We currently have no sales, marketing. medical affairs infrastructure and have no experience in the sales, marketing, or distribution of pharmaceutical products. Assuming CTI-1601 ultimately is approved for marketing in the US and elsewhere, we will need to establish sales and marketing capabilities as well as customer service and support, logistics, and other related functions, or make arrangements with third parties to perform these services;

Net losses and negative cash flows have had, and will continue to have, an adverse effect on our liquidity and potentially the ability for us to raise capital due to our unfavorable operating results.

We have no commercial revenue and may never become profitable.

To date, we have not generated any commercial revenue. Our ability to generate revenue and become profitable depends upon our ability to obtain regulatory approval for, and to successfully commercialize, CTI-1601 or other product candidates that we may develop, in-license or acquire in the future.

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Because of the uncertainties and risks associated with these activities, we are unable to accurately predict the timing and as a result, youamount of increased expenses, and if or when we might achieve or maintain profitability. We and any future collaborators may never succeed in these activities and, even if we do, or any future collaborators do, we may never generate revenues that are large enough for us to achieve profitability. Even if we are able to complete the processes described above, we anticipate incurring significant costs associated with commercializing CTI-1601 or any of our future product candidates. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to become and remain profitable could decrease the value of our business and could impair our ability to raise capital, maintain our discovery and clinical development efforts, expand our business or continue our operations and may require us to raise additional capital that may dilute the ownership interest of shareholders. A decline in the value of our business could also cause shareholders to lose all or part of yourtheir investment.

Risks RelatedWe need to Product Development, Regulatory Approvalraise additional funding in order to continue our planned operations. This funding may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed would force us to delay, limit or terminate our product development efforts or other operations.

We expect to continue to spend substantial and Commercializationincreasing amounts to conduct clinical trials of CTI-1601 and further research and development activities for CTI-1601, and for any additional product candidates that we may develop, in-license or acquire in the future. In addition, raising funds in the current economic environment may present substantial challenges, and our expenses will increase as we expand, through development, in-license or acquisition, our pipeline of product candidates. If we obtain marketing approval for any of our product candidates, we will likely incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution to the extent that such sales, marketing, manufacturing and distribution are not the responsibility of a future collaborator. Accordingly, we will need to obtain additional funding in connection with our continuing operations.

We currently depend primarilyAs of December 31, 2022, our existing cash, cash equivalents and marketable securities were $118.4 million, excluding restricted cash of $1.3 million. This amount will not be sufficient to fund all of the efforts that we plan to

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Our success is currently dependent upon the success of our lead product candidate, CTI-1601, for which we have completed two Phase 1 clinical trials in patients with FA and are currently conducting a Phase 2 dose exploration study. We cannot be certain that data from the first cohort of our current dose exploration study will provide the FDA with adequate data to allow the CTI-1601 development program to proceed as planned in part or in full, or that we will ultimately be successful with our clinical development or that we will be ever able to obtain regulatory approval forZGN-1061, or successfully commercializeZGN-1061 if approved. CTI-1601.

We currently have only one product candidate in clinical development,ZGN-1061, which has completed Phase 1 clinical development in the Netherlands and is in Phase 2 clinical development in Australia and New Zealand, and our business currently depends primarily on its successful clinical development, regulatory approval and commercialization. We currently have no drug products for sale and may never be ableour business is currently wholly dependent on our successful clinical development, regulatory approval and commercialization of CTI-1601, our lead product candidate and our only product candidate in clinical development, for which we have completed two Phase 1 clinical trials in patients with FA and are currently working to complete a Phase 2 dose exploration under an FDA partial clinical hold. The study’s first cohort (25 mg ) is proceeding in line with our planned timeline with dosing completed. Additional cohorts and/or other clinical trials are contingent on the review of the study’s 25 mg cohort data by the FDA and the data monitoring committee. We expect to provide an update on the study in the second quarter of 2023 and anticipate reporting top-line data in the second half of 2023.

If our efforts to develop marketable drug products. Inand commercialize CTI-1601 for the treatment of FA are unsuccessful, or we experience significant delays in doing so, our business could also be substantially harmed. The success of CTI-1601 will depend on several factors, including the following:

Many of these factors are outside of our control, including the clinical development and regulatory approval processes, results of non-clinical and toxicology studies and clinical trials, potential threats to our intellectual property rights and the manufacturing, marketing and sales efforts, respectively. The process of obtaining regulatory approval is expensive and time consuming. The FDA and foreign regulatory authorities may never approve CTI-1601 for sale and marketing, and even if CTI-1601 is ultimately approved, regulatory approval may be delayed or

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limited in the United States or in other jurisdictions. Even if we are authorized to sell and market CTI-1601 in one or more markets, there is no assurance that we will be able to successfully market CTI-1601 or that CTI-1601 will achieve market acceptance sufficient to generate profits. If we are unable to successfully develop and commercialize CTI-1601 due to failure to obtain regulatory approval for CTI-1601, to successfully market CTI-1601, to generate profits from the sale of CTI-1601, or due to other risk factors outlined in this report, it would have material adverse effects on our business, financial condition, and results of operations as CTI-1601 is currently our sole product candidate.

Clinical development is a lengthy and expensive process with an uncertain outcome, and the results of non-clinical studies, toxicology studies or clinical trials may not be predictive of future non-clinical studies, toxicology studies or clinical trial results.

Clinical development is expensive and can take many years to complete, and its outcome is inherently uncertain. We cannot guarantee that any non-clinical studies, toxicology studies or clinical trials will be conducted as planned or completed on schedule, if at all, and failure can occur at any time during the non-clinical study, toxicology study or clinical trial process. Despite promising non-clinical, toxicology or clinical results, any product candidate can unexpectedly fail at any stage of non-clinical, toxicology or clinical development. The historical failure rate for product candidates in our industry is high, especially for products in early stages of development.

The results from non-clinical studies, toxicology studies or clinical trials of a product candidate may not predict the results of later non-clinical or clinical trials of the product candidate, or in clinical trials with different patient populations such as children and adolescents and interim results of a clinical trial are not necessarily indicative of final results. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy characteristics despite having progressed through non-clinical studies and initial clinical trials. It is not uncommon to observe results in clinical trials that are unexpected based on non-clinical studies and early clinical trials, and many product candidates fail in clinical trials despite very promising early results. Favorable safety and efficacy outcomes in adult clinical trials may not be seen in pediatric clinical trials.

Moreover, current and future non-clinical and clinical data may be susceptible to varying interpretations and analyses. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies. Furthermore, we cannot provide assurance that we will be able to successfully progress any future non-clinical programs from candidate identification to Phase 1 clinical development. As is typical in candidate development, we have a program of ongoing toxicology studies in animals for CTI-1601 and cannot provide assurance that the findings from such studies or any ongoing or future clinical trials will not adversely affect the clinical development of CTI-1601. For the foregoing reasons, we cannot be certain that our ongoing and planned non-clinical studies and clinical trials will be successful. If non-clinical studies or clinical trials for CTI-1601 or any future product candidates or indications fail to demonstrate safety or efficacy to the satisfaction of the FDA or the equivalent regulatory authorities in other countries, the FDA or equivalent regulatory authority will not approve our product candidates in those and other indications, which could have a material adverse effect on our business, financial condition results of operations and prospects.

We do not know whether any ongoing or future clinical trials for CTI-1601 will be completed on schedule, if at all, as the commencement and completion of clinical trials can be delayed, prevented or terminated for a number of reasons, including as a result of safety concerns, or ambiguous or negative interim results. In addition, a clinical trial may be suspended or terminated by us, the FDA, other regulatory authorities, institutional review boards (IRBs") or ethics committees, an independent data monitoring committee, or safety review committee, overseeing the clinical trial at issue or other regulatory authorities due to a number of factors, including, among others:

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Failures or delays in the completion of our clinical trials could result in increased costs and could delay, prevent or limit our ability to generate revenue and continue our business.

For our lead product candidate CTI-1601, we have completed two Phase 1 clinical trials in patients with FA and are currently conducting the first cohort of a Phase 2, four-week, placebo-controlled, dose exploration trial of CTI-1601 in FA patients. Additional cohorts and/or the initiation of other clinical trials are contingent on agreement by the FDA based on its review of the data from the 25 mg cohort and on review by the study's independent data monitoring committee. We expect to provide an update that will outline the next steps for the study in the second quarter of 2023 and anticipate reporting top-line data in the second half of 2023. We do not know if, or when, the FDA will lift the partial clinical hold on our CTI-1601 program, if it will allow additional cohorts of this dose exploration study or if it will ever allow further clinical development of CTI-1601.

Clinical trials may also be delayed or terminated as a result of safety issues in non-clinical or clinical trials, ambiguous or negative interim results or events outside of our control.

If future clinical trials of CTI-1601 fail or further delays occur in the United States and or other countries, we may not be able to develop and commercialize CTI-1601 and could fail to realize the potential advantages of doing so, and it could materially adversely affect our business, financial condition and results of operations.

In addition, disruptions caused by health crises, such as the recent COVID-19 pandemic may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical trials. Further, FA is a rare disease, there are a limited number of patients in close proximity to clinical trial sites and clinical trial patients may need to file an Investigational New Drug,travel from other countries to the clinical trial sites in order to participate. In addition, given the limited number of FA patients, the recent approval of a competing therapy for the treatment of FA may make patients less likely to enroll in our clinical trials or IND, application with the U.S. Foodless likely to be eligible for our clinical trials. Any inability to successfully initiate or complete clinical trials could result in additional costs to us or impair our ability to generate revenue from product sales. In addition, if we make manufacturing or formulation changes to our product candidates, we may be required to or we may elect to conduct additional studies to bridge our modified product candidates to earlier versions. Clinical trial delays could also shorten any periods during which our products have patent protection and Drug Administration,may allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our product candidates and may seriously harm our business.

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We may not be successful in our efforts to identify, discover or FDA. Because our business is primarily dependent upon thisacquire additional product candidates.

We currently only have one product candidate CTI-1601 in clinical development, although we have other product candidates in pre-clinical development. Therefore, the success of our business largely depends upon our ability to identify, develop, in-license or acquire and commercialize products targeting rare diseases. We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful. In addition, our research methodology may be unsuccessful in identifying potential product candidates or our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval.

Research programs to identify new product candidates require substantial technical, financial and human resources. We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful. If any setback inof these events occur, we may be forced to abandon our pursuit of regulatory approvaldevelopment efforts forZGN-1061 a program or programs, which would have a material adverse effect on our business, financial condition and prospects. Theresults of operations.

We have no marketed proprietary products and have not yet advanced a product candidate beyond Phase 2 clinical trials, ofwhich makes it difficult to assess our ability to develop CTI-1601 or any future product candidates and commercialize any resulting products independently.

We have no experience in later stage clinical development, and related regulatory requirements or the commercialization of products. As a result, we have not yet demonstrated our ability to independently and repeatedly conduct clinical development after Phase 1, successfully conduct an international multi-center clinical trial, conduct a pivotal clinical trial, obtain regulatory approval, manufacture drug product on a commercial scale or arrange for a third party to do so on our behalf, and commercialize therapeutic products. We will need to develop such abilities if we are to execute on our business strategy to develop and independently commercialize product candidates for orphan and niche indications. To execute on our business plan for the manufacturingdevelopment of independent programs, we will need to successfully:

for the commercial sale of any product candidate, we must demonstrate through nonclinical testing and clinical trials, that the product candidate is saferegulatory approvals and effective for use in each target indication. This process can take many years and will likely include post-marketing studies, or PMS, post-marketing requirements, or PMRs, and surveillance such as Risk Evaluation and Mitigation Strategies, or REMS, which will require the expenditure of substantial resources beyond the proceeds we currently have on hand.

Any of these factors, many of which are beyond our control, could jeopardize our ability to obtain and/or maintain regulatory approval for and successfully marketZGN-1061. Of the large number of drugs in development in the United States, only a small percentage will successfully complete the FDA regulatory approval process and be commercialized. Accordingly, even if we are able to obtain the requisite financing to continue to fund our development and clinical trials, we cannot assure you thatZGN-1061 or any other of our product candidates will be successfully developed or commercialized.

We cannot be certain that we will be able to successfully complete clinical trials for ourCTI-1601 or any other product candidates, obtain regulatory approval for our product candidates or successfully commercialize our product candidates, if approved.candidates.

We currently have advanced only one product candidate ininto clinical development,ZGN-1061, which has completed Phase 1 clinical development in the Netherlands and is in Phase 2 clinical development in Australia and New Zealand, and our CTI-1601. Our business currently depends primarily on itsCTI-1601’s successful clinical development, regulatory approval and commercialization.We recently announced a new product candidate,ZGN-1258, which is in nonclinical development. We expect to initially developZGN-1258 as a treatment for Prader-Willi syndrome, or PWS. Before our product candidates can be marketed,submitted our IND application must go into effectand it was accepted, permitting the conduct of clinical trials. We completed two Phase 1 clinical trials then we must successfully complete human testing. The FDA and other comparable foreign regulatory agencies must approve our NDA or comparable regulatory submissions. Even after successful completionbut, as a result of clinical testing, there iscertain mortalities in a risk thatnon-clinical study of NHPs, the FDA may request further information from us, disagree with our findings or otherwise undertakeissued a lengthyclinical hold. We responded to the clinical hold in January 2022. Following review of our submission. Evenresponse, the FDA maintained the clinical hold.

In September 2022, following the Type C meeting and the submission of our complete response, the FDA allowed the 25 mg cohort of a Phase 2, four-week, placebo-controlled, dose exploration trial of CTI-1601 in FA patients to proceed. In connection with this decision, the FDA lifted its full clinical hold on the CTI-1601 clinical development program and imposed a partial hold. The dose exploration trial is designed to further characterize CTI-1601’s safety and PD and PK profiles to provide information about the preferred long-term dose and dose regimen. We have since initiated the 25 mg cohort of the Phase 2 dose exploration trial. Initiation of the second cohort and/or

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other clinical trials is contingent on the FDA’s agreement based on its review of the trial's 25 mg cohort data and on review by the trial’s independent data monitoring committee. We anticipate that we will provide an update that will outline the next steps for the clinical trial in the second quarter of 2023 and anticipate reporting top-line data in the second half of 2023.

We do not know if, or when, the FDA will lift the partial clinical hold on our CTI-1601 program, if it will allow additional cohorts of the dose exploration study or if it will ever allow further clinical development of CTI-1601. If the FDA does not lift the clinical hold in a timely manner, or at all, our development timelines and our business may be adversely affected and our stock price may decline. Further, even if the FDA approves our NDA, welifts the partial clinical hold, or if the FDA or other regulatory agencies continue to express safety concerns after the partial clinical hold is lifted, future CTI-1601 non-clinical or clinical studies may be unablerequired. In such instances, our progress in the development of CTI-1601 may be significantly slowed and the associated costs may be significantly increased, adversely affecting our business, which could impair our ability to successfully commercialize ourultimately obtain FDA or other regulatory approval for CTI-1601.

In clinical development of any product candidates.candidate, the outcome of toxicology studies and early clinical trials may not be positive and may not be predictive of the success of later non-clinical studies or clinical trials. Adverse toxicology or safety results could lead to clinical holds or other developmental delays. Interim results of clinical trials do not necessarily predict success in those or future clinical trials. Success in adult clinical trials may not predict the outcome of pediatric clinical trials.

It is possible, that the FDA will not approvePublished clinical data or case reports from third parties or early clinical trial data of CTI-1601 or any application that we may submit. It is possible that ourfuture product candidates may not obtain appropriate regulatory approvals necessary for us to commence clinical trials for our product candidates. Any delay or failure in obtaining required approvals could have a material adverse effect on our business. This process can take many years and will likely require the expenditure of substantial resources beyond the proceeds we currently have on hand.

Favorable results from nonclinical studies, our Phase 1 clinical trial ofZGN-1061 and interim analysis of our Phase 2 clinical trial of ZGN-1061 are not necessarilybe predictive of the results of additional nonclinicallater-stage clinical trials. Interpretation of results from early, usually smaller, studies that suggest a clinically meaningful response in some patients, requires caution. Results from later stages of clinical trials enrolling more patients, or later-stagedifferent patient populations, such as pediatric patients, may fail to show the desired safety or efficacy results or otherwise fail to be consistent with the results of earlier trials of the same product candidate. Later clinical trial results may not replicate earlier clinical trials for a variety of reasons, including differences in trial design, different trial endpoints (or lack of trial endpoints in exploratory studies), different patient population, number of patients, patient selection criteria, trial duration, drug dosage and formulation and lack of statistical power. These uncertainties are enhanced where the diseases under study lack established clinical endpoints, validated measures of efficacy, as is often the case with orphan diseases for which no drugs have been developed previously and where the product candidates target novel mechanisms. For example, to our knowledge, CTI-1601 is the only protein replacement therapy being developed for the treatment of FA and therefore non-clinical studies may not be adequate to predict efficacy in a clinical trial due to our novel protein replacement therapy platform.

In some instances, there can be significant variability in safety or efficacy results between different clinical trials ofZGN-1061. Given the thrombosis findingssame product candidate due to numerous factors, including changes in humans treated with beloranib, development costs forZGN-1061 may be highertrial procedures set forth in protocols, differences in the size and we may be unabletype of the patient populations, such as pediatric patients, variability of the disease being studied, changes in and adherence to successfully develop, obtain regulatory approval forthe dosing regimen and commercializeZGN-1061.

Favorable results from our nonclinical studies ofZGN-1061, our Phase 1other clinical trial protocols and interim analysisthe rate of our Phase 2dropout among clinical trial ofZGN-1061 may not necessarily be predictive of the results from ongoing and later-stage clinical trials. To date we have shown thatZGN-1061 has similar potency against the MetAP2 target and similar activity in rodent models of obesity compared to beloranib. Toxicology studies in multiple species have shown thatZGN-1061 is not exhibiting any testicular safety signals or activation of thrombosis-related biochemical markers, and displays an appreciable margin for embryofetal toxicity, testicular toxicity, pro-thrombotic effects and other previously observed issues for MetAP2 inhibitors such as hematological and neuronal toxicities with a small therapeutic margin and no margin for embryofetal toxicity. Further in our Phase 1 clinical trial,ZGN-1061 demonstrated rapid drug absorption and clearance in line with criteria established in advance for the molecule, and has a favorable tolerability profile with no safety signals identified, including no evidence of pro-thrombotic effects. The data show thatZGN-1061 causes improvements across multiple metabolic measures consistent with MetAP2 inhibition, and patients in the clinical trial experienced mean weight loss of up to approximately one pound per week. In addition, data from the interim analysis of the Phase 2 clinical trial ofZGN-1061 demonstrated a favorable glycated hemoglobin A1C, or A1C, effect at the 0.9 mg dose ofZGN-1061. However, we can provide no assurance that the results of our nonclinical studies, Phase 1 clinical trial ofZGN-1061 and interim analysis of our Phase 2 clinical trial ofZGN-1061 will be replicated in ongoing or later-stage clinical trials ofZGN-1061 or other nonclinical studies.

Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical trials after achieving positive results in nonclinical and early-stage clinical development. In particular, we have suffered significant setbacks in later-stage clinical trials of our former lead product candidate, beloranib, after achieving positive results in nonclinical and clinical development, and we cannot be certain that we will not face similar setbacks in our development ofZGN-1061. The setbacks in later-stage clinical development have been caused by, among other things, nonclinical findings made while clinical trials were underway or safety or efficacy observations made in clinical trials, including previously unreported or understood adverse events. Moreover, nonclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in nonclinical studies and clinical trials nonetheless failed to obtain FDA and/or EMA approval.participants. If we fail to produceultimately receive positive results in our later-stage clinical trials ofZGN-1061, CTI-1601, the development timeline and regulatory approval and commercialization prospects for our lead product candidate,CTI-1601, and, correspondingly, our business, and financial prospects and results of operation would be materially adversely affected.negatively impacted.

OurFurther, CTI-1601 or any future product candidates may not be approved even if they achieve their primary endpoint in clinical trials. The FDA, EMA or foreign regulatory authorities may disagree with our trial design and our interpretation of data from non-clinical studies and clinical trials. In addition, any of these regulatory authorities may change its requirements for the approval of a product candidate even after reviewing and providing comments or advice on a protocol for a pivotal clinical trial that, if successful, would potentially form the basis for an application for approval by the FDA, EMA or another regulatory authority. Furthermore, any of these regulatory authorities may also approve CTI-1601 or any future product candidates for a narrower indication than we may request or may grant approval contingent on the performance of costly post-marketing clinical trials.

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CTI-1601 may cause adverse events or undesirable side effects in non-clinical or clinical trials that could delay or prevent theirits regulatory approval, limit the commercial profile of an approved label,labeling, or result in significant negative consequences following marketingregulatory approval, if any.

UndesirableAny adverse events or undesirable side effects caused by, our product candidatesor other unexpected properties of, CTI-1601 in non-clinical or clinical studies could cause us, any future collaborators, an IRB or ethics committee or regulatory authorities such as the FDA to interrupt, delay or halt clinical trials of our product candidate and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities. For example, commonShould the FDA permit us to continue with the clinical development of CTI-1601, it is possible that as we progress CTI-1601 through clinical trials and toxicology studies, or as the use of CTI-1601 becomes more widespread if it receives regulatory approval, illnesses, injuries, discomforts and other adverse events that were not observed in patients treatedearlier trials, as well as conditions that did not occur or went undetected in previous trials, may be reported by patients. If such side effects become known later in development or after approval, such findings may harm our business, financial condition and prospects significantly. Further, if a serious safety issue is identified in connection with our first-generation MetAP2 inhibitor, beloranib, versus placebo included diarrhea, injection site bruising, dizziness, decreased appetite, anxiety and sleep disturbances (insomnia principally manifested as delayed onsetthe use of sleep and abnormal dreams), among others. In addition, an imbalanceCTI-1601 commercially or in the number of thrombotic events observed in patients treated with beloranib as compared to patients on placebo in ourthird-party clinical trials was observed. Weelsewhere, such issues may see similar adverse events withZGN-1061adversely affect the development potential of CTI-1601 elsewhere orZGN-1258 as we saw with beloranib, and therefore, we will study these parameters result in nonclinical and clinical development ofZGN-1061 andZGN-1258. Inregulatory authorities restricting our Phase 1 clinical trial ofZGN-1061, the most common adverse events reported were mild gastrointestinal issues (comparable betweenZGN-1061 and placebo groups), headache and procedural-related irritation. In addition, data from the interim analysis of the Phase 2 clinical trial ofZGN-1061 demonstrated an increase in A1C in some treatment groups between 8 weeks and 12 weeks, and it is unknown whether this effect would continueability to develop or worsen during the remainder of this clinical trial.commercialize CTI-1601, if approved.

Further, ifZGN-1061 orZGN-1258 CTI-1601 were to receive marketing approval and we or others identify undesirable side effects caused by the product (or any other similar product) after the approval, a number of potentially significant negative consequences could result, including:

Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate and could substantially increase the costs of commercializing our product candidates and significantly impact our ability to successfully commercialize our product candidates and generate revenues.

FailuresInterim, “top-line,” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available or as additional analyses are conducted, and as the data are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publish interim, “top-line” or preliminary data from our clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or “top-line” data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Material adverse changes between preliminary, “top-line” or interim data and final data could significantly harm our business, financial condition, results of operations and prospects.

Our approach to discover and develop fusion proteins for delivering proteins is novel and may never lead to marketable products.

We have concentrated our efforts and research and development activities on delivering proteins (FXN or other) to intracellular targets. Our future success depends on the successful development and manufacturing of such therapeutics and the effectiveness of our platform. The scientific discoveries that form the basis for our research are relatively new.

CTI-1601 uses a novel and unproven approach and mechanism to treat FA and therefore its efficacy and safety are difficult to predict, and there is no guarantee that CTI-1601 will be approved by the FDA, the EMA, or any other regulatory authorities.

If CTI-1601 proves to be ineffective, unsafe or commercially unviable, it is possible that our platform and pipeline would have little, if any, value, which would substantially harm our business, financial condition, results of operations and prospects. In addition, our approach may expose us to additional financial risks and make it more difficult to raise additional capital than other, more advanced proven technologies, which would materially adversely affect our business, financial condition and results of operations.

Protein replacement therapies are novel, complex and difficult to manufacture. We could experience manufacturing problems that result in delays in the commencementdevelopment or completioncommercialization of our plannedprotein replacement therapy platform or product candidates or otherwise harm our business.

The manufacture of fusion proteins, such as CTI-1601 and any fusion protein candidates, is technically complex and necessitates substantial expertise and capital investment. Production difficulties caused by unforeseen events may delay the availability of material for clinical trials and commercial products for CTI-1601 or any fusion protein product that may receive regulatory approval in the future. Additionally, because biologic products are complex, the manufacture ofZGN-1061 such products and product candidates is more difficult and costly. We may not be able to have such products reliably manufactured in accordance with the applicable regulatory requirements in sufficient quantities to support our development programs and, if ultimately approved, commercial supply.

There are a limited number of contract manufacturers who specialize in the manufacture of biologic products and those that do may still be developing appropriate processes, controls and facilities for large-scale production. While we believe that there will be sufficient sources of supply that can satisfy our clinical and commercial requirements, we cannot be certain that we will be able to identify and establish additional relationships with such sources, if necessary, in a timely manner orZGN-1258 at all, and what the terms and costs of such new arrangements would be, or that such suppliers would be able to supply our potential commercial needs. Furthermore, in the event our primary manufacturer cannot meet our needs, any switch to an alternative manufacturer, if available, would result in a significant delay, would require FDA approval, and cause material additional costs.

As further described in these risk factors, the manufacturers of biologic products must comply with strictly enforced cGMP requirements, state and federal regulations, as well as foreign requirements when applicable. Any failure by us or our contract manufacturing organizations to adhere to or document compliance to such regulatory requirements could lead to a delay or interruption in the availability of our program materials for clinical trials or commercial use, among other consequences. If we or our manufacturers fail to comply with the FDA, EMA, or other regulatory authorities, it could result in increased costssanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, clinical holds or termination of clinical trials, Form 483s, warning or untitled letters, regulatory communications warning the public about safety issues with a product, import or export

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In addition, the FDA may terminate the accelerated approval program or change the standards under which accelerated approvals are considered and granted in response to public pressure or other concerns regarding the accelerated approval program. Changes to or termination of the accelerated approval program could prevent or limit our ability to generate revenue and continueobtain accelerated approval of any of our business.

ZGN-1061 has completed Phase 1 clinical development inprograms. Recently, the Netherlandsaccelerated approval pathway has come under scrutiny within the FDA and by Congress. The FDA has put increased focus on ensuring that confirmatory studies are conducted with diligence and, ultimately, that such studies confirm the benefit. In addition, Congress recently enacted the Food and Drug Omnibus Reform Act (“FDORA”), which included provisions related to the accelerated approval pathway. Pursuant to FDORA, the FDA is in Phase 2 clinical development in Australiaauthorized to require a post-approval study to be underway prior to approval or within a specified time period following approval. FDORA also requires the FDA to specify conditions of any required post-approval study and New Zealandrequires sponsors to submit progress reports for required post-approval studies and will require substantial further clinical development before we can submit an NDAany conditions required by the FDA. FDORA enables the FDA to initiate enforcement action for the failure to conduct with due diligence a required post-approval study, including a failure to meet any required conditions specified by the FDA or an MAA to submit timely reports.

If we fail to maintain orphan drug designation or other regulatory exclusivity for CTI-1601 or obtain such exclusivity for any of our other product candidates in the EMA for its marketing approval.ZGN-1258 is still in nonclinical development, and additional nonclinical work mustfuture, our competitive position would be completed prior to filing the IND application with the FDA.harmed.

Despite the guidance we may receiveWe received orphan drug designation from the FDA for CTI-1601 for the EMA,treatment of FA in July 2017. In the United States, orphan drug designation entitles a party to financial incentives such as tax advantages and user-fee waivers. In addition, if a product candidate that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including an NDA or other applicable regulatory authoritiesBLA, to market the same drug for the same indication for seven years, except in limited circumstances, including Australia and New Zealand, anyif the FDA concludes that the later drug is clinically superior to the approved drug. A drug is clinically superior if it is safer, more effective, or makes a major contribution to patient care. In the case of these regulatory authorities can change their positionsa biological product, whether a drug is the same drug is based on the acceptabilityprincipal molecular structural features of the product. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process.

Additionally, we may lose orphan drug exclusivity if we are unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition. Moreover, orphan drug exclusivity may not effectively protect our clinical trial designsproduct candidates from competition because different drugs can be approved for the same condition. Further, even after an orphan drug is approved, the FDA or comparable foreign regulatory authority can subsequently approve another drug for the same condition if such regulatory authority concludes that the later drug is clinically superior, if it is shown to be safer, more effective or makes a major contribution to patient care.

We have also received orphan drug designation for CTI-1601 in the European Union. In the European Union, the European Medicines Agency, or EMA’s Committee for Orphan Medicinal Products grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention or treatment of life threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the European Union. Additionally, designation is granted for products intended for the diagnosis, prevention or treatment of a life threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the drug. In the European Union, orphan drug designation also entitles a party to financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity following drug approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is sufficiently profitable so that market exclusivity is no longer justified. Loss of orphan drug designation for CTI-1601 or the clinical endpoints selected,failure to obtain such designation in other countries or for any future product candidates could adversely affect our business, financial condition and results of operation.

If another product has received approval in the indications for which we have received orphan drug designation, we may require us to complete additional clinical trials or impose stricterstill receive approval conditions thanin that indication if we currently expect. Successful completion of such clinical trialscan demonstrate that our product candidate is a prerequisite to submitting an NDAclinically superior to the FDA and an MAA to the EMA and, consequently, the ultimate approval and commercial marketing ofZGN-1061 orZGN-1258. We do not know whether any clinical trials forZGN-1061 orZGN-1258 will begin or be completed on schedule, if at all, as the commencement and completionexisting orphan product. This demonstration of clinical trialssuperiority may be done at the time of initial approval or in post-approval studies, depending on the type of marketing authorization granted. Having to comply with these additional requirements to obtain orphan drug exclusivity could adversely affect our business, financial condition and results of operation.

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Although we have obtained rare pediatric disease designation for CTI-1601, we may not be eligible to receive a priority review voucher in the event the FDA determines we no longer meet the criteria for designation, revokes the designation or that FDA approval does not occur prior to September 30, 2026.

The sponsor of an application for a rare pediatric disease drug product may be eligible for a voucher that can be delayedused or preventedsold to obtain a priority review for a subsequent application submitted under section 505(b)(1) of the FDCA or section 351 of the PHS Act. The rare pediatric disease priority review voucher program was most recently reauthorized by Congress through September 30, 2024, with the potential for priority review vouchers to be granted through September 30, 2026. We received rare pediatric disease designation from the FDA for CTI-1601 in 2019. We may, in the future, apply for rare pediatric disease designation from the FDA for future product candidates that may qualify for designation. Vouchers for rare pediatric disease drugs are awarded for qualifying applications when the drug receives approval.

Although CTI-1601 has received rare pediatric disease designation, CTI-1601 may not receive a priority review voucher for a number of reasons, including, among others:

Clinical trials may also be delayed or terminated as a result of ambiguous or negative interim results. In addition, a clinical trial may be suspended or terminated by us, the FDA, other regulatory authorities, the IRBs or ethics committees, at the sites where the IRBs or ethics committees are overseeing a clinical trial, a data monitoring committee, or DMC, overseeing the clinical trial at issue or other regulatory authorities due to a number of factors, including, among others:

Changes in regulatory requirements, FDA guidance, or guidance from EMA, Australia or New Zealandother regulatory authorities or unanticipated events during our non-clinical or clinical trials ofZGN-1061 CTI-1601 orZGN-1258, may occur, which future product candidates may result in changes to clinical trial protocols or additional non-clinical or clinical trial requirements, which could result in increased costs to us and could delay our development timeline.

Changes in regulatory requirements, FDA guidance or guidance from EMA or unanticipated events during our non-clinical or clinical trials may force us to terminate or adjust our clinical program.programs. The FDA, the EMA, or theother applicable regulatory authorities in Australia and New Zealand may impose additional clinical trial and/or nonclinicalnon-clinical study requirements. For instance, the FDA issued draft guidance on developing products for weight management in February 2007 and issued draft guidance on developing products for the treatment of diabetes in February 2008 but these guidance documents may be revised at any time. In December 2008, FDA established guidance on evaluating cardiovascular risk of new therapies for the treatment of type 2 diabetes. Amendments to our clinical trial protocols would require resubmission to the FDA, the EMA, or the applicable regulatory authorities in Australia and New Zealand as well as IRBs and ethics committees for review and approval, which may adversely impact the cost, timing or successful completion of a clinical trial. If we experience delays completing, or if we terminate, any of our clinical trials, or if we are required to conduct additional clinical trials, or non-clinical studies and/or nonclinicalpost-market studies, the commercial prospects forZGN-1061 CTI-1601 orZGN-1258 any other potential product candidates may be harmed and our ability to generate product revenue will be delayed.

We rely,delayed or eliminated, and expect that we will continue to rely, on third parties to conduct any future clinical trials forZGN-1061 andZGN-1258. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to develop and obtain regulatory approval for or commercializeZGN-1061 orZGN-1258, and our business could be substantially harmed.

We enter into agreements with third-party CROs to provide monitors for and to manage data for our ongoing clinical trials. We rely heavily on these parties for execution of clinical trials forZGN-1061 and will continue to rely on these parties for clinical trials forZGN-1258, but we only control certain aspects of their activities. As a result, we have less direct control over the conduct, timing and completion of these clinical trials and the management of data developed through the clinical trials thanit would be the case if we were relying

entirely upon our own staff. Communicating with outside parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating activities. Outside parties may:

These factors may materially adversely affect the willingness or abilityour business, financial condition and results of third parties to conduct our clinical trials and may subject us to unexpected cost increases that are beyond our control. Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the applicable protocol, legal and regulatory requirements and scientific standards, and our reliance on CROs does not relieve us of our regulatory responsibilities. We and our CROs are required to comply with requirements for Good Clinical Practice, or GCPs, which are legal requirements enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities for any products in clinical development. The FDA enforces these GCP regulations through periodic inspections of clinical trial sponsors, principal investigators and clinical trial sites, IRBs, and other vendors that may be involved in the clinical development of new products. If we or our investigators or CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that, upon inspection, the FDA will determine that any of our clinical trials comply with GCPs. In addition, our clinical trials must be conducted with products produced under current Good Manufacturing Practices, or cGMPs’ regulations, to assure the identity, strength, quality, and purity of our drug product candidates being used in the clinical trials, as well as theto-be-marketed formulation and product. Our failure or the failure of our CROs and/or contract manufacturing organizations, or CMOs, to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process and could also subject us to enforcement action, up to and including, civil and criminal penalties.operations.

Although we design our clinical trials, investigators and CROs conduct all of the clinical trials. As a result, many important aspects of our drug development programs are outside of our direct control. In addition, the investigators or CROs may not perform all of their obligations under arrangements with us or in compliance with regulatory requirements, but we remain responsible and are subject to enforcement action that may include civil penalties up to and including criminal prosecution for any violations of FDA laws and regulations during the conduct of our clinical trials. If the investigators or CROs do not perform clinical trials in a satisfactory manner, breach their obligations to us, or fail to comply with regulatory requirements, the development and commercialization ofZGN-1061 orZGN-1258 may be delayed or our development program materially and irreversibly harmed. We cannot control the amount and timing of resources these investigators or CROs devote to our program,ZGN-1061, or will devote toZGN-1258. If we are unable to rely on clinical data collected by our investigators or CROs, we could be required to repeat, extend the duration of, or increase the size of our clinical trials and this could significantly delay commercialization and require significantly greater expenditures.

If any of our relationships with these third-party investigators or CROs terminate, we may not be able to enter into arrangements with alternative investigators or CROs in a timely manner, or at all. If investigators or CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, any such clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for or successfully commercializeZGN-1061 orZGN-1258. As a result, our financial results and the commercial prospects forZGN-1061 orZGN-1258 in the subject indications would be harmed, our costs could increase and our ability to generate revenue could be delayed.

The number of patients suffering from PWS is small and has not been established with precision. If the actual number of patients with this condition is smaller than we estimate or if any approval that we obtain is based on a narrower definition of this patient population, our revenue and ability to achieve profitability forZGN-1258 will be adversely affected, possibly materially.

There is no current comprehensive patient registry or other method of establishing with precision the actual number of patients with PWS in any geography. Published population studies estimate that the prevalence of PWS in the United States and in the European Union ranges from 1 in 8,000 to 1 in 50,000. If the actual number of patients with PWS is lower than we believe or if any approval that we obtain is based on a narrower definition of these patient populations, than the potential market forZGN-1258 for these indications will be smaller than we anticipate. If our IND goes into effect, our inability to enroll a sufficient number of patients for our clinical trials could result in significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs forZGN-1258, delay or halt the development of and approval processes for our product candidates and jeopardize our ability to achieve our clinical development timeline and goals, including the dates by which we will commence, complete and receive results from clinical trials. Enrollment delays in our clinical trials may also jeopardize our ability to commence sales of and generate revenues from our product candidates, which could cause the value of our company to decline and limit our ability to obtain additional financing, if needed.

We rely completely on third-party suppliers to manufacture our clinical drug supplies forZGN-1061 andZGN-1258, and to the extent we elect to commercializeZGN-1061 orZGN-1258 on our own, we intend to rely on third parties to produce commercial supplies of such products, and nonclinical, clinical and commercial supplies of any future product candidate.

We do not currently have, nor do we currently plan to acquire, the infrastructure or capability to internally manufacture our clinical drug supply ofZGN-1061,ZGN-1258, or any future product candidates, for use in the conduct of our nonclinical studies and clinical trials, and we lack the internal resources and the capability to manufacture any product candidates on a clinical or commercial scale. The CMOs used to manufacture the active drug substance and final drug product must be approved by our quality assurance unit and inspected by the FDA and other comparable foreign regulatory agencies.

We rely on our CMOs to comply with cGMPs for manufacture of raw materials, active drug substance and finished drug products. If our CMOs cannot successfully manufacture material that conforms to our specifications and the regulatory requirements of the FDA or applicable foreign regulatory agencies, the CMOs will not be able to secure and/or maintain regulatory approval for their manufacturing facilities or regulatory agencies may find deficiencies with their facilities and refuse to approve our marketing applications. While we manage our quality expectations through an audit program for our vendors and suppliers, we have no direct control over our CMOs’ ability to maintain adequate quality control, quality assurance and qualified personnel. Furthermore, our CMOs are engaged with third party vendors to supply and/or manufacture starting materials or components for them, which exposes our CMOs to regulatory risks for the production of such materials and components. As a result, failure to satisfy the regulatory requirements for the production of those materials and components may affect the regulatory clearance of our CMOs’ facilities generally. If the FDA or an applicable foreign regulatory agency finds deficiencies with or does not approve these facilities for the manufacture of our product candidates or if it withdraws its approval in the future, we may need to find alternative manufacturing facilities, which would adversely impact our ability to develop, obtain regulatory approval for or market our product candidates.

We rely completely on third-party suppliers to manufacture our nonclinical and clinical drug supplies forZGN-1061 and our nonclinical drug supplies and future clinical drug supplies forZGN-1258. Currently each batch ofZGN-1061 andZGN-1258 is individually contracted under a work order, which is governed by a quality and service agreement. The current drug substance manufacturing process will support nonclinical studies and early clinical trials and will be further optimized to support advanced clinical development and

commercialization. Current drug substance, including key starting material, in inventory, is expected to support Phase 2 clinical trials. A new formulation with longer shelf life has been developed and manufactured to support Phase 2 clinical development forZGN-1061.

Even if we receive marketing approval for a product candidate in the United States, we may never receive regulatory approval to market such product candidate outside of the United States.

We may pursue marketing approval for certain of our product candidates in the United States, the European Union and in other countries worldwide. In order to market any product outside of the United States, we must establish and comply with the numerous and varying safety, efficacy and other regulatory requirements of other countries including potential additional clinical trials and/or nonclinical studies. Approval procedures vary among countriesregarding drug development and commercialization. The approval processes varies from country to country and can involve additional product candidate testing and additional administrative review periods. The time required to obtain approvalsapproval in other countries might differ from and be longer than that required to obtain FDA approval. The marketing approval processes in other countries may implicate all of the risks detailed above regarding FDA approval in the United States as well as other risks. In particular, in many countries outside of the United States, products must receive pricing and reimbursement approval before the product can be commercialized. Obtaining this approval can result in substantial delays in bringing products to market in such countries. In addition, on March 20, 2017, the United Kingdom government started the process to leave the European Union by April 2019, or Brexit. The effects of Brexit will depend on any agreements the United Kingdom makes to retain access to European Union markets either during a transitional period or more permanently. Brexit could lead to legal uncertainty and potentially divergent national laws and regulation as the United Kingdom determines which European Union laws to replace or replicate. MarketingRegulatory approval in one country does not necessarily ensure marketingregulatory approval in another, but a failure or delay in obtaining marketingregulatory approval in one country may have a negative effect onnegatively impact the regulatory process or commercial activities in others. Failure to obtain marketing approval in other countries or any delay or other setback in obtaining such approval would impair our ability to market a product candidate in such foreign markets. Any such impairment would reduce the size of our potential market, which could have a material adverse impact on our business, results of operations and prospects.

Even if we receive marketing approval for CTI-1601 in the United States, we may never receive regulatory approval to market CTI-1601 outside of the United States.

Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a product candidate, ittimely manner or at all, which could negatively impact our business.

The ability of the FDA to review and/or approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel, and accept the payment of user fees, and other events that may not achieve broad market acceptance,otherwise affect the FDA’s ability to perform routine functions. 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 may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, since March 2020 when foreign and domestic inspections of facilities were largely placed on hold, the FDA has been working to resume routine surveillance, bioresearch monitoring and pre-approval inspections on a prioritized basis. Since April 2021, the FDA has conducted limited inspections and employed remote interactive evaluations, using risk management methods, to meet user fee commitments and goal dates. Ongoing travel restrictions and other uncertainties continue to impact oversight operations both domestic and abroad and it is unclear when standard operational levels will resume. Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to a resurgence of COVID-19, and/or other outbreaks of communicable diseases. If a prolonged government shutdown occurs, or if 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.

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Regulatory requirements governing biologic drug products are evolving and may continue to change in the revenue that we generate from its sales.future. As a result, it is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for CTI-1601 for the treatment of FA or any other future protein replacement therapy product candidates in any indication, if at all. Regulatory review agencies and the new requirements and guidelines they promulgate may lengthen the regulatory review process, require us to perform additional or larger studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates or lead to significant post-approval studies, limitations or restrictions. Delays, failure or unexpected costs in obtaining, the regulatory approval necessary to bring our product candidates to market could have a material adverse effect on our business, results of operations, financial condition and prospects.

The commercial successIn addition, the clinical trial requirements of the FDA, the EMA and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate if developedvary substantially according to the type, complexity, novelty and approvedintended use and market of such product candidates. The regulatory approval process for novel product candidates such as ours can be more expensive and take longer than for other, better known or more extensively studied product candidates.

The clinical trials of CTI-1601 and any future product candidates are, and the manufacturing and marketing of CTI-1601 and any future product candidates, will be subject to extensive and rigorous review and regulation by numerous government authorities in the United States and in other countries, such as within the European Union, where we intend to seek regulatory approval of, and market, any product candidates.

Before obtaining regulatory approvals for the commercial sale of any product candidate, we must demonstrate through non-clinical testing and clinical trials that the product candidate is safe and effective for use in each target indication. This process can take many years. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions, which may cause delays in the approval of or may result in the decision not to approve our product candidates. We have not obtained regulatory approval for CTI-1601, and it is possible that this product candidate or any product candidates we may seek to develop in the future will never obtain regulatory approval. If marketing approval is obtained, it will likely include post-marketing studies, and other post-marketing requirements, and surveillance such as REMS which will require the expenditure of substantial resources beyond the proceeds we currently have on hand.

Furthermore, we are not permitted to market CTI-1601 in the United States or the European Union until we receive approval of a BLA from the FDA or a MAA from the EMA, or in any other foreign countries until we receive the requisite marketing approval from such countries. The development of drugs for FA or other rare diseases may require initial non-clinical studies, early and usually smaller, clinical trials and randomized, double-blind placebo controlled long-term safety and efficacy trials in order to test the safety and efficacy of the drug.

CTI-1601 requires substantial further clinical development before we can submit a BLA to the FDA. Development and/or regulatory programs for CTI-1601 in any countries other than the United States (such as a MAA to the EMA) are only in very preliminary stages and may require substantial further development in those countries prior to regulatory submissions seeking regulatory approval for marketing.

Even after successful completion of clinical trials, there is a risk that the FDA or other regulatory agencies may request further information from us, disagree with our findings or otherwise undertake a lengthy review of our submission.

The FDA and certain European regulatory authorities may delay, limit or deny testing or approval of CTI-1601 for many reasons, including, among others:

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Competing technologies could emerge, including devices and surgical procedures, adversely affecting our opportunity to generate revenue from the sale ofZGN-1061 orZGN-1258.

The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We have competitors in a number of jurisdictions, many of which have substantially greater name recognition, commercial infrastructures and financial, technical and personnel resources than we have. Established competitors may invest heavily to quickly discover and develop novel compounds that could makeZGN-1061 orZGN-1258 obsolete or uneconomical. Any new product that competes with an approved product may need to demonstrate compelling advantages in efficacy, convenience, tolerability and safety to be commercially successful. Other competitive factors, including generic competition, could force us to lower prices or could result in reduced sales. In addition, new products developed by others could emerge as competitors toZGN-1061 orZGN-1258. If we are not able to compete effectively against our current and future competitors, our business will not grow and our financial condition and operations will suffer.

Our future growth depends, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.

Our future profitability will depend, in part, on our ability to commercialize a product candidate in foreign markets for which we may rely on collaborations with third parties. If we commercialize a product candidate in foreign markets, we would be subject to additional risks and uncertainties, including:

Foreign sales of a product candidate could also be adversely affected by the imposition of governmental controls, political and economic instability, trade restrictions and changes in tariffs.

We are subject to healthcare laws and regulations, and health information privacy and security laws, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers, physicians and others will play a primary role in the recommendation and prescription ofZGN-1061 CTI-1601 orZGN-1258, any potential product candidates, if approved. Our future arrangements with third-party payors will expose us broadly to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distributeZGN-1061 CTI-1601 orZGN-1258, potential product candidates, if we obtain marketing approval. In addition, we may be subject to patient privacy regulation by both the federal government and the states or other countries in which we conduct our business. Restrictions under applicable federal and state healthcare laws and regulations include the following:

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Ensuring that our future business arrangements with third parties comply with applicable healthcare laws and regulations could be costly. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations, including anticipated activities to be conducted by our sales team, were found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines and exclusion from government funded healthcare programs, such as Medicare and Medicaid, any of which could substantially disrupt our operations and would materially adversely affect our business, financial condition and results of operations. If any of the physicians or other providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.programs, which could have a material adverse effect on our business, results of operations, financial condition and prospects.

The FDAHealthcare legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives may increase the difficulty and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion ofoff-label uses. If we are foundcost for us to have improperly promotedoff-label uses, we may become subject to significant liability.

The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products, such asZGN-1061 orZGN-1258, if approved. If we receiveobtain marketing approval forZGN-1061 orZGN-1258, physicians may prescribeof and commercialize our product candidates to their patientscandidates.

The commercial potential for our approved products, if any, could be affected by changes in healthcare spending and policy in the United States and abroad. We operate in a manner that is inconsistent withhighly regulated industry. New laws, regulations or judicial decisions or new interpretations of existing laws, regulations or decisions, related to healthcare availability, the approved label. If we are found to have promoted suchoff-label uses, we may become subject to significant liability. The federal government has levied large civilmethod of delivery or payment for healthcare products and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging inoff-label promotion and required that they enter into corporate integrity agreements with the Office of Inspector General of the Department of Health and Human Services, or OIG. 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 ofZGN-1061 orZGN-1258, if approved, weservices could become subject to significant liability, which would materially adversely affect our business, operations and financial condition. The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that may affect our ability to profitably sell our product and product candidates, if approved. The United States government, state legislatures and foreign governments also have shown significant interest in implementing cost-containment programs to limit the

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Even if approved, reimbursement policies could limit our ability to sell product candidates that we elect to sell on our own.

If approved by regulatory authorities, market acceptance and sales of product candidates that we elect to sell on our ownwill depend on reimbursement policies and may be affected by healthcare reform measures. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels for those medications. Cost containment is a primary concern in the U.S. healthcare industry and elsewhere. Government authorities and these third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. We cannot be sure that reimbursement will be available for CTI-1601, if approved, or future product candidates that we elect to sell on our own and, if reimbursement is available, the level of such reimbursement. Reimbursement may impact the demand for, or the price of, product candidates that we elect to sell on our own.to. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize product candidates that we elect to sell on our own.sell.

In some foreign countries, particularly in Canada and European countries, the pricing of prescription pharmaceuticals is subject to strict governmental control. In these countries, pricing negotiations with governmental authorities can take six to 12 months or longer after the receipt of regulatory approval and product launch. To obtain favorable reimbursement for the indications sought or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of product candidates that we elect to sell on our own with other available therapies. If reimbursement for product candidates that we elect to sell on our own is

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unavailable in any country in which we seek reimbursement, if it is limited in scope or amount, if it is conditioned upon our completion of additional clinical trials, or if pricing is set at unsatisfactory levels, our operatingbusiness, financial conditions and results of operations could be materially adversely affected.