During the first step of the development stage, we or our partners study our drugs in IND-enabling studies,
which are animal studies intended to support an Investigational NewDrug, or IND, application and/or the foreign
equivalent. An approved IND allows us or our partners to study our development candidate in humans. If the
regulatory agency approves the IND, we or our partners initiate Phase 1 clinical trials in which we typically
enroll a small number of healthy volunteers to ensure the development candidate is safe for use in patients. If we
or our partners determine that a development candidate is safe based on the Phase 1 data, we or our partners
initiate Phase 2 studies that are generally larger scale studies in patients with the primary intent of determining
the efficacy of the development candidate.
The final step in the development stage is Phase 3 studies to gather the necessary safety and efficacy data to
request marketing approval from the Food and DrugAdministration, or FDA, and/or foreign equivalents. The
Phase 3 studies typically involve large numbers of patients and can take up to several years to complete. If the
data gathered during the trials demonstrates acceptable safety and efficacy results, we or our partner will submit
an application to the FDAand/or its foreign equivalents for marketing approval. This stage of the drug’s
life-cycle is the regulatory stage.
If a drug achieves marketing approval, it moves into the commercialization stage, during which we or our
partner will market and sell the drug to patients. Although our partner will ultimately be responsible for
marketing and selling the partnered drug, our efforts to discover and develop a drug that is safe, effective and
reliable contributes significantly to our partner’s ability to successfully sell the drug. The FDAand its foreign
equivalents have the authority to impose significant restrictions on an approved drug through the product label
and on advertising, promotional and distribution activities. Therefore, our efforts designing and executing the
necessary animal and human studies are critical to obtaining claims in the product label from the regulatory
agencies that would allow us or our partner to successfully commercialize our drug. Further, the patent protection
afforded our drugs as a result of our initial patent applications and related prosecution activities in the United
States and foreign jurisdictions are critical to our partner’s ability to sell our drugs without competition from
generic drugs. The potential sales volume of an approved drug is dependent on several factors including the size
of the patient population, market penetration of the drug, and the price charged for the drug.
Generally, the milestone events contained in our partnership agreements coincide with the progression of our
drugs from development, to regulatory approval and then to commercialization. The process of successfully
discovering a new development candidate, having it approved and ultimately sold for a profit is highly uncertain.
As such, the milestone payments we may earn from our partners involve a significant degree of risk to achieve.
Therefore, as a drug progresses through the stages of its life-cycle, the value of the drug generally increases.
Development milestones in our partnerships may include the following types of events:
•
Designation of a development candidate. Following the designation of a development candidate,
IND-enabling animal studies for a new development candidate generally take 12 to 18 months to
complete;
•
Initiation of a Phase 1 clinical trial. Generally, Phase 1 clinical trials take one to two years to complete;
•
Initiation or completion of a Phase 2 clinical trial. Generally, Phase 2 clinical trials take one to three
years to complete;
•
Initiation or completion of a Phase 3 clinical trial. Generally, Phase 3 clinical trials take two to four
years to complete.
Regulatory milestones in our partnerships may include the following types of events:
•
Filing of regulatory applications for marketing approval such as a NewDrugApplication, or NDA, in
the United States or aMarketingAuthorizationApplication, or MAA, in Europe. Generally, it takes six
to twelve months to prepare and submit regulatory filings.
•
Marketing approval in a major market, such as the United States, Europe or Japan. Generally it takes
one to two years after an application is submitted to obtain approval from the applicable regulatory
agency.
Commercialization milestones in our partnerships may include the following types of events:
•
First commercial sale in a particular market, such as in the United States or Europe.
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