As filed with the Securities and Exchange Commission on August 23, 2022

Registration No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

RELIEF THERAPEUTICS Holding SA

(Exact name of Registrant as specified in its charter)

 

 

N/A

(Translation of Registrant’s Name into English)

 

 

 

Switzerland		2834		n/a
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

Avenue de Sécheron 15

1202 Genève

Switzerland

Tel: +41 22 545 11 16

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

The Corporation Trust Company

Corporation Trust Center

1209 Orange Street

Wilmington, DE 19801

+1-302-658-7851

(Name, address, including zip code, and telephone number, including area code, or agent for service)

 

 

Copies to:

 

Philip B. Schwartz Andrew E. Schwartz Akerman LLP 201 East Las Olas Boulevard Suite 1800 Fort Lauderdale, Florida 33301 Tel: (954) 463-2700		[Underwriter Counsel]

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement is declared effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act of 1933.

Emerging Growth Company  ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 7(a)(2)(B) of the Securities Act.  ☐

 

†	The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

 

 

The information contained in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED AUGUST 23, 2022

PRELIMINARY PROSPECTUS

[*] American Depositary Shares

Representing [*] Ordinary shares

 

$[*] Per American Depositary Share

 

 

This is the initial public offering of our American Depositary Shares, or ADSs. We are selling ordinary shares in the form of ADSs in the United States. Each ADS represents the right to receive ordinary shares and the ADSs may be evidenced by American Depositary Receipts, or ADRs. We intend to apply to list our ADSs on NASDAQ, under the symbol “RLFT”.

Our ordinary shares are listed on the SIX Swiss Exchange under the symbol “RLF”. Our ordinary shares also currently trade on the over-the-counter market under the symbol “RLFTF” and our ADSs currently trade on the over-the-counter market under the symbol “RLFTY”. On August 22, 2022, the last reported sale price of our ordinary shares on the SIX Swiss Exchange was 0.033 CHF per common share, equivalent to a price of $4.50 per ADS as calculated by the official exchange rate on such date.

The offering price per common share will be determined by reference to the prevailing market prices of our ordinary shares on the SIX Swiss Exchange, after taking into account market conditions and other factors, but will not be lower than a price that is [*]% below the volume-weighted average price on the SIX Swiss Exchange for the ___ days prior to the commencement of this offering.

 

 

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012, and, as such, have elected to comply with certain reduced public company reporting requirements.

 

 

Investing in our ADSs involves a high degree of risk. See “Risk Factors” beginning on page 21 of this prospectus.

Neither the United States Securities and Exchange Commission nor any U.S. state securities commission has approved or disapproved of these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

		Per ADS				Total
Offering Price		$				$
Underwriting discounts and commissions		$				$
Proceeds, to us, before expenses		$				$

 

(1)	Please see “Underwriting” beginning on page 189 of this prospectus for additional information regarding underwriting compensation in the offering.

We have agreed to issue, at the option of the underwriters, within 30 days from the date of the underwriting agreement, up to an aggregate of ____ additional ADSs in the offering to be sold from the several underwriters at the applicable offering price. If the underwriters exercise this option in full, the total underwriting commission payable by us will be $ and the total proceeds to us, before expenses, will be $.

The underwriters expect to deliver the ADSs to purchasers in the offering on or about ______, 2022 through the book-entry facilities of The Depository Trust Company, or DTC.

 

 

[Underwriter]

Prospectus dated ____, 2022

TABLE OF CONTENTS

Contents

 

PROSPECTUS SUMMARY			1
THE OFFERING			17
SUMMARY FINANCIAL DATA			19
RISK FACTORS			21
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			65
MARKET, INDUSTRY AND OTHER DATA			67
TRADEMARKS AND SERVICE MARKS			67
USE OF PROCEEDS			68
DIVIDEND POLICY			69
CAPITALIZATION			70
DILUTION			71
SELECTED FINANCIAL DATA			73
MANAGEMENT’S DISCUSSION AND ANALYSIS OF			75
FINANCIAL CONDITION AND RESULTS OF OPERATIONS			75
BUSINESS			86
MANAGEMENT			135
EXECUTIVE COMPENSATION			141
RELATED PARTY TRANSACTIONS			146
PRINCIPAL SHAREHOLDERS			147
DESCRIPTION OF SHARE CAPITAL AND ARTICLES OF ASSOCIATION			148
COMPARISON OF SHAREHOLDER RIGHTS			160
DESCRIPTION OF AMERICAN DEPOSITORY SHARES			167
SHARES AND ADSs ELIGIBLE FOR FUTURE SALE			179
TAXATION			181
UNDERWRITING			189
EXPENSES RELATED TO THIS OFFERING			197
LEGAL MATTERS			197
EXPERTS			197
SERVICE OF PROCESS AND ENFORCEMENT OF JUDGEMENTS			198
WHERE YOU CAN FIND MORE INFORMATION			198
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1

 

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We are responsible for the information contained in this prospectus and in any free writing prospectus we prepare or authorize. We have not, and the underwriters have not, authorized anyone to provide you with different information, and we and the underwriters take no responsibility for any other information others may give you. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than its date.

Our jurisdiction of incorporation is Switzerland, and our registered office is in Geneva, Canton of Geneva, Switzerland. A majority of our outstanding securities that are registered in our share register are owned by non-U.S. residents. Under the rules of the U.S. Securities and Exchange Commission, or the SEC, we are currently eligible for treatment as a foreign private issuer. As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. domestic issuers whose securities are registered under the Securities Exchange Act of 1934, as amended, referred to herein as the Exchange Act.

We own trademarks for Relief Therapeutics in Switzerland. All other trade names, trademarks and service marks of other companies appearing in this prospectus are the property of their respective holders. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the ^® and ^™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend to use or display other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

Our reporting currency is the Swiss franc. In this prospectus, unless otherwise specified, all monetary amounts are in Swiss francs, all references to “CHF” and “Swiss francs” mean Swiss francs and all references to “U.S. dollars,” “$,” “US$” and “USD” mean United States dollars. Throughout this prospectus, references to ADSs mean ADSs or ordinary shares represented by such ADSs, as the case may be.

We present our consolidated financial statements in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. Readers of this prospectus should note that there may be certain differences between the presentation of our financial position, results of operations and cash flows under IFRS and U.S. generally accepted accounting principles.

 

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RISK FACTORS

Investing in the ADSs involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the other information in this prospectus before making an investment decision. Our business, financial condition or results of operations could be adversely affected if any of these risks occurs, and as a result, the market price of the ADSs could decline and you could lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors.

Risks Related to our Business

We depend heavily on the success of our product candidates. If our clinical studies are unsuccessful, if we or our collaboration partners do not obtain regulatory approval or if we or our collaboration partners are unable to commercialize our product candidates, or if we experience significant delays in doing so, our business, financial condition and results of operations will be materially adversely affected.

We currently have a small number of products approved for sale, all of which were acquired in the business combination with APR, generating a limited volume of sales. We recently licensed ACER-001, and have added additional products to our portfolio through our acquisitions of AdVita and APR. Our ability to generate significantly higher product revenues will depend heavily on successful clinical development, obtaining regulatory approval and eventual commercialization of these product candidates. The success of our current and future product candidates will depend on several factors, including the following:

 

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completing preclinical studies and clinical studies that demonstrate the efficacy, safety and clinical utility of our product candidates;

 

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receiving marketing approvals from applicable regulatory authorities;

 

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developing product formulations with sufficiently long-term stability and chemistry, manufacturing and controls that meet governmental regulatory standards;

 

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establishing commercial manufacturing capabilities;

 

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launching commercial sales, marketing and distribution operations;

 

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acceptance of our product candidates by patients, the medical community and third-party payors;

 

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a continued acceptable safety profile following approval;

 

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competing effectively with other therapies; and

 

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obtaining, maintaining, enforcing and defending our intellectual property rights and claims and not infringing on third parties’ intellectual property rights.

If we or our collaborators do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our current or future product candidates, which would materially adversely affect our business, financial conditions and results of operations.

 

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Our business is subject to significant regulation from governments and regulatory bodies, including marketing approval requirements, which could lengthen the development time, increase the cost of developing our drug product candidates or delay, prevent or limit the commercialization of our product candidates.

When a medicinal product candidate receives regulatory approval, the approval can nonetheless be subject to limitations, e.g., with regard to the indications for which it may be marketed. The approval may also be given subject to conditions, such as additional proof of the medicinal product’s effectiveness and safety. Even after approval is granted, manufacturing, safety, efficacy, recordkeeping, labeling, marketing, sales and distribution of its product candidates are regulated by government agencies in countries where we intend to market our products. All these activities are subject to recurring scrutiny and regular inspections by the relevant agencies. As a consequence, if previously unknown problems are discovered in connection with an approved product, its manufacturer or the manufacturing facilities, this can result in restrictions on the product, the manufacturer or the manufacturing facilities, up to the requirement to withdraw the product from the market. In any event, changes in existing regulations or adoption of new regulations could prevent the Company and/or its commercialization partners from obtaining or maintaining, or affect the timing of, future regulatory approvals.

These and other factors, alone or together, may have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects as well as the Share price.

Results of early clinical studies may not be predictive of future study results.

Positive or timely results from preclinical or early-stage clinical studies do not ensure positive or timely results in late-stage clinical studies or product approval by the FDA, the EMA, or comparable foreign regulatory authorities. Products that show positive preclinical or early clinical results may not show sufficient safety or efficacy in later-stage clinical studies and therefore may fail to obtain regulatory approvals. In addition, preclinical and clinical data are often susceptible to varying interpretations and analyses. Many companies that believed their product candidates performed satisfactorily in preclinical and clinical studies have nonetheless failed to obtain marketing approval for the product candidates. The FDA, the EMA and comparable foreign regulatory authorities have substantial discretion in the approval process and in determining when or whether regulatory approval will be obtained for any of our product candidates. Even if we believe that the data collected from clinical studies of our product candidates are promising, such data may not be sufficient to support approval by the FDA, the EMA or any other regulatory authority.

In some instances, there can be significant variability in safety and/or efficacy results between different studies of the same product candidate due to numerous factors, including changes in study procedures set forth in protocols, differences in the size and type of the patient populations, adherence to the dosing regimen and other study protocols, and the rate of dropout among clinical study participants. In the case of our later-stage clinical product candidates, results may differ in general on the basis of the larger number of clinical study sites and the additional countries and languages involved in these clinical studies.

Clinical studies may include subject-reported outcomes, some of which may be captured with electronic diaries. We have no assurance and cannot rely on past experience that the high frequency of questioning is not influencing the measured outcome. In addition, low compliance with daily reporting requirements may impact the studies’ validity or statistical power. We cannot assure that any Phase 1, phase 2, phase 3 or other clinical studies that either we or our collaboration partners may conduct will demonstrate consistent or adequate efficacy and safety to obtain regulatory approval to market our product candidates.

 

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If we or our collaboration partners are required to conduct additional clinical studies or other testing of any of our current or future product candidates that we or our collaboration partners develop, beyond the studies and testing that we or our collaboration partners contemplate, if we or our collaboration partners are unable to successfully complete clinical studies of our product candidates or other testing, if the results of these studies or tests are unfavorable or are only modestly favorable, or if there are safety concerns associated with our current or future product candidates, we may:

 

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be delayed in obtaining marketing approval for our product candidates;

 

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not obtain marketing approval;

 

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obtain approval for indications or patient populations that are not as broad as intended or desired;

 

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obtain approval with labeling that includes significant use or distribution restrictions or significant safety warnings, including boxed warnings;

 

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be subject to conditional approval or otherwise to additional post-marketing studies or other requirements; or

 

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remove the product from market after obtaining marketing approval.

Our product development costs will also increase if we experience delays in testing or receiving marketing approvals and we may be required to obtain additional funds to complete clinical studies. We cannot assure that our clinical studies will begin as planned or be completed on schedule, if at all, or that we will not need to amend our studies after they have begun. Significant clinical study delays could also shorten any periods during which we or our collaboration partners may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do, which may harm our business and results of operations. In addition, some of the factors that cause, or lead to, clinical study delays may ultimately lead to the denial of regulatory approval of our product candidates.

The successful commercialization of our product candidates will depend on the extent to which governmental authorities and health insurers establish adequate coverage and reimbursement levels and pricing policies.

The successful commercialization of our product candidates will depend, in part, on the extent to which coverage and reimbursement for our products will be available from government and health administration authorities, private health insurers and other third-party payors. To manage healthcare costs, many governments and third-party payors increasingly scrutinize the pricing of new technologies and require greater levels of evidence of favorable clinical outcomes and cost-effectiveness before extending coverage. In light of such challenges to prices and the requirement for increasing levels of evidence of the benefits and clinical outcomes of new technologies, we cannot be sure that coverage will be available for any of our current or future product candidates that we or our collaboration partners will commercialize or, if available, that the reimbursement rates will be adequate in each respective region. If we are unable to obtain adequate levels of coverage and reimbursement for our product candidates, their marketability will be negatively and materially impacted.

Third-party payors may deny coverage and reimbursement status altogether for a given drug product, or may cover the product but also establish prices at levels that are too low to enable us to realize an appropriate return on our investment in product development. Because the rules and regulations regarding coverage and reimbursement change frequently, in some cases at short notice, even when there is favorable coverage and reimbursement, future changes may occur that adversely impact the favorable status. Further, the net reimbursement for drug products may be subject to additional reductions in the future depending on policy changes enacted by the national regulatory bodies.

 

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The unavailability or inadequacy and variability of third-party coverage and reimbursement could have a material adverse effect on the market acceptance of our product candidates and the future revenues we may expect to receive from those products. In addition, we are unable to predict what additional legislation or regulation relating to the healthcare industry or third-party coverage and reimbursement may be enacted in the future, or what effect such legislation or regulation would have on our business.

Our products may not gain market acceptance, in which case we or our collaboration partners may not be able to generate product revenues, which would materially adversely affect our business, financial condition and results of operations.

Even if the FDA, the EMA or any other regulatory authority approves the marketing of any product candidates that we develop, physicians, healthcare providers, patients or the medical community may not accept or use them. Efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may not be successful. If any of our current or future product candidates does not achieve an adequate level of acceptance, we or our collaboration partners may not generate significant product or royalty revenues or any profits from operations. The degree of market acceptance of our product candidates that are approved for commercial sale will depend on a variety of factors, including:

 

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how clinicians and potential patients perceive our novel products;

 

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the timing of market introduction;

 

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the number and clinical profile of competing products;

 

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our ability to provide acceptable evidence of safety and efficacy;

 

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the prevalence and severity of any side effects;

 

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relative convenience and ease of administration;

 

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cost-effectiveness;

 

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patient diagnostics and screening infrastructure in each market;

 

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marketing and distribution support;

 

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availability of coverage, reimbursement and adequate payment from third party payors, both public and private; and

 

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other potential advantages over alternative treatment methods.

If our product candidates fail to gain market acceptance, this will have a material adverse impact on our ability to generate revenues to provide a satisfactory, or any, return on our investments. Even if some products achieve market acceptance, the market may prove to not be large enough to allow us to generate significant revenues.

In addition, the potential market opportunity of our product candidates is difficult to estimate precisely. Our estimates of the potential market opportunity are predicated on several key assumptions such as industry knowledge and publications, third-party research reports and other surveys. These assumptions involve the exercise of significant judgment on the part of our management and are inherently uncertain, and the reasonableness of these assumptions could not have been assessed by an independent source in every detail. If any of the assumptions proves to be inaccurate, then the actual market for our product candidates could be smaller than our estimates of the potential market opportunity. If the actual market for our product candidates is smaller than we expect, or if any approved products fail to achieve an adequate level of acceptance by physicians, healthcare payors and patients, our product or royalty revenue may be limited, and it may be more difficult for us to achieve or maintain profitability.

 

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We depend on enrollment of patients in our clinical studies for our product candidates. If we are unable to enroll patients in our clinical studies, our research and development efforts could be materially adversely affected.

If our product candidates are associated with serious adverse, undesirable or unacceptable side effects, we may need to abandon their development or limit development to certain uses or subpopulations in which such side effects are less prevalent, less severe or more acceptable from a risk–benefit perspective. Many compounds that initially showed promise in preclinical or early-stage testing were later found to cause side effects that restricted their use and prevented further development of the compound for larger indications.

Generally, the specific target population of patients and therapeutic time windows may make it difficult for us to enroll enough patients to complete clinical studies for our products in a timely and cost-effective manner. Delays in the completion of any clinical study of our product candidates will increase our costs, slow down our product candidate development and approval process, and delay or potentially jeopardize our or our collaboration partners’ ability to commence product sales and generate revenue. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical studies may also ultimately lead to the denial of regulatory approval of our product candidates.

If serious adverse, undesirable or unacceptable side effects are identified during the development of our product candidates or following approval, if any, we may need to abandon our development of such product candidates, the commercial profile of any approved label may be limited, or we may be subject to other significant negative consequences following marketing approval, if any.

If our product candidates are associated with serious adverse, undesirable or unacceptable side effects, we may need to abandon their development or limit development to certain uses or subpopulations in which such side effects are less prevalent, less severe or more acceptable from a risk–benefit perspective. Many compounds that initially showed promise in preclinical or early-stage testing were later found to cause side effects that restricted their use and prevented further development of the compound for larger indications.

Occurrence of serious side effects could impede clinical study enrollment and receipt of marketing approval from the U.S. FDA, the EMA and comparable other national regulatory authorities. Adverse events (“AEs”) and/or serious adverse events (“SAEs”) could also adversely affect physician or patient acceptance of our product candidates.

Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including the following:

 

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regulatory authorities may withdraw approvals of such product and require us or our collaboration partners to take any approved products off the market;

 

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regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies;

 

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we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;

 

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we may be required to change the way the product is administered, to conduct additional studies or to change the labeling of the product;

 

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we or our collaboration partners may be subject to limitations in how we promote the product;

 

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sales of the product may decrease significantly;

 

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we could be sued and held liable for harm caused to patients; and

 

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our reputation and physician or patient acceptance of our products may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations and prospects.

We operate in highly competitive and rapidly changing industries, which may result in others discovering, developing or commercializing competing products before or more successfully than we do.

The biopharmaceutical and pharmaceutical industries are highly competitive and subject to significant and rapid technological change. Our success is highly dependent on our ability to discover, develop and obtain marketing approval for new and innovative products on a cost-effective basis and to market them successfully. In doing so, we face and will continue to face intense competition from a variety of businesses, including large, fully integrated pharmaceutical companies, specialty pharmaceutical companies and biopharmaceutical companies, academic institutions, government agencies and other private and public research institutions in Europe, the U.S. and other jurisdictions. Many of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of treatments, and the commercialization of those treatments. Mergers and acquisitions in the pharmaceutical and biopharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors.

The highly competitive nature of and rapid technological changes in the pharmaceutical and biopharmaceutical industries could render our product candidates or our technology obsolete or noncompetitive. The commercial opportunity for our products could be reduced or eliminated if our competitors:

 

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develop and commercialize products that are safer, more effective, less expensive, or more convenient or easier to administer;

 

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obtain quicker FDA or other regulatory approval for their products;

 

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establish superior intellectual property and proprietary positions;

 

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have access to more manufacturing capacity;

 

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implement more effective approaches to sales, marketing and distribution; or

 

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form more advantageous strategic alliances.

Should any of these occur, our business, financial condition and results of operations could be materially adversely affected.

Our business is subject to additional risks associated with international operations.

Our business is subject to risks associated with conducting business internationally. Accordingly, our future results could be harmed by a variety of factors, including:

 

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potentially reduced protection for intellectual property rights;

 

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changes in a specific country’s or region’s political or economic environment;

 

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trade protection measures, import or export licensing requirements or other restrictive actions such as government sanctions;

 

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negative consequences from changes in tax laws;

 

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compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

 

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difficulties associated with staffing and managing international operations, including differing labor relations;

 

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production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and

 

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business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.

The COVID-19 pandemic may impact our business.

In December 2019, a novel strain of coronavirus, COVID-19, surfaced in Wuhan, Hubei Province, China. By March 2020, COVID-19 had spread to other countries, including Switzerland and the United States, and was declared a pandemic by the World Health Organization on March 11, 2020. Since the beginning of the pandemic, governments, public institutions, and other organizations in countries and localities where COVID-19 cases have been identified have taken certain preventative or protective measures to combat the transmission of the virus, including implementation of travel restrictions or bans, closures of non-essential businesses, limitations of public gatherings, other social distancing and shelter-in-place measures, and delays or cancellations of elective surgeries. The COVID-19 pandemic continues to pose the risk that the Company, our employees, contractors, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time due to shutdowns that may be requested or mandated by state and federal governmental authorities.

As the COVID-19 pandemic continues, we may experience disruptions that could materially impact our business and planned clinical trials, including:

 

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delays or difficulties in conducting preclinical and clinical trials;

 

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interruption in global manufacturing and shipping that may affect the manufacturing and/or transport of clinical trial materials and other materials, including testing equipment; and

 

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changes in local regulations as a response to COVID-19 that may require us to change the way we perform our trials.

Our future growth and ability to compete depends on retaining our key personnel and recruiting additional qualified personnel

Our success depends upon the continued contributions of our key management, scientific and technical personnel, many of whom have substantial experience with or been instrumental for us and our projects. The loss of our key managers and senior scientists could delay our research and development activities. Laws and regulations on executive compensation, including legislation in Switzerland, may restrict our ability to attract, motivate and retain the required level of qualified personnel. In Switzerland, legislation affecting public companies has been passed that, among other things, imposes an annual binding shareholder “say on pay” vote with respect to the compensation of the executive management, including executive officers and the members of the board of directors. In addition, the competition for qualified personnel in the pharmaceutical and biopharmaceutical field is intense, and our future success depends

 

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upon our ability to attract, retain and motivate highly skilled scientific, technical and managerial employees. We face competition for personnel from other companies, universities, public and private research institutions and other organizations. If our recruitment and retention efforts are unsuccessful in the future, it may be difficult for us to implement our business strategy, which could have a material adverse effect on our business.

We may become exposed to costly and damaging liability claims, either when testing our product candidates or at the commercial stage or as a result of claims against our directors and officers, and our liability insurance may not cover all damages from such claims.

We are exposed to potential product liability and professional indemnity risks that are inherent in the research, development, manufacturing, marketing and use of pharmaceutical or biopharmaceutical products. Currently we have no products that have been approved for commercial sale; however, our current and future use of product candidates in clinical studies, and the sale of any approved products in the future, may expose us to liability claims. These claims might be made by patients that use the product, by healthcare providers, or by pharmaceutical or biopharmaceutical companies or others selling such products. Any claims against us, regardless of their merit, could be difficult and costly to defend and could materially adversely affect the market for our product candidates or any prospects for commercialization of our product candidates.

Although the clinical trial process is designed to identify and assess potential side effects, it is always possible that a drug, even after regulatory approval, may exhibit unforeseen side effects. If any of our product candidates were to cause adverse side effects during clinical studies or after approval of the product candidate, we may be exposed to substantial liabilities. Physicians and patients may not comply with any warnings that identify known potential adverse effects and patients who should not use our product candidates.

We continuously seek to maintain appropriate and cost-effective liability insurance coverage in connection with our products and for purposes of indemnifying our directors and officers for claims against them. It is, however, possible that our liabilities could exceed our insurance coverage. For example, we intend to expand our insurance coverage to include the sale of commercial products if we obtain marketing approval for any of our product candidates. However, we may not be able to maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise. If a successful liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, our assets may not be sufficient to cover such claims and our business operations could be impaired.

Should any of the events described above occur, this could have a material adverse effect on our business, financial condition and results of operations.

Business disruptions could seriously harm our future revenue and financial condition and increase our costs.

Our operations and those of our third-party collaborators and other contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics, and other natural or man-made disasters or business interruptions, for which we are partly uninsured. In addition, we rely on our third-party research institution collaborators for conducting research and development of our product candidates, and they may be affected by government shutdowns or withdrawn funding. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. We rely on third-party manufacturers to produce and process our product candidates. Our ability to obtain clinical supplies of our product candidates could be disrupted if the operations of these suppliers are affected by a man-made or natural disaster or by other business interruption.

 

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Our operations are conducted internationally with employees, consultants and strategic vendors located in the U.S. and in Europe, including Switzerland where the Company is headquartered. Damage or extended periods of interruption to our corporate, development or research facilities due to fire, natural disaster, power loss, communications failure, unauthorized entry or other events could cause us to cease or delay development of some or all of our product candidates. Although we maintain property damage and business interruption insurance coverage on these facilities, our insurance might not cover all losses under such circumstances and our business may be seriously harmed by such delays and interruption.

We have a limited history of commercializing pharmaceutical products, which may make it difficult to evaluate our future viability.

Our operations to date have mostly been limited to financing and staffing our company, developing our technology, and developing our product candidates. Until our acquisition of APR, we had not generated any revenue from product sales. While we began marketing commercial products with our acquisition of APR, our history of operating in the commercial market is short. Consequently, predictions about our future success or viability may not be as accurate as they could be if we had a longer history of successfully developing and commercializing pharmaceutical products. Factors that may affect our ability to commercialize our product candidates on our own include recruiting and retaining adequate numbers of effective sales and marketing personnel, obtaining access to or persuading adequate numbers of physicians to prescribe our drug candidates, and other unforeseen costs associated with creating an independent sales and marketing organization. Developing a sales and marketing organization requires significant investment, is time consuming and could delay the launch of our product candidates. Consequently, we may not be able to build an effective sales and marketing organization. Additionally, successful commercialization also requires an enhanced regulatory organization, which we currently do not have. If we are unable to build our own distribution and marketing capabilities, are unable to find suitable partners for the commercialization of our product candidates or do not successfully obtain the necessary regulatory capabilities, we may not generate sufficient revenues from them and as a result may not be able to reach or sustain profitability.

Risks related to our Relationships with Third Parties

We are in litigation with NeuroRx, and there can be no assurance as to the result of that litigation.

On October 7, 2021, we filed a lawsuit against NeuroRx and its now former Chief Executive Officer, Dr. Jonathan Javitt, for multiple breaches of the Collaboration Agreement. The complaint was filed in the Supreme Court in the State of New York in Manhattan.

The complaint alleges that defendants are in breach of numerous provisions of the Collaboration Agreement, including without limitation:

 

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by failing to provide Relief with the full data set from NeuroRx’s phase 2b/3 clinical trial evaluating IV RLF-100 (aviptadil) for the treatment of acute respiratory failure due to COVID-19, and the FDA correspondence relating to their trial and the failure to obtain EUA for the product, which data and information are required to be provided to Relief by NeuroRx under the Collaboration Agreement and which data and information are required for Relief to seek approval to commercialize the product in Europe;

 

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by failing to allow Relief, despite multiple requests, to conduct a forensic audit of NeuroRx’s books and records to determine how the funds that Relief provided to NeuroRx were actually used in order to help determine the amount, if any, that may be owed by us to NeuroRx under the Collaboration Agreement;

 

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by entering into multiple agreements relating to the development of the product subject to the collaboration without Relief’s consent, as required under the Collaboration Agreement;

 

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by engaging in commercialization efforts in territories outside the purview of NeuroRx’s territory under the Collaboration Agreement; and

 

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by developing additional COVID-19 treatments in violation of the exclusivity provisions of the Collaboration Agreement.

The suit also alleges, among other matters, breaches of the covenant of good faith and fair dealing and tortious interference with prospective economic advantage.

The Complaint, among other remedies, seeks damages, an order compelling NeuroRx to comply with multiple provisions of the Collaboration Agreement, and a declaration directing NeuroRx to deliver the entire data set from the Phase 2b/3 clinical trial of the intravenous administration of aviptadil to Relief.

Further, on January 10, 2022, NeuroRx, filed a complaint against Relief. Among other claims, NeuroRx’s complaint makes the following allegations:

 

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NeuroRx claims that Relief has breached the Collaboration Agreement by refusing to make required payments thereunder. NeuroRx currently appears to claim that we have failed to pay them approximately $13.8 million. We believe we have paid all amounts required to be paid under the Collaboration Agreement.

 

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NeuroRx claims that by failing to pay what they allege is due, Relief has repudiated the Collaboration Agreement and that NeuroRx is no longer bound thereby. We dispute this allegation and believe that the Collaboration Agreement remains in full force and effect.

 

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NeuroRx claims that Relief has defamed NeuroRx through its statements regarding NeuroRx’s breaches of the Collaboration Agreement and other matters, claiming that Relief knew that such statements were recklessly made and/or knowingly false. Relief denies that any such statements were untrue or defamatory.

In the complaint, NeuroRx is claiming damages in excess of $185 million, as well as seeking a ruling that the Collaboration Agreement is void. We are also considering filing additional claims against NeuroRx and Dr. Javitt, including for defamation, as a result of public statements made about Relief by NeuroRx. We believe that NeuroRx’s claims are without merit and that we will prevail before the court. However, there can be no assurance as to the result of the litigation, and an adverse ruling in the litigation could have a material adverse effect on our business, financial position, and results of operations.

On March 8, 2022, NeuroRx announced the retirement of Dr. Javitt as its Chief Executive Officer. Dr. Javitt continues to serve on NRx’s Board of Directors and as its Chief Scientist and Dr. Javitt’s retirement as CEO does not affect the status of Relief’s lawsuit against Dr. Javitt. Further, the parties have begun to discuss an amicable resolution of their disputes, and these efforts remain ongoing. On August 22, 2022, Relief and NRx issued a press release announcing that they had agreed to a tentative settlement of the pending litigation. The parties announced that they had agreed to work collaboratively to finalize the settlement within the next thirty days. Further, the parties announced that they had agreed to stay the litigation for an additional sixty days to allow for the negotiation and execution of the definitive settlement agreement and related terms. There can be no assurance that the parties will successfully complete the proposed settlement.

 

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If we fail to maintain our strategic relationships with any of our current or future strategic partners, our business, commercialization prospects and financial condition may be materially adversely affected.

We rely on our strategic partners. Good relationships with our strategic partners are important for our business prospects and while we have a positive working relationship with Acer, we are in litigation with NeuroRx. Further, if our relationships with our current or future strategic partners were to challenge our use of their intellectual property or our calculations of the payments we are owed under our agreements, our business, financial condition, commercialization prospects and results of operations could be materially adversely affected.

We may seek to form additional strategic alliances in the future with respect to our product candidates, and if we do not realize the benefits of such alliances, our business, financial condition, commercialization prospects and results of operations may be materially adversely affected.

We face significant competition in seeking appropriate collaborators. Collaborations are complex and time-consuming to negotiate, document and manage. Any delays in entering into new strategic partnership agreements related to our product candidates could delay the development and commercialization of our product candidates and reduce their competitiveness even if they reach the market. We may also be restricted under existing and future collaboration agreements from entering into strategic partnerships or collaboration agreements on certain terms with other potential collaborators. We may not be able to negotiate collaborations on acceptable terms, or at all, for any of our existing or future product candidates and programs because the potential partner may consider that our research and development pipeline is insufficiently developed to justify a collaborative effort, or that our product candidates and programs do not have the requisite potential to demonstrate safety and efficacy in the target population. If we are unsuccessful in establishing and maintaining a collaboration with respect to a particular product candidate, we may have to curtail the development of that product candidate, reduce the scope of or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of our sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense, for which we have not budgeted. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we will not be able to bring our product candidates to market and generate product revenue. Even if we are successful in establishing a new strategic partnership or entering into a collaboration agreement, we cannot be certain that, following such a strategic transaction or license, we will be able to progress the development and commercialization of the applicable product candidates as envisaged, or that we will achieve the revenues that would justify such transaction, and we could be subject to the following risks, each of which may materially harm our business, commercialization prospects and financial condition:

 

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we may not be able to control the amount and timing of resources that the collaboration partner devotes to the product development program;

 

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the collaboration partner may experience financial difficulties;

 

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we may be required to grant or otherwise relinquish important rights such as marketing, distribution and intellectual property rights; or

 

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business combinations or significant changes in a collaboration partner’s business strategy may adversely affect our willingness to continue any arrangement.

 

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We rely on third parties to conduct our nonclinical and clinical studies and perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates, and our business could be substantially harmed.

We have relied upon and plan to continue to rely upon third-party clinical research organizations or contract research organizations (“CROs”), to monitor and manage data for our ongoing nonclinical and clinical programs, including the clinical studies of our product candidates. We rely on these parties for execution of our nonclinical and clinical studies and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on the clinical CROs does not relieve us of our regulatory responsibilities. We and our clinical CROs and other vendors are required to comply with current Good Manufacturing Practice (“cGMP”), current Good Clinical Practice (“cGCP”), and current Good Laboratory Practice (“cGLP”), which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the EU and comparable foreign regulatory authorities for our product candidates in nonclinical and clinical development (where applicable). Regulatory authorities enforce these regulations through periodic inspections of study sponsors, principal investigators, study sites and other contractors. If we or any of our clinical CROs or vendors fail to comply with applicable regulations, the data generated in our nonclinical and clinical studies may be deemed unreliable and the EMA, FDA, other regulatory authorities may require us to perform additional nonclinical and clinical studies before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that all of our clinical studies comply with cGCP regulations. In addition, our clinical studies must be conducted with products produced under cGMP regulations. Our failure to comply with these regulations may require us to repeat clinical studies, which would delay the regulatory approval process.

If any of our relationships with these third-party clinical CROs terminates, we may not be able to enter into arrangements with alternative clinical CROs or do so on commercially reasonable terms. In addition, our clinical CROs are not our employees, and except for remedies available to us under our agreements with such clinical CROs, we cannot control whether or not they devote sufficient time and resources to our ongoing nonclinical and clinical programs. If clinical 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 data they obtain is compromised due to their failure to adhere to our protocols, regulatory requirements, or for other reasons, our clinical studies may be extended, delayed, or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. Clinical CROs may also generate higher costs than anticipated. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase, and our ability to generate revenue could be delayed.

Switching or adding additional clinical CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new clinical CROs commences work. As a result, delays occur, which could materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our clinical CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

We currently rely on third-party suppliers and other third parties for production of our product candidates and our dependence on these third parties may impair the advancement of our research and development programs and the development of our product candidates.

We currently rely on and expect to continue to rely, on third parties for the manufacturing and supply of chemical and biological compounds and formulations for the clinical studies of our current and future product candidates. For the foreseeable future, we expect to continue to rely on such third parties for the manufacture of any of our product candidates on a clinical or commercial scale, if any of our product

 

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candidates receives regulatory approval. Reliance on third-party providers may expose us to different risks than if we were to manufacture product candidates ourselves. The facilities used by our contract manufacturers to manufacture our product candidates must be approved by the FDA or other regulatory authorities, pursuant to inspections that will be conducted after we submit our New Drug Application (“NDA”) or comparable marketing application to the FDA or other regulatory authority. We do not have control over a supplier’s or manufacturer’s compliance with these laws, regulations and applicable cGMP standards and other laws and regulations, such as those related to environmental health and safety matters. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or others, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control (“QC”), quality assurance (“QA”) and qualified personnel. If we are compelled or we wish to find alternative manufacturing facilities, this could significantly impact our ability to develop, obtain regulatory approval for or market our product candidates. Any failure to achieve and maintain compliance with these laws, regulations and standards could subject us to the risk that we may have to suspend the manufacturing of our product candidates or that obtained approvals could be revoked, which would adversely affect our business and reputation.

Third-party providers may breach agreements they have with us because of factors beyond our control. Contract manufacturers often encounter difficulties involving production yields, QC and QA, as well as shortages of qualified personnel. They may also terminate or refuse to renew their agreements because of their own financial difficulties or business priorities, potentially at a time that is costly or otherwise inconvenient for us. If we are unable to find adequate replacement or another acceptable solution in time, our clinical studies could be delayed, or our commercial activities could be harmed.

In addition, the fact that we are dependent on our suppliers and other third parties for the manufacture, storage and distribution of our product candidates means that we are subject to the risk that our product candidates and, if approved, commercial products may have manufacturing defects that we have limited ability to prevent or control. The sale of products containing such defects could result in recalls or regulatory enforcement action that could adversely affect our business, financial condition and results of operations.

Growth in the costs and expenses of components or raw materials may also adversely influence our business, financial condition and results of operations. Supply sources could be interrupted from time to time and, if interrupted, we cannot be certain that supplies could be resumed (whether in part or in whole) within a reasonable timeframe and at an acceptable cost or at all. Our current and anticipated future dependence upon others for the manufacturing of our current and future product candidates may adversely affect our future profit margins and our, or our collaboration partners’, ability to commercialize any products that receive marketing approval on a timely and competitive basis.

Risks related to Intellectual Property

We may not have sufficient patent terms to protect our products and business effectively.

Patents have a limited lifespan. In the U.S. and Europe, the natural expiration of a patent is generally 20 years after it is filed. Although various extensions or adjustments may be available, such as adjustments based on certain delays caused by the U.S. Patent and Trademark Office (the “USPTO”) or the European Patent Office (“EPO”) to the life of a patent, and the protection it affords, is limited. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned, co-owned and licensed patent portfolios may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours or otherwise provide us with a competitive advantage. Even if patents covering our product candidates are obtained and unchallenged, once the patent life has expired for a product, we may be open to competition from generic medications.

 

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Although patent term extensions under the Hatch-Waxman Act in the U.S. and under supplementary protection certificates (“SPCs”) in Europe may be available to extend the patent exclusivity term for our products, we cannot provide any assurances that any such patent term extension will be obtained and, if so, for how long. The Hatch-Waxman Act permits a patent extension term of up to five years as compensation for patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended, and only those claims covering the approved drug, a method for using it or a method for manufacturing it may be extended. However, we may not be granted any extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. It is not possible to base an SPC in Europe on a patent in a European Member State if that patent expires before the market approval of the clinical product, protected by the patent, is obtained. As the “product” (active ingredient(s)) must be “protected by a basic patent in force”, only a granted patent that is in force, and remains in force until it reaches the end of its full term, can serve as a “basic patent” upon which an SPC can be based. Therefore, expired patents and pending patent applications cannot serve as the basis for an SPC. Given the relatively long clinical development timelines of biologicals and new chemical entities for therapeutic purpose, we may not be granted any patent extensions as we might fail to apply for the extensions prior to expiration of relevant patents. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we are unable to obtain patent term extension or if the term of any such extension is less than we request, such result could have a material adverse effect on our business.

We or our licensing or collaboration partners may become subject to intellectual property-related litigation or other proceedings to protect or enforce our patents or the patents of our licensors or licensees and collaborators, any of which could be expensive, time-consuming, and unsuccessful, and may ultimately result in our loss of ownership of intellectual property.

Competitors may infringe our patents or the patents of our licensors or collaborators. To counter such infringement, we may be required to file infringement claims against those competitors, which can be expensive and time-consuming. If we or one of our licensing or collaboration partners were to initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that the patent covering our product candidate is invalid or unenforceable or that the defendant’s products do not infringe our or our licensing collaborators’ patents or that we or our licensing collaborators infringe the defendant’s patents. In patent litigation in the U.S., defendant counterclaims alleging invalidity, unenforceability and non-infringement are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, obviousness-type double patenting, lack of written description, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or the EPO, or made a misleading statement, during prosecution. In addition, third parties may raise similar claims before administrative bodies in the U.S., in Europe or elsewhere, even outside the context of litigation. Such mechanisms include re-examination, post-grant review, inter partes review, interference and derivation proceedings as well as equivalent proceedings in foreign jurisdictions, such as opposition proceedings in Europe. The outcome following legal assertions of invalidity and unenforceability is unpredictable. Such proceedings or patent litigations could result in the revocation or cancellation of or amendment to our patents in such a way that they no longer cover our product candidates or otherwise provide any competitive advantage. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which the patent examiner and we or our licensing or collaboration partners were unaware during prosecution. A court may also refuse to stop a third party from using the technology in question on the grounds that our patents do not cover that technology. An adverse result in any proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly, which could have a material adverse effect on our business and financial condition.

 

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Interference proceedings provoked by third parties or brought by us or declared by the USPTO or the EPO may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors, licensees or collaborators. An unfavorable outcome could require us or our licensing or collaboration partners to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be materially harmed if the prevailing party does not offer us or our licensing or collaboration partners a license on commercially reasonable terms or at all. If we or our licensing or collaboration partners are unsuccessful in any interference proceedings, we may lose our ownership of intellectual property or our patents may be narrowed or invalidated. There can be no assurance as to the outcome of the interference and opposition proceedings, and any of the foregoing could result in a material adverse effect on our business, financial condition, results of operations or prospects.

Our defense of litigation, interference proceedings or other intellectual property-related proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees from their normal responsibilities. Such litigation or proceedings could substantially increase our operating losses and could substantially reduce the funds necessary to continue our clinical studies and research programs or force us to license necessary technology from third parties or enter into development partnerships that would help us bring our product candidates to market. We may not be able to prevent, alone or with our licensing or collaboration partners, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the U.S.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, decisions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our Shares.

If we or our licensing or collaboration partners are unable to obtain and maintain effective patent rights for our technologies, product candidates or any future product candidates, or if the scope of the patent rights obtained is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our, or our collaboration partners’ ability to successfully commercialize our products and technology may be adversely affected.

We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our technologies and product candidates. Our success depends in large part on our and our licensing or collaboration partners’ ability to obtain and maintain patent and other intellectual property protection in the U.S., the EU and other countries with respect to our proprietary technologies and product candidates. If such license is not granted or terminated, our licensing or collaboration partners may be required to cease development and commercialization of our product candidates, any of which could have a material adverse effect on our business, financial condition, results of operations or prospects.

We have sought to protect our proprietary position by filing patent applications in the U.S. and other countries related to any of our novel technologies and products that are important to our business. This process is expensive, time-consuming, and complex, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost, in a timely manner or in all jurisdictions. It is also possible that we will fail to identify patentable aspects of our or our licensing or collaboration partners’ research and development output before it is too late to obtain patent protection. Moreover, in some circumstances, we do not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license to or from third parties. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

 

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The patent position of pharmaceutical and biopharmaceutical companies generally is highly uncertain and involves complex legal and factual questions for which legal principles remain unsolved. As a result, the inventorship, issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. The pending or future patent applications that we own, co-own or in-license may fail to issue, fail to result in issued patents with claims that cover our product candidates in the U.S. or in other countries, or fail to effectively prevent others from commercializing competitive technologies and product candidates. Changes in either the patent laws or interpretation of the patent laws in the U.S. and other countries may diminish the value of our patents or narrow the scope of our patent protection.

We may not be aware of all third-party intellectual property rights potentially relating to our technologies or product candidates. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions remain confidential for a period of time after filing, and some remain so until issued. Therefore, we cannot be certain that we were the first to file any patent application related to our product candidates or technologies, or whether we were the first to make the inventions claimed in our owned or co-owned patents or pending patent applications, nor can we know whether those from whom we license patents were the first to make the inventions claimed or were the first to file.

There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if such patents cover our product candidates, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated, which could allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our or our collaboration partners’ inability to manufacture or commercialize products without infringing third-party patent rights. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for our product candidates, prevent others from designing around our claims or provide us with a competitive advantage. Any of these outcomes could impair our ability to prevent competition from third parties, which may have a material adverse effect on our business.

We may be subject to claims challenging the inventorship of our patents and other intellectual property.

We may be subject to claims that former employees, collaborators or other third parties have an interest or title in our patents or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of consultants, CROs, contract manufacturing organizations (“CMOs”), academic institutions or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or our ownership of our patents or other intellectual property. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or the right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

 

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Patent policy and rule changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, thereby impairing our ability to protect our technologies and products.

Changes in either the patent laws or interpretation of the patent laws in the U.S., EU or elsewhere could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. Assuming the other requirements for patentability are met, in the U.S. prior to March 15, 2013, the first to make the claimed invention is entitled to the patent, whereas outside the U.S., the first to file a patent application was entitled to the patent. After March 15, 2013, under the Leahy-Smith America Invents Act (the “Leahy-Smith Act”), which was enacted on September 16, 2011, the U.S. moved to a first-to-file system. Under a first-to-file system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether a third party was the first to invent the invention. The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications are prosecuted and may also affect patent litigation. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by the USPTO administered during post grant proceedings, including re-examination proceedings, inter partes review, post-grant review and derivation proceedings. Therefore, the Leahy-Smith Act and its implementation increases the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, future actions by the U.S. Congress, the federal courts and the USPTO could cause the laws and regulations governing patents to change in unpredictable ways. Any of the foregoing could harm our business, financial condition and results of operations.

In addition, the patent positions of companies in the development and commercialization of biologics and pharmaceuticals are particularly uncertain. U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. This combination of events has created uncertainty with respect to the validity and enforceability of patents, once obtained. Depending on future actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could have a material adverse effect on our existing patent portfolio and our ability to protect and enforce our intellectual property in the future in the U.S.

If we are unable to maintain effective proprietary rights for our technologies, product candidates or any future product candidates, we may not be able to compete effectively in our markets.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce, and any other elements of our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect and some courts inside and outside the U.S. are less willing or unwilling to protect trade secrets. For instance, the EU has introduced a new Directive on trade secrets increasing the standards for protection. Because we rely on our advisors, employees and third-party contractors and consultants to research and develop and to manufacture our product candidates, we must, at times, share our intellectual property with them. We seek to protect our intellectual property and other proprietary technology in part by entering into confidentiality agreements and master service agreements, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees, contractors, consultants, licensing and collaboration partners, and other third parties with confidentiality provisions. These agreements typically limit the rights of these third parties to use or disclose our confidential information, including our intellectual property and trade secrets. These agreements also typically restrict the ability of third parties to publish data potentially relating to our intellectual property, although our agreements may contain certain limited publication rights. For example, any academic institution that we may collaborate with in the future may expect to be granted rights to publish data arising out of such collaboration, provided that we may have the right to be notified in advance and given the opportunity to delay publication for a limited time period in order for us to secure patent

 

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protection of intellectual property rights arising from the collaboration, in addition to the opportunity to remove confidential or trade secret information from any such publication. We also conduct joint research and development programs that may require us to share intellectual property under the terms of our research and development or similar agreements. However, we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or other confidential information or proprietary technology and processes, or that such agreements will not be breached or that our trade secrets or other confidential information will not otherwise be disclosed. Despite the contractual provisions employed when working with these advisors, employees and third-party contractors and consultants, the need to share intellectual property and other confidential information increases the risk that such confidential information becomes known by our competitors, is inadvertently incorporated into the product development of others or is disclosed or used in violation of these agreements. Additionally, our grant agreements typically provide for dissemination of results to academic institutions and to the general public. As a result, our information may be disseminated with the loss of protection status.

We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining the physical security of our premises and the physical and electronic security of our information technology systems. Despite our efforts to protect our intellectual property, our competitors may discover our trade secrets through breach of our agreements by third parties, for which we may not have adequate remedies for any breach, or publication of information by any of our CROs, academic partners, funding organizations or our licensing or collaboration partners. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate by law, we may have insufficient recourse against third parties for misappropriating such trade secrets. Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business. Moreover, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent such competitor or other third party from using that technology or information to compete with us. A competitor’s or other third party’s discovery of our intellectual property would impair our competitive position and have a material adverse effect on our business.

Further, the laws of different countries protect proprietary rights to a different extent or in a different manner. As a result, we may encounter significant problems in protecting and defending our intellectual property in different countries both in the U.S. and abroad. If we are unable to prevent material disclosure of the intellectual property related to our technologies to third parties, we will not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, financial condition and results of operations.

Despite confidentiality clauses within our employment agreements, we cannot ensure that departing employees will not breach any post-termination commitments in such agreements by allowing others to access our trade secrets.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document-submission, fee-payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other government fees on a patent and patent application are due to be paid to the USPTO and other national patent agencies in several stages over the lifetime of the patent and patent application. The USPTO, the EPO and various other governmental patent agencies require compliance with a number of procedural, documentary, fee-payment and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply with these requirements and we are also dependent on our licensors or collaboration partners to take the necessary action to comply with these requirements with respect to certain of our intellectual property. Although an inadvertent lapse can in many cases be cured by payment of a late

 

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fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, nonpayment of fees and failure to properly legalize and submit formal documents. In such an event, our competitors might be able to enter the market, which would have a material adverse effect on our business.

The patent protection and patent prosecution for some of our product candidates could be dependent on third parties.

Although we normally seek to obtain the right to control prosecution, maintenance and enforcement of the patents relating to our product candidates, there may be times when the filing and prosecution activities for patents relating to our product candidates are controlled by our licensors or collaboration partners. If any of our current or future licensing or collaboration partners fail to prosecute, maintain and enforce such patents and patent applications in a manner consistent with the best interests of our business, including by payment of all applicable fees for patents covering our product candidates, we could lose our rights to the intellectual property or our exclusivity with respect to those rights, our or our collaboration partners’ ability to develop and commercialize those product candidates may be adversely affected and we may not be able to prevent competitors from making, using, and selling competing products. In addition, even where we have the right to control patent prosecution of patents and patent applications we have licensed to and from third parties, we may still be adversely affected or prejudiced by actions or inactions of our licensees, our licensors and their counsel that took place prior to the date upon which we assumed control over patent prosecution.

Additionally, we may be adversely affected or prejudiced by actions or inactions of our external and internal patent counsels working solely on our projects or our joint patent counsels representing us and our collaboration partners.

Third-party claims of intellectual property infringement may expose us to substantial liability or may prevent or delay our or our collaboration partners’ development and commercialization efforts.

Numerous EU- and foreign-issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing product candidates. For example, we are aware of third-party patents or patent applications that may be construed to cover one or more of our product candidates. If these patents are asserted against us or our licensing or collaboration partners and either we or our licensing or collaboration partners are found to infringe any of these patents, and are unsuccessful in demonstrating that such patents are invalid or unenforceable, then we and our licensing or collaboration partners could be required to pay substantial monetary damages or cease further development or commercialization of one or more of our product candidates or be compelled to enter into onerous licenses with such third parties. There may also be other third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods of treatment related to the use or manufacture of our product candidates and technology. Although we generally conduct a freedom-to-operate search and review with respect to our product candidates, we cannot guarantee that our search and review is complete and thorough, nor can we be sure that we have identified each and every patent and pending application in the U.S. and abroad that is relevant or necessary to the manufacturing or commercialization of our product candidates or use of our technology. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe. In addition, third parties may file and obtain additional patents in the future and claim that use of our technologies infringes upon these patents.

 

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Third parties may assert infringement claims against us based on existing patents or on patents that may be granted in the future, regardless of merit. Even if we believe such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, which could materially and adversely affect our or our collaboration partners’ ability to commercialize our product candidates or technologies covered by the asserted third-party patents.

Parties making claims against us may also obtain injunctive or other equitable relief, which could effectively block our or our collaboration partners’ ability to further develop and commercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of management and employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure. Any of the foregoing could have a material and adverse effect on our business, financial conditions, results of operations and prospects.

In addition, claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business, financial condition, results of operations and prospects.

There could also be public announcements of the results of hearings, motions, decisions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our Shares.

Some of our competitors may have substantially greater resources and more mature and developed intellectual property portfolios than we do and may be able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could. In addition, patent-holding companies that focus solely on extracting royalties and settlements by enforcing patent rights may target us. As the pharmaceutical and biopharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties. The uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

We employ and utilize the services of individuals who were previously employed or provided services to universities or other pharmaceutical or biopharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants, and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employees’, consultants’ or independent contractors’ former employers or of other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

 

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In addition, although it is our policy to require our employees, consultants and independent contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries may be less extensive than those in the U.S. or Europe. In addition, the laws of different countries do not protect intellectual property rights to the same extent as the laws in the U.S. or Europe. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the U.S. or Europe, or from selling or importing products made using our inventions in and into the U.S., Europe or other jurisdictions. In the ordinary course of prosecution and maintenance activities, we determine whether to seek patent protection outside the U.S. and Europe and in which countries. This also applies to patents we have acquired or in-licensed from third parties. In some cases, we, or our predecessors in interest or licensors of patents within our portfolio, have sought patent protection in a limited number of countries for patents covering our product candidates. Competitors may use our technologies and products in jurisdictions where we have not obtained or are unable to adequately enforce patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection but enforcement is not as strong as that in the U.S. or Europe. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing, which would have a material adverse effect on our business and financial positions.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement, misappropriation or other violations of our intellectual property and proprietary rights. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

We may be unable to protect our trade secrets, know-how and technologies.

We also rely on trade secrets and non-patentable know-how and technologies it seeks to protect, in part, by confidentiality agreements with our employees, consultants, suppliers, licensees and other contractual parties. Trade secrets and non-patentable know-how and technologies are difficult to protect. There can be no assurance that these agreements represent effective protection or that they will not be breached, that we would have adequate remedies for any breach, or that our trade secrets or non-patentable know-how and technologies will not otherwise become known or be independently developed by competitors and other third parties.

These and other factors, alone or together, may have a material adverse effect on our business, financial condition, results of operations and growth prospects as well as the price of our shares.

 

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Risks related to our Financial Condition and Results of Operations

We are a commercial-stage biopharmaceutical company with a history of operating losses.

We incurred a net loss (defined as net loss attributable to owners of the Company) of approximately CHF 34.3 million for the year ended December 31, 2021 and had accumulated losses at consolidation level of approximately CHF 69.8 million as of December 31, 2021. We may continue to incur losses in the foreseeable future as development expenses and other operating expenses may exceed future revenue.

Our losses have resulted principally from research and development expenses and from general business and administrative expenses. We expect to continue to incur significant operating losses in the future as we continue our research and development efforts for our current and future product candidates and seek to obtain regulatory approval and commercialization of such product candidates.

To date, we have financed our liquidity requirements primarily from equity financings and loans from our main shareholder. Biopharmaceutical and pharmaceutical product development are highly speculative undertakings and involve a substantial degree of risk.

If we fail to obtain additional funding, we may delay, reduce or eliminate our product development programs or commercialization efforts.

We are currently advancing our product candidates through clinical development, either together with a collaboration partner or independently. We expect our research and development expenses to continue to increase in connection with our ongoing activities, particularly as we and/or our collaboration partners continue our ongoing studies and initiate new studies and initiate preclinical and clinical development of our product candidates.

As of December 31, 2021, we had cash and cash equivalents of approximately CHF 44.8 million, As of August 22, 2022, we have cash and cash equivalents of approximately CHF 29.1 million.

Based on current financial current projections and available cash, we expect that we have sufficient resources to fund operations well into 2023, not considering the proceeds of this offering. We also expect that with a successful launch of ACER-001 and the potential expansion of our GOLIKE franchise into the United States, we could reach operating cash flow-positive operations during 2024. There can be no assurance whether our estimates will be accurate or whether we will ever achieve cash flow-positive operations.

Accelerated growth strategy, potential milestone payments, and acquisitions will require significant additional funding. We may also need to raise additional funds due to various factors such as the scope and rate of progress of our development activities, regulatory approval outcomes and emergence of competing technologies, among others. There can be no assurance that our commercialization efforts will be successful or if we need additional funding in the future, whether such funding will be available to us.

We expect that we will require additional capital to develop and commercialize certain of our product candidates. If we receive regulatory approval for our current and future product candidates, and if we have not already licensed such product candidate to a collaboration partner and choose to commercialize such product candidate independently, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing, distribution and establishing a regulatory structure, depending on where we choose to commercialize. Additional funds may not be available on a timely basis, on favorable terms, or at all, and such funds, if raised, may not be sufficient to enable us to continue to implement our long-term business strategy. Additionally, we may be dependent on the status of the capital markets at the time such capital is sought. If we are not able to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

 

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Raising additional capital may cause dilution to our shareholders, restrict our operations or require us to relinquish rights to our intellectual property or future revenue streams.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our liquidity needs through a combination of equity offerings, debt financings, grants, and license and development agreements in connection with collaborations. We do not have any material committed external source of funds. In the event we need to seek additional funds, we may raise additional capital through the sale of equity, convertible debt or other securities, and through drawdowns from our Share Subscription Facility in place with GEM Global Yield LLC SCS (“GEM”). In such an event, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a holder of our Shares. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or proposing dividends to our shareholders.

If we raise additional funds through collaborations, strategic alliances, or marketing, distribution or licensing arrangements with third parties, we may have to grant or otherwise relinquish valuable rights to our intellectual property or future revenue streams.

Our ability to use tax loss carry-forwards may be limited.

As of December 31, 2021, we had consolidated tax loss carry-forwards for purposes of Swiss corporate income tax in the aggregate amount of approximately CHF 136.4 million, which could be available to offset future taxable income. If not used, these tax losses will expire seven years after the year in which they were incurred. Due to our limited income, there is a high risk that the tax loss carryforwards will expire partly or entirely and we will not be able to use them to offset future taxable income thereafter for corporate income tax purposes. Further, taxable income generated by an entity of the group may only be offset against carried forward losses incurred by the same entity, hence reducing the overall likelihood of benefiting from these losses.

Exchange rate fluctuations may materially affect our results of operations and financial condition.

As our reporting currency is the Swiss franc, transactions and balance sheet items denominated in foreign currencies are converted into Swiss francs at the applicable exchange rates. Our current expenses are denominated in Swiss francs, U.S. Dollars and Euros. In the future, we expect that the majority of our revenue and expenses will be in U.S. Dollars and Euros. Therefore, unfavorable developments in the value of the Swiss franc as compared to the U.S. Dollar and Euro could have a material adverse effect on our business, financial condition and results of operations.

Risks related to regulation of our business

The SIX Exchange Regulation AG has launched an investigation into Relief, the results of which are uncertain.

We have recently been notified by SIX Exchange Regulation AG – the self-regulatory supervisory body for issuers listed on the SIX Swiss Exchange – of a formal investigation due to potential violations of the rules on ad-hoc publicity. While we do not believe that this investigation will have a material adverse effect on our business, there can be no assurance of that conclusion.

 

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We cannot give any assurance that any of our product candidates in development will receive regulatory approval, which is necessary before they can be commercialized.

We cannot be certain that any of our product candidates in development will be successful in clinical studies or receive regulatory approval. Applications for our product candidates could fail to receive regulatory approval for many reasons, including but not limited to the following:

 

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the FDA, EMA, Swissmedic or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical studies;

 

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the population studied in the clinical program may not be sufficiently broad or representative to assure safety in the full population for which we seek approval;

 

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the FDA, EMA, Swissmedic or comparable foreign regulatory authorities may disagree with our interpretation of data from nonclinical or clinical studies;

 

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the data collected from clinical studies of our product candidates may not be sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the U.S., Switzerland or elsewhere;

 

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we may be unable to demonstrate to the FDA, EMA, Swissmedic or comparable foreign regulatory authorities that a product candidate’s benefit-risk ratio for its proposed indication is acceptable;

 

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the FDA, EMA, Swissmedic or other regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications, or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and

 

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the approval policies or regulations of the FDA, EMA, Swissmedic or comparable foreign regulatory authorities may change significantly in a manner rendering our clinical data insufficient for approval.

We generally plan to seek regulatory approval to commercialize our product candidates in the U.S., the EU, Switzerland and in additional foreign countries where we have commercial and typically IP rights. To obtain regulatory approval in other countries, we must comply with numerous and varying regulatory requirements of such other countries regarding safety, efficacy, chemistry, manufacturing and controls, clinical studies, commercial sales, pricing, marketing and distribution of our product candidates. Even if we are successful in obtaining approval in one jurisdiction, we cannot ensure that we will obtain approval in any other jurisdictions. Failure to obtain marketing authorization for our product candidates will result in our being unable to market and sell such products, which would materially adversely affect our business, financial condition and results of operations. If we fail to obtain approval in any jurisdiction, the geographic market for our product candidates could be limited.

Similarly, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates.

Clinical drug development involves a lengthy and expensive process with uncertain timelines and uncertain outcomes. If clinical studies of our product candidates are prolonged or delayed, we may be unable to obtain required regulatory approvals, and therefore be unable to commercialize our product candidates on a timely basis or at all.

In order to commercialize any of our product candidates, we or our partners must obtain the necessary regulatory approvals to market and sell such product. To obtain that approval, we must demonstrate through extensive preclinical and clinical studies that our products are safe and effective in humans. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical study process. The results of preclinical and early clinical studies of our

 

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product candidates may not be predictive of the results of later-stage clinical studies. For example, the positive results generated to date in clinical studies for our product candidates do not ensure that later clinical studies will demonstrate similar results. Product candidates in later stages of clinical studies may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical studies. A number of companies in the pharmaceutical or biopharmaceutical industry, including us, have suffered significant setbacks in advanced clinical studies due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier studies. Our future clinical study results may not be successful.

Clinical studies must be conducted in accordance with the legal requirements, regulations or guidelines of the FDA, EMA, Swissmedic and comparable regulatory authorities, and are subject to oversight by these governmental agencies and Institutional Review Boards (“IRBs”) at the medical institutions where the clinical studies are conducted. In addition, clinical studies must be conducted with supplies of our product candidates produced under cGMP and other requirements. We depend on medical institutions and CROs to conduct our clinical studies in compliance with cGCP standards. To the extent the CROs fail to enroll participants for our clinical studies, fail to conduct the study to cGCP standards or are delayed for a significant time in the execution of studies, including achieving full enrollment, we may be affected by increased costs, program delays or both, which may harm our business.

The completion of clinical studies for our clinical product candidates may be delayed, suspended or terminated as a result of many factors, including but not limited to:

 

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the delay or refusal of regulators or IRBs to authorize us to commence or amend a clinical study at a prospective study site or changes in regulatory requirements, policies and guidelines;

 

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delays or failure to reach agreement on acceptable terms with prospective CROs and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and study sites;

 

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delays in patient enrollment and variability in the number and types of patients available for clinical studies;

 

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the inability to enroll a sufficient number of patients in studies to ensure adequate statistical power to detect statistically significant treatment effects;

 

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negative or inconclusive results, which may require us to conduct additional preclinical or clinical studies or to abandon projects that we expected to be promising;

 

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safety or tolerability concerns, which could cause us to suspend or terminate a study if we find that the participants are being exposed to unacceptable health risks;

 

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regulators or IRBs requiring that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or safety concerns, among others;

 

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lower than anticipated retention rates of patients and volunteers in clinical studies;

 

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our CROs or clinical study sites failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, deviating from the protocol or dropping out of a study;

 

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•

delays relating to adding new clinical study sites;

 

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difficulty in maintaining contact with patients after treatment, resulting in incomplete data;

 

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delays in establishing the appropriate dosage levels;

 

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the quality or stability of the product candidate falling below acceptable standards;

 

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the inability to produce or obtain sufficient quantities of the product candidate to complete clinical studies; and

exceeding budgeted costs due to difficulty in accurately predicting costs associated with clinical studies.

Any delays in completing our clinical studies will increase our costs, slow our product candidate development and approval process, and jeopardize our ability to commence product sales and generate sales revenues. Any of these occurrences may significantly harm our business, financial condition and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical studies may also ultimately lead to the denial of regulatory approval of certain of our product candidates.

Even if we obtain and maintain approval for certain of our drug candidates from one jurisdiction, we may never obtain approval for our drug candidates in other jurisdictions, which would limit our market opportunities and adversely affect our business.

Sales of our approved drugs will be subject to U.S. and non-U.S. regulatory requirements governing clinical studies and regulatory approval, and we plan to seek regulatory approval to commercialize our drug candidates in the U.S., the European Economic Area (“EEA”), Switzerland and other countries. Clinical studies conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not ensure approval in any other country, while a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory approval process in others. For example, approval in the U.S. by the FDA does not ensure approval by the regulatory authorities in other countries or jurisdictions, and similarly, approval by a non-U.S. regulatory authority, such as the EMA, does not ensure approval by regulatory authorities in other countries, including by the FDA. However, the failure to obtain approval in one jurisdiction may have a negative impact on our ability to obtain approval elsewhere. Approval processes and regulatory requirements vary among countries and can involve additional drug testing and validation and additional administrative review periods. Even if a drug is approved, the FDA or EMA, as the case may be, may limit the indications for which the drug may be marketed, require extensive warnings on the drug labeling, or require expensive and time-consuming clinical studies or reporting as conditions of approval. In many countries outside the U.S., a drug candidate must be approved for reimbursement before it can be approved for sale in that country. In some cases, the price that would be charged for a drug is also subject to approval. Regulatory authorities in other countries also have their own requirements for approval of drug candidates with which we must comply prior to marketing in those countries. Obtaining non-U.S. regulatory approvals and compliance with such non-U.S. regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our current and any future drugs, in certain countries. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of our drug candidates will be unrealized.

 

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Even if certain of our product candidates obtain regulatory approval, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expenses. Additionally, our additional product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.

If marketing authorization is obtained for certain of our product candidates, the products will remain subject to continual regulatory review and therefore authorization could be subsequently withdrawn or restricted. Any regulatory approvals that we receive for certain of our product candidates may also be subject to limitations on the approved indicated uses for which the products may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including phase 4 clinical studies, and surveillance to monitor the safety and efficacy of the product candidate. In addition, if the FDA or a comparable regulatory authority approves any of our product candidates in development, we will be subject to ongoing regulatory obligations and oversight by regulatory authorities, including with respect to the manufacturing processes, labeling, packing, distribution, adverse event reporting, storage, advertising and marketing restrictions, and record-keeping and, potentially, other post-marketing obligations, all of which may result in significant expense and limit our or our collaboration partners’ ability to commercialize such products. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP and cGCP requirements for any clinical studies that we conduct post-approval. Later discovery of previously unknown problems with a product, including AEs of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

 

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restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls;

 

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fines, warning letters or holds on clinical studies;

 

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refusal by the FDA to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of product license approvals;

 

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regulatory constraints in promotion and distribution of drug products in various markets;

 

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product seizure or detention, or refusal to permit the import or export of products; and

 

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injunctions or the imposition of civil or criminal penalties.

If any of these events occurs, our ability to sell such product may be impaired, and we may incur substantial additional expense to comply with regulatory requirements, which could materially adversely affect our business, financial condition and results of operations. Regulatory policies may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business, prospects and ability to achieve or sustain profitability.

We have conducted and may in the future conduct clinical studies for our drug candidates outside the U.S., Europe and Switzerland, and the FDA, EMA and Swissmedic and applicable foreign regulatory authorities may not accept data from such studies.

We, or our collaboration partners, have conducted and may in the future choose to conduct one or more of our clinical studies outside the U.S., Europe and Switzerland. The acceptance of study data from clinical studies conducted outside the U.S., Europe and Switzerland or another jurisdiction by the FDA, EMA and Swissmedic or applicable foreign regulatory authority may be subject to certain conditions. In cases where data from foreign clinical studies are intended to serve as the basis for marketing approval, for instance in

 

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the U.S., the FDA will not approve the application on the basis of foreign data alone unless the following are true: the data are applicable to the U.S. population and U.S. medical practice; the studies were performed by clinical investigators of recognized competence; and the data are considered valid without the need for an on-site inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. Additionally, the FDA’s clinical study requirements, including sufficient size of patient populations and statistical powering, must be met. Many foreign regulatory bodies have similar requirements. In addition, such foreign studies would be subject to the applicable local laws of the foreign jurisdictions in which the studies are conducted. There can be no assurance that the FDA, EMA, Swissmedic or any applicable foreign regulatory authority will accept data from studies conducted outside of the U.S. or the applicable jurisdiction. If the FDA, EMA, Swissmedic or any applicable foreign regulatory authority does not accept such data, it would result in the need for additional studies, which would be costly and time-consuming and delay aspects of our business plan, and which may result in our drugs or drug candidates not receiving approval or clearance for commercialization in the applicable jurisdiction.

Our business is subject to complex and evolving U.S. and international laws and regulations regarding clinical trials reimbursement and privacy and data protection. Many of these laws and regulations are subject to change and uncertain interpretation and could result in claims, changes to our business practices, penalties, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.

Regulatory authorities around the world have adopted laws and regulations, and are continuing to consider a number of legislative and regulatory proposals, concerning privacy and data protection, including measures to ensure that encryption of users’ data does not hinder access of law enforcement agencies to that data. In addition, the interpretation and application of consumer and data protection laws in the U.S., Europe, Switzerland and elsewhere are often uncertain and in flux. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices. These laws and regulations, and legislative and regulatory proposals, if adopted, and such interpretations could, in addition to the possibility of fines, result in an order requiring that we change our data practices, which could have an adverse effect on our business and results of operations. Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

In the EU, new clinical trial regulations came into force on January 31, 2022. This new legislation enforces the centralization of clinical trial applications and approvals, New clinical trial sponsors must begin using the new system by January 31, 2023, and any previously approved trial sponsors must comply from January 31, 2025, but in some cases, this may extend timelines for clinical study approvals, due to potentially longer wait times enabling sponsors to apply for trial authorization in up to 30 European countries with a single online application. The General Data Protection Regulation (“GDPR”), which became effective in May 2018 in all EU member states, created a range of new compliance obligations for companies that process the personal data of EU residents. Although it is expected that the GDPR will provide consistency across the territory of the EU, it imposes more onerous requirements concerning consent and the obligations of sponsors of clinical trials (acting as data controllers), among other measures, which may increase the costs and extend the timelines of our product development efforts. Austerity measures in certain European nations may also affect the prices we are able to seek if our products are approved, as discussed below. Furthermore, the Brexit vote and the impact of the withdrawal of the UK may adversely affect business activity, political stability and economic conditions in the UK, the Eurozone, the EU and elsewhere. Specifically, Brexit and ongoing developments in the UK have created uncertainty with regard to data protection regulation in the UK. We may be required to comply with both the GDPR and the UK GDPR, exposing us to two parallel regimes with potentially divergent interpretations and enforcement actions for certain violations. The relationship between the UK and the EU in relation to certain aspects of data protection law remains unclear, for example, how data transfers between EU member states and the UK will be treated and the role of the UK’s Information Commissioner’s Office with respect to the EU following the end of the transitional period. Although we do not have material operations in the UK, we cannot rule out potential disruptions in relation to the clinical regulatory framework applicable to our clinical studies in the UK, and to data privacy and security rules with respect to personal data sharing with vendors and clinical investigators in the UK, and we cannot predict future implications.

 

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Both in the U.S. and in the EU, legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical and biopharmaceutical products. We do not know whether additional legislative changes will be enacted, whether the regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be.

We could be subject to liabilities under environmental, health and safety laws or regulations, or fines, penalties or other sanctions, if we fail to comply with such laws or regulations or otherwise incur costs that could have a material adverse effect on the success of our business.

We are subject to numerous environmental, health and safety laws, regulations, and permitting requirements, including those governing laboratory procedures, decontamination activities, and the handling, transportation, use, remediation, storage, treatment and disposal of hazardous materials, human substances and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials that produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials or wastes either at our sites or at third-party disposal sites. In the event of such contamination or injury, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties. Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, human substances or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws, regulations or permitting requirements. Such laws, regulations and requirements are becoming increasingly more stringent and may impair our research, development or production efforts. Failure to comply with these laws, regulations and permitting requirements also may result in substantial fines, penalties or other sanctions.

Our relationships with clinical centers, customers and payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which, if violated, could expose us to criminal sanctions, civil penalties, exclusion from government healthcare programs, contractual damages, reputational harm and diminished profits and future earnings.

 

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for instance, the U.S. healthcare Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under U.S. government healthcare programs such as Medicare and Medicaid;

 

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for instance, the U.S. False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the U.S. government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

 

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for instance, the Health Insurance Portability and Accountability Act (“HIPAA”), imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

 

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

 

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for instance, the transparency requirements under the Health Care Reform Law require manufacturers of drugs, devices, biologics and medical supplies to report to the U.S. Department of Health and Human Services information related to payments and other transfers of value made by such manufacturers to physicians and teaching hospitals, and ownership and investment interests held by physicians or their immediate family members; and

 

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in various other jurisdictions, analogous laws and regulations, such as state anti-kickback and false claims laws, will apply to sales or marketing arrangements, consultancy and service agreements, and claims involving healthcare items or services reimbursed by nongovernmental third-party payors, including private insurers, and some state laws require pharmaceutical and biopharmaceutical companies to comply with the pharmaceutical and biopharmaceutical industries’ voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, in addition to requiring manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under the U.S. federal Anti-Kickback Statute, it is possible that some of our future business activities could be subject to challenge under one or more of such laws. In addition, recent healthcare-reform legislation has strengthened these laws. For example, the Health Care Reform Law, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. Moreover, the Health Care Reform Law provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may 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 are 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, exclusion from U.S. government-funded healthcare programs, such as Medicare and Medicaid, other foreign healthcare reimbursement and procurement programs, and the curtailment or restructuring of our operations. If any of the physicians or other providers or entities with whom we expect to do business with is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs.

 

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Risks Related to the Offering and the ADSs

The price of the ADSs may be volatile and may fluctuate due to factors beyond our control. An active trading market may not develop and/or may not be sustained following the offering. You may not be able to resell the ADSs at or above the public offering price.

Prior to this offering, while our ordinary shares have been traded on the SIX Swiss Exchange, there has been no public market on a U.S. national securities exchange for the ADSs or our ordinary shares in the United States. If you purchase ADSs in this offering, you may not be able to resell those ADSs at or above the public offering price. The trading price of the ordinary shares has fluctuated and is likely to continue to fluctuate substantially. The trading price of those securities depends on a number of factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance. In addition, although we anticipate our ADSs being approved for listing on the NASDAQ Global Market, an active trading market for our ADSs may never develop or be sustained following this offering. The offering price of our ADSs will be determined through negotiations between us and the underwriters. This offering price may not be indicative of the market price of our ADSs or ordinary shares after this offering.

The market price of the ADSs and our ordinary shares is volatile and may fluctuate significantly due to a variety of factors, many of which are beyond our control, including:

 

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positive or negative results of testing and clinical trials reported or conducted by us, strategic partners or competitors;

 

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delays in entering into strategic relationships with respect to development or commercialization of our product candidates or entering into strategic relationships on terms that are not deemed to be favorable to us;

 

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technological innovations or commercial product introductions by us or competitors;

 

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changes in government regulations;

 

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developments concerning proprietary rights, including patents and litigation matters;

 

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public concern relating to the commercial value or safety of any of our product candidates;

 

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financing or other corporate transactions;

 

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publication of research reports or comments by securities or industry analysts;

 

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general market conditions in the pharmaceutical industry or in the economy as a whole;

 

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impact of the COVID-19 pandemic on the economy or financial markets; or

 

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price and volume fluctuations attributable to inconsistent trading volume levels of the ADSs and/or ordinary shares.

These and other market and industry factors may cause the market price and demand for the ADSs and ordinary shares to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling their ADSs or ordinary shares and may otherwise negatively affect the liquidity of the ADSs and ordinary shares. In addition, the stock market in general, and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

 

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A significant shareholder will continue to own a substantial number of our securities and as a result, may be able to exercise significant influence over the outcome of shareholder votes. This shareholder may have different interests from us or your interests.

We have few significant shareholders. For an overview of our current significant shareholders, please see “Principal Shareholders.” Following the completion of this offering, this significant shareholder and its affiliates will own approximately [*]% of our ordinary shares (including ordinary shares represented by the ADSs).

Currently, we are not aware that any of our existing shareholders have entered or will enter into a shareholders’ agreement with respect to the exercise of their voting rights. Nevertheless, depending on the level of attendance at our annual general meetings of shareholders (“AGM”), or the General Meeting, this significant shareholder could have the ability to significantly influence the outcome of decisions taken at any such AGM. Any such voting by this shareholder may not be in accordance with our interests or those of our other shareholders. Among other consequences, this concentration of ownership may have the effect of delaying or preventing a change in control and might therefore negatively affect the market price of the ADSs.

Future sales, or the possibility of future sales, of a substantial number of our securities could adversely affect the price of the shares and dilute shareholders.

If our existing shareholders sell, or indicate an intent to sell, substantial amounts of our securities in the public market, the trading price of the ADSs and our ordinary shares could decline significantly and, in case of the ADSs, could decline below the public offering price in this offering. Upon completion of this offering, we will have [*] ordinary shares outstanding (including ordinary shares represented by the ADSs), approximately [*] of which, subject to limited exceptions, are subject to a 90-day contractual lock-up. The representatives of the underwriters may permit us and the holders of the shares subject to lock-up agreements to sell shares or ADSs prior to the expiration of the lock-up agreements. See “Underwriting.” After the lock-up agreements pertaining to this offering expire, and based on the number of ordinary shares (including ordinary shares represented by ADSs) outstanding upon completion of this offering, these [*] additional ordinary shares will be eligible for sale in the public market, all of which shares are held by directors and certain members of our executive management and will be subject to volume limitations under Rule 144 under the Securities Act of 1933, as amended, or the Securities Act, for sales in the United States. In addition, ordinary shares subject to outstanding options under our equity incentive plans and the ordinary shares reserved for future issuance under our equity incentive plan will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations.

We intend to register all ordinary shares that we may issue under our equity compensation plans. Once we register these ordinary shares, they can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and the lock-up agreements described in the “Shares and ADSs Eligible for Future Sale” section of this prospectus.

Provisions of our articles of association or Swiss corporate law might deter acquisition bids for us that might be considered favorable and prevent or frustrate any attempt to replace or remove the then board of directors.

Provisions of our articles of association may make it more difficult for a third party to acquire control of us. For example, in connection with an authorized share capital increase, our board of directors is authorized to restrict or exclude the subscription rights of shareholders and allocate them to third parties as a defense of an actual, threatened or potential takeover bid, in relation to which our board of directors, upon consultation with an independent financial adviser retained by it, has not recommended to the shareholders acceptance on the basis that the board of directors has not found the takeover bid to be financially fair to the shareholders. In addition, provisions of our articles of association may provide that in connection with a conditional share capital increase, the subscription rights and preemptive rights of shareholders are excluded.

 

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In addition, several provisions of Swiss corporate law and certain other provisions of Swiss law, such as obligations to disclose significant shareholdings, insider rules, ad hoc publicity rules of SIX Swiss Exchange, and merger control regulations, that apply to us may make an unsolicited tender offer, merger, change in management or other change in control of our company more difficult. These provisions could discourage potential takeover attempts that other shareholders may consider to be in their best interest and could adversely affect the market price of our securities. These provisions may also have the effect of depriving ADS holders of the opportunity to sell their ADSs at a premium. In addition, the board of directors of Swiss companies may in certain instances, and subject to prior authorization by the shareholders, deter or frustrate public takeover bids through dilutive issuances of equity securities (pursuant to the authorized capital) or through share buy-backs.

If you purchase ADSs in this offering, you will suffer immediate dilution of your investment.

The public offering price of the ADSs is substantially higher than the as adjusted net tangible book value per ADS. Therefore, if you purchase ADSs in this offering, you will pay a price per ADS that substantially exceeds our as adjusted net tangible book value per ADS after this offering. To the extent outstanding options are exercised, you will incur further dilution. Based on the assumed public offering price of $ per ADS, you will experience immediate dilution of $ per ADS, representing the difference between our as adjusted net tangible book value per ADS after giving effect to this offering and the public offering price. See “Dilution.”

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

Our board of directors will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of the ADSs. The failure by our board of directors to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of the ADSs to decline and delay the development of our product candidates. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

Fluctuations in exchange rates may increase the risk of holding ADSs and ordinary shares.

Due to the international scope of our operations, our assets, earnings and cash flows are influenced by movements in exchange rates of several currencies, particularly the euro, U.S. dollar and Swiss franc. Our functional currency is the Swiss franc, and the majority of our operating expenses are paid in Swiss franc, but we also receive or may receive payments from business partners in U.S. dollars, and we regularly acquire services, consumables and materials in U.S. dollars and euros. Further, potential future revenue may be derived from abroad, particularly from the United States or the European Union. As a result, our business and the price of the ADSs and ordinary shares may be affected by fluctuations in foreign exchange rates between the Swiss franc and these other currencies, which may also have a significant impact on our reported results of operations and cash flows from period to period. Besides natural hedging, currently, we do not have any exchange rate hedging arrangements in place.

Moreover, because our ordinary shares currently trade on the SIX Swiss Exchange in Swiss francs, and the ADSs will trade on the NASDAQ Global Market (if we make such application, and if our application is accepted) in U.S. dollars, fluctuations in the exchange rate between the U.S. dollar and the Swiss franc may result in temporary differences between the value of the ADSs and the value of our ordinary shares, which may result in heavy trading by investors seeking to exploit such differences.

 

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We will be traded on more than one market and this may result in price variations and adversely affect the liquidity and value of the ADSs; in addition, investors may not be able to easily move ordinary shares for trading between such markets. Furthermore, because of this dual listing, securities and stock exchange laws, regulations and rules will apply to us that may be irreconcilable or otherwise difficult to comply with contemporaneously.

Our ordinary shares have traded on the SIX Swiss Exchange since 2009 and, assuming our listing application is accepted, our ADSs will be traded on the NASDAQ Global Market. Trading in our ADSs or ordinary shares on these markets takes place in different currencies (U.S. dollars on the NASDAQ Global Market and Swiss Francs on the SIX Swiss Exchange), and at different times (resulting from different time zones, different trading days and different public holidays in the United States and Switzerland). The trading prices of our ordinary shares and our ADSs on these two markets may differ due to these and other factors. Any decrease in the price of our ordinary shares on the SIX Swiss Exchange could cause a decrease in the trading price of our ADSs on the NASDAQ Global Market. Investors could seek to sell or buy our ordinary shares to take advantage of any price differences between the markets through a practice referred to as arbitrage. Any arbitrage activity could create unexpected volatility in both our share prices on one exchange and the ordinary shares available for trading on the other exchange. In addition, holders of ADSs cannot immediately surrender their ADSs and withdraw the underlying ordinary shares for trading on the other market without effecting necessary procedures with the depositary. This could result in time delays and additional cost for holders of ADSs.

Additionally, the property rights attached to our common shares transfer to a holder of those shares upon purchasing such shares in a stock market transaction. Any voting rights or rights related to voting rights only transfer once the acquirer has been registered in the share register as shareholder with voting rights of such common shares. Holders of ADSs are, in such capacity, not directly registered in the share register and can thus enjoy the property and voting rights and rights related to voting rights attached to the ADSs only through the entity that acts as nominee or depositary for those ADSs and is recorded in the share register. It is possible that a nominee or a depositary will be unwilling to exercise certain rights attached to the common shares, such as rights that require litigation. Therefore, failing to register in the share register may result in your inability to exercise certain rights as a shareholder.

Holders of ADSs are not treated as holders of our ordinary shares.

By participating in this offering, you will become a holder of ADSs with underlying ordinary shares in a Swiss corporation (Société Anonyme). Holders of ADSs are not treated as holders of our ordinary shares, unless they withdraw the ordinary shares underlying their ADSs in accordance with the deposit agreement and applicable laws and regulations. The depositary is the holder of the ordinary shares underlying the ADSs. Holders of ADSs therefore do not have any rights as holders of our ordinary shares, other than the rights that they have pursuant to the deposit agreement. See “Description of American Depositary Shares.”

Except as described in this prospectus and the deposit agreement, holders of the ADSs will not be able to exercise voting rights attaching to the ordinary shares represented by the ADSs. Under the terms of the deposit agreement, holders of the ADSs may instruct the depositary to vote the ordinary shares underlying their ADSs. Otherwise, holders of ADSs will not be able to exercise their right to vote unless they withdraw the common shares underlying their ADSs in accordance with the deposit agreement and applicable laws and regulations to vote them in person or by proxy in accordance with applicable Swiss laws and regulations and our articles of association. Even so, ADS holders may not know about a meeting far enough in advance to withdraw those common shares. If we ask for the instructions of holders of the ADSs, the depositary, upon timely notice from us, will notify ADS holders of the upcoming vote and arrange to deliver our voting materials to them. Upon our request, the depositary will mail to holders a shareholder meeting notice that contains, among other things, a statement as to the manner in which voting instructions may be given. We cannot guarantee that ADS holders will receive the voting materials in time to ensure that they can instruct the depositary to vote the common shares underlying their ADSs. In addition, regardless of whether timely voting instructions are provided to the depositary, at our request, the depositary will represent all common shares underlying the ADSs for the purpose of establishing a quorum at a meeting of our shareholders. A shareholder is only entitled to participate in, and vote at, the meeting of shareholders, provided that its

 

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shares are recorded in its name at midnight (Central European Time) at the end of the 28th day preceding the date of the meeting of shareholders. In addition, the depositary’s liability to ADS holders for failing to execute voting instructions or for the manner of executing voting instructions is limited by the deposit agreement. As a result, holders of ADSs may not be able to exercise their right to give voting instructions or to vote in person or by proxy and they may not have any recourse against the depositary or us if their common shares are not voted as they have requested or if their shares cannot be voted.

Additionally, the financial rights attached to our common shares transfer to a holder of those shares upon purchasing such shares in a stock market transaction. Any voting rights or rights related to voting rights only transfer once the acquirer has been registered in the shareholders’ register as shareholder of such common shares. A beneficial owner that is not directly registered in the shareholders’ register can enjoy the financial rights, voting rights and rights related to voting rights only through the entity that acts as nominee or depositary for those common shares and is recorded in the shareholders’ register as the shareholder of record of those shares. This is also the case if you hold ADSs. It is possible that a nominee or a depositary will be unwilling to exercise certain rights attached to the common shares, such as rights that require litigation. Therefore, failing to register in the shareholders’ register may result in your inability to exercise certain rights as a shareholder.

Holders of ADSs may be subject to limitations on the transfer of their ADSs and the withdrawal of the underlying ordinary shares.

ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason, subject to the right of ADS holders to cancel their ADSs and withdraw the underlying ordinary shares. Temporary delays in the cancellation of your ADSs and withdrawal of the underlying ordinary shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of ordinary shares is blocked to permit voting at a shareholders’ meeting or we are paying a dividend on our ordinary shares. In addition, ADS holders may not be able to cancel their ADSs and withdraw the underlying ordinary shares when they owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited securities. See “Description of American Depositary Shares-Withdrawal of Ordinary shares Upon Cancellation of ADSs.”

We are entitled to amend the deposit agreement and to change the rights of ADS holders under the terms of such agreement, or to terminate the deposit agreement, without the prior consent of the ADS holders.

We are entitled to amend the deposit agreement and to change the rights of the ADS holders under the terms of such agreement, without the prior consent of the ADS holders. We and the depositary may agree to amend the deposit agreement in any way we decide is necessary or advantageous to us or to the depositary. Amendments may reflect, among other things, operational changes in the ADS program, legal developments affecting ADSs or changes in the terms of our business relationship with the depositary. If the terms of an amendment are materially disadvantageous to ADS holders, ADS holders will only receive 30 days’ advance notice of the amendment, and no prior consent of the ADS holders is required under the deposit agreement. Furthermore, we may decide to direct the depositary to terminate the ADS facility at any time for any reason. For example, terminations may occur if we become the subject of a takeover or a going-private transaction. If the ADS fac terminate, ADS holders will receive at least 30 days’ prior notice, but no prior consent is required from them. Under the circumstances that we decide to make an amendment to the deposit agreement that is disadvantageous to ADS holders or terminate the deposit agreement, the ADS holders may choose to sell their ADSs or surrender their ADSs and become direct holders of the underlying ordinary shares, but will have no right to any compensation whatsoever.

 

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Holders of ADSs may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.

The deposit agreement governing the ADSs representing our ordinary shares provides that, to the fullest extent permitted by law, holders and beneficial owners of ADSs irrevocably waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to the ADSs or the deposit agreement.

If this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the deposit agreement with a jury trial. If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which govern the deposit agreement, by a federal or state court in the City of New York, which has non-exclusive jurisdiction over matters arising under the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiver provision before entering into the deposit agreement.

If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us and/or the depositary. If a lawsuit is brought against us and/or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action, depending on, among other things, the nature of the claims, the judge or justice hearing such claims, and the venue of the hearing.

No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder.

Moreover, as the jury trial waiver relates to claims arising out of or relating to the ADSs or the deposit agreement, we believe that, as a matter of construction of the clause, the waiver would likely to continue to apply to ADS holders who withdraw the ordinary shares from the ADS facility with respect to claims arising before the cancellation of the ADSs and the withdrawal of the ordinary shares, and the waiver would most likely not apply to ADS holders who subsequently withdraw the ordinary shares represented by ADSs from the ADS facility with respect to claims arising after the withdrawal. However, to our knowledge, there has been no case law on the applicability of the jury trial waiver to ADS holders who withdraw the ordinary shares represented by the ADSs from the ADS facility.

 

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We do not expect to pay dividends in the foreseeable future.

We have not paid any dividends since our incorporation. Even if future operations lead to significant levels of distributable profits, we currently intend that any earnings will be reinvested in our business and that dividends will not be paid until we have an established revenue stream to support continuing dividends. In addition, payment of any future dividends to shareholders would be subject to shareholder approval at our AGM, upon proposal of the board of directors, taking into account various factors including our business prospects, cash requirements, financial performance and new product development. In addition, certain limitations apply to the payment of future dividends pursuant to Swiss law and our articles of association. See “Description of Share Capital and Articles of Association.” For the taxation of future dividend payments, see “Swiss Tax-Implications for U.S. Holders.” In addition, ordinary dividends may be paid only if our shareholders’ equity exceeds the sum of our paid-in and called-up share capital plus the statutory reserves required to be maintained by Swiss law or by our articles of association. Accordingly, investors cannot rely on dividend income (whether cash nor otherwise) from ADSs and any returns on an investment in the ADSs will likely depend entirely upon any future appreciation in the price of the ADSs.

You may not receive distributions on our common shares represented by our ADS or any value for them if it is illegal or impractical to make them available to holders of ADSs.

We expect that the depositary for our ADSs will agree to pay to you or distribute the cash dividends or other distributions it or the custodian receives on our common shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of our common shares your ADSs represent. However, in accordance with the limitations that we expect will be set forth in the deposit agreement, it may be unlawful or impractical to make a distribution available to holders of ADSs. We have no obligation to take any other action to permit the distribution of our ADSs, common shares, rights or anything else to holders of our ADSs. This means that you may not receive the distributions we make on our common shares or any value from them if it is unlawful or impracticable to make them available to you. These restrictions may have a material adverse effect on the value of your ADSs.

Holders of our common shares outside Switzerland and ADS holders may not be able to exercise subscription or preemptive rights.

Under Swiss law, shareholders may have certain subscription rights and preemptive rights to subscribe on a pro rata basis for issuance of equity or other securities that are convertible into equity. Due to laws and regulations in their respective jurisdictions, however, non-Swiss shareholders may not be able to exercise such rights unless we take action to register or otherwise qualify the rights offering under the laws of that jurisdiction. There can be no assurance that we would take any such action and we reserve the right to determine whether we should take such action in any jurisdiction. If shareholders in such jurisdictions were unable to exercise their subscription or pre-emptive rights, their ownership interest in the Company would be diluted.

ADS holders have no subscription or preemptive rights to subscribe to newly issued shares unless such rights are granted to the foreign depositary. The right to exercise such subscription and preemptive rights is set out in the agreement between the ADS holder and the depositary.

We are a Swiss corporation. The rights of our shareholders may be different from the rights of shareholders in companies governed by the laws of U.S. jurisdictions.

We are a Swiss corporation. Our corporate affairs are governed by our articles of association and organizational regulations and by the laws governing companies, including listed companies, incorporated in Switzerland. The rights of our shareholders and the responsibilities of members of our board of directors may be different from the rights and obligations of shareholders and directors of companies governed by the laws of U.S. jurisdictions. In the performance of its duties, our board of directors is required by Swiss law to consider the interests of our company, and may also have regard to the interests of our shareholders, our employees and other stakeholders, in all cases with due observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a holder of ADSs. Swiss corporate law limits the ability of our shareholders to challenge

 

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resolutions made or other actions taken by our board of directors in court. Our shareholders generally are not permitted to file a suit to reverse a decision or an action taken by our board of directors but are instead only permitted to seek damages for breaches of fiduciary duty. As a matter of Swiss law, shareholder claims against a member of our board of directors for breach of fiduciary duty would have to be brought to the competent courts in Geneva, Canton of Geneva, Switzerland, or where the relevant member of our board of directors is domiciled. In addition, under Swiss law, any claims by our shareholders against us must be brought exclusively to the competent courts in Geneva, Canton of Geneva, Switzerland

On June 19, 2020, the Swiss Parliament approved legislation that will modernize certain aspects of Swiss corporate law. See “Description of Share Capital and Articles of Association-Certain Important Provisions of our Articles of Association, Organizational Rules and Swiss Law.” The new legislation, which will alter the rights of shareholders under Swiss law, will come into force on January 1, 2023. There can be no assurance that Swiss law will not once again change in the future, which could adversely affect the rights of our shareholders or holders of our ADSs. Furthermore, there can be no guarantee that Swiss law does or will protect our shareholders or the holders of our ADSs in a similar fashion as the laws of U.S. jurisdictions would, in particular as regards corporate law principles, if we were a U.S.-incorporated company.

Claims of U.S. civil liabilities may not be enforceable against us.

We are incorporated under the laws of Switzerland and our registered office and domicile is located in Geneva, Switzerland. Substantially all of our assets are located outside the United States. Several our directors and executive officers are not residents of the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or to enforce judgments obtained against them or us in U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws. We have been advised by our Swiss counsel that there is doubt as to the enforceability in Switzerland of original actions, or in actions for enforcement of judgments of U.S. courts, of civil liabilities to the extent solely predicated upon the federal and state securities laws of the United States. Original actions against persons in Switzerland based solely upon the U.S. federal or state securities laws are governed, among other things, by the principles set forth in the Swiss Federal Act on Private International Law.

The United States currently does not have a treaty with Switzerland providing for the reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. Consequently, a final judgment for payment given by a court in the United States, whether or not predicated solely upon U.S. securities laws, would not automatically be recognized or enforced in Switzerland. In order to obtain a judgment which is recognizable and enforceable in Switzerland, the party in whose favor a final and conclusive judgment of the U.S. court has been rendered will be required to file its claim with a court of competent jurisdiction in Switzerland which may refuse to enforce a final judgment rendered by the U.S. court for one of the reasons specified in the Swiss Federal Private International Law Act of December 18, 1987, as amended (“PILA”), in particular pursuant to art. 25—27 thereof. Enforcement may, according to such provisions, be refused, for instance, if the foreign court had no jurisdiction from a Swiss law point of view, for reasons of public policy, lack of possibility to defend, conflicting judgments, violation of fundamental principles of Swiss procedural law, especially that the Swiss company was denied the right to be heard, a lawsuit between the same parties and concerning the same cause of action had already been brought or decided in Switzerland or that the lawsuit had proceeded to judgment in a third State and that judgment can be recognized in Switzerland. Also, (i) the application of provisions of foreign law is excluded if such application leads to a result that is incompatible with Swiss public policy, (ii) mandatory provisions of Swiss law may be applicable regardless of any other law that would otherwise apply, and (iii) a Swiss court may find that provisions of a law other than the law chosen by the parties are applicable if important reasons call for such applicability and if the facts are closely linked to such other law. Swiss courts may deny the recognition and enforcement of punitive damages or other awards. Moreover, a Swiss court may reduce the amount of damages granted by a U.S. court and recognize damages only to the extent that they are necessary to compensate actual losses or damages. the non-Swiss court had jurisdiction pursuant to the Swiss Federal Act on Private International Law;

 

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Our status as a Swiss corporation means that our shareholders enjoy certain rights that may limit our flexibility to raise capital, issue dividends and otherwise manage ongoing capital needs.

Swiss law reserves for approval by shareholders certain corporate actions over which a board of directors would have authority in some other jurisdictions. For example, the payment of dividends and cancellation of treasury shares must be approved by shareholders. Swiss law also requires that our shareholders themselves resolve to, or authorize our board of directors to, increase our share capital. While our shareholders may authorize share capital that can be issued by our board of directors without additional shareholder approval, Swiss law limits this authorization to 50% of the share capital registered in the commercial register at the time of the authorization. The authorization, furthermore, has a limited duration of up to two years and must be renewed by the shareholders from time to time thereafter in order to be available for raising capital. Additionally, subject to specified exceptions, including exceptions explicitly described in our articles of association, Swiss law grants pre-emptive rights to existing shareholders to subscribe for new issuances of shares, which may be limited or withdrawn only under certain limited conditions. Swiss law also does not provide as much flexibility in the various rights and regulations that can attach to different categories of shares as do the laws of some other jurisdictions. These Swiss law requirements relating to our capital management may limit our flexibility, and situations may arise where greater flexibility would have provided benefits to our shareholders. See “Description of Share Capital and Articles of Association,” “Limitations Affecting Shareholders of a Swiss Company” and “Comparison of Shareholder Rights.”

We are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.

We report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from the Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

As a foreign private issuer and as permitted by the listing requirements of NASDAQ, we rely on certain home country governance practices rather than the corporate governance requirements of NASDAQ.

We are a foreign private issuer. As a result, in accordance with NASDAQ Listing Rule 5615(a)(3), if we are approved for listing, we will comply with home country governance requirements and certain exemptions thereunder rather than complying with certain of the corporate governance requirements of NASDAQ.

 

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Swiss law does not require that a majority of our board of directors consist of independent directors. Our board of directors therefore may include fewer independent directors than would be required if we were subject to NASDAQ Listing Rule 5605(b)(1). In addition, we are not subject to NASDAQ Listing Rule 5605(b)(2), which requires that independent directors regularly have scheduled meetings at which only independent directors are present.

Although Swiss law also requires that we adopt a compensation committee, we follow home country requirements with respect to such committee. As a result, our practice varies from the requirements of NASDAQ Listing Rule 5605(d), which sets forth certain requirements as to the responsibilities, composition and independence of compensation committees, and, from the independent director oversight of director nominations requirements of NASDAQ Listing Rule 5605(e).

Furthermore, in accordance with Swiss law and generally accepted business practices, our articles of association do not provide quorum requirements generally applicable to general meetings of shareholders. Our practice thus varies from the requirement of NASDAQ Listing Rule 5620(c), which requires an issuer to provide in its bylaws for a generally applicable quorum, and that such quorum may not be less than one-third of the outstanding voting stock.

For an overview of our corporate governance principles, see “Description of Share Capital and Articles of Association-Certain Important Provisions of our Articles of Association, Organizational Rules and Swiss Law.” As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

We may lose our foreign private issuer status which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant legal, accounting and other expenses.

We are a foreign private issuer and therefore we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers. In order to maintain our current status as a foreign private issuer, either (a) a majority of our common shares must be either directly or indirectly owned of record by non-residents of the U.S. or (b) (i) a majority of our executive officers or directors may not be U.S. citizens or residents, (ii) more than 50 percent of our assets cannot be located in the U.S. and (iii) our business must be administered principally outside the U.S. If we lost this status, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and stock exchange rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time-consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors.

 

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We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to “emerging growth companies” will make the ADSs less attractive to investors.

We are an “emerging growth company,” as defined in the U.S. Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be an “emerging growth company,” we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation. As an “emerging growth company,” we are required to report only two years of financial results and selected financial data compared to three and five years, respectively, for comparable data reported by other public companies. We may take advantage of these exemptions until we are no longer an “emerging growth company.” We could be an “emerging growth company” for up to the last day of the fiscal year ending after the fifth anniversary of our initial U.S. public offering, although circumstances could cause us to lose that status earlier, including if the aggregate market value of our common shares held by non-affiliates exceeds $700 million as of any June 30 (the end of our second fiscal quarter) before that time, in which case we would no longer be an “emerging growth company” as of the following December 31 (our fiscal year-end). We cannot predict if investors will find the ADSs less attractive because we may rely on these exemptions. If some investors find the ADSs less attractive as a result, there may be a less active trading market for the ADSs and the price of the ADSs may be more volatile.

If we are or become classified as a passive foreign investment company, U.S. holders of ADSs may suffer adverse tax consequences as a result.

Generally, for any taxable year, if at least 75% of our gross income is passive income, or at least 50% of the value of our assets is attributable to assets that produce passive income or are held for the production of passive income, including cash, we will be characterized as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. For purposes of these tests, passive income includes dividends, interest, gains from commodities and securities transactions, the excess of gains over losses from the disposition of assets which produce passive income (including amounts derived by reason of the temporary investment of funds raised in offerings of our shares or ADSs) and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. If we are characterized as a PFIC, U.S. holders of our ADSs may suffer adverse tax consequences, including having gains realized on the sale of our ADSs treated as ordinary income rather than capital gain, the loss of the preferential rate applicable to dividends received on ADSs by individuals who are U.S. holders, and having interest charges apply to certain distributions by us and gains from the sales of our ADSs.

Our status as a PFIC will depend on the nature and composition of our income and the nature, composition and value of our assets. Our status may also depend, in part, on how quickly we utilize the cash proceeds from this or any future offering of our common shares or ADSs in our business. The tax consequences that would apply if we are classified as a PFIC would be different from those described above if a U.S. holder of ADSs were able to make a valid qualified electing fund, or QEF, election. At this time, we do not expect to provide U.S. holders of ADSs with the information necessary for a U.S. shareholder to make a QEF election. Accordingly, prospective investors should assume that a QEF election will not be available.

General Risks

We will incur increased costs as a result of operating as a U.S. public company, and our board of directors will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company in the United States, and particularly after we no longer qualify as an emerging growth company, we will incur significant legal, accounting and other expenses that we did not incur as a public company listed only on the SIX Swiss Exchange. We are a corporation (Société Anonyme), organized under the laws of Switzerland in accordance with articles 620 et seqq. of the Swiss Code of Obligations (Code des obligations) and subject to the listing rules and the applicable regulations for companies listed on the SIX Swiss Exchange, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer

 

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Protection Act, the listing requirements of the NASDAQ Stock Market, or NASDAQ, and other applicable securities rules and regulations that impose various requirements on non-U.S. reporting public companies, including the establishment and maintenance of effective disclosure and financial controls and certain additional corporate governance practices. Our board of directors and other personnel will be required to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we will be required to furnish a report on our internal control over financial reporting. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of ADSs representing our shares or our shares.

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or any subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of ADSs representing our shares or our shares.

Management will be required to assess the effectiveness of our internal controls annually beginning with our second annual report to be filed with the SEC. However, for as long as we are an “emerging growth company” under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements requiring us to incur the expense of remediation and could also result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

 

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Risks from the improper conduct of employees, agents, contractors, or collaborators could adversely affect our reputation and our business, prospects, operating results, and financial condition.

We cannot ensure that our compliance controls, policies, and procedures will in every instance protect us from acts committed by our employees, agents, contractors, or collaborators, which would violate the laws or regulations of the jurisdictions in which we operate, including, without limitation, healthcare, employment, foreign corrupt practices, environmental, competition, and patient privacy and other privacy laws and regulations. Such improper actions could subject us to civil or criminal investigations, and monetary and injunctive penalties, and could adversely impact our operating results, our ability to conduct business and our reputation.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA or EMA regulations, to provide accurate information to the FDA or the EMA, or intentional failures to report financial information or data accurately or to disclose unauthorized activities to us. Employee misconduct could also involve the improper use of information obtained in the course of clinical studies, which could result in regulatory sanctions and serious harm to our reputation. While we take precautions to detect and prevent this activity, it may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

Our business activities may be subject to the Foreign Corrupt Practices Act (FCPA) and similar anti-bribery and anti-corruption laws.

Our business activities may be subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate, including the UK Bribery Act. The FCPA generally prohibits offering, promising, giving or authorizing others to give anything of value, either directly or indirectly, to a non-U.S. government official in order to influence official action, or otherwise obtain or retain business. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation, and to devise and maintain an adequate system of internal accounting controls. Our business is heavily regulated and therefore involves significant interaction with public officials. including officials of non-U.S. governments. Additionally, in many other countries, the healthcare providers who prescribe pharmaceuticals or biopharmaceuticals and the investigators who perform our studies are employed by their government, and the purchasers of pharmaceuticals are government entities; therefore, our dealings with these prescribers and purchasers are subject to regulation under the FCPA. The Securities and Exchange Commission (“SEC”) and the Department of Justice have increased their FCPA enforcement activities with respect to pharmaceutical companies. There is no certainty that all of our employees, agents, contractors or collaborators, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, the closing down of our facilities, requirements to obtain export licenses, cessation of business activities in sanctioned countries, implementation of compliance programs, and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, and our business, prospects, operating results and financial condition.

 

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A breakdown or breach of our information technology systems and cybersecurity efforts, or those of our key business partners or service providers, could subject us to liability or reputational damage or interrupt the operation of our business.

Despite the implementation of security measures, our internal computer systems and those of our contractors and consultants may be vulnerable to damage from computer viruses and unauthorized access. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations. For example, the loss of clinical trial data from completed, ongoing or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Our ability to monitor our partners’ data security practices are limited, and due to applicable laws and regulations or contractual obligations, we may be held responsible for any security breaches or cybersecurity attack attributed to them as they relate to the information we share with them. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate disclosure of confidential or proprietary information or personal data of our employees, partners or study subjects, we could incur liability and the further development and commercialization of our product candidates could be delayed.

We are increasingly dependent upon technology systems and data. Our computer systems continue to increase in multitude and complexity due to the growth in our business, making them potentially vulnerable to breakdown, malicious intrusion and random attack. Data privacy or security breaches, including those by individuals authorized to access our technology systems or others may pose a risk that sensitive data, including intellectual property, trade secrets or personal information belonging to us, our patients, study subjects or other business partners, may be exposed to unauthorized persons or to the public. Cyber-attacks are increasing in their frequency, sophistication and intensity, and are becoming increasingly difficult to detect. They are often carried out by motivated, well-resourced, skilled and persistent actors, including nation states, organized crime groups, “hacktivists” and employees or contractors acting with malicious intent. Cyber-attacks could include the deployment of harmful malware and key loggers, ransomware, a denial-of-service attack, a malicious website, phishing attacks, computer viruses, social engineering and other means to affect the confidentiality, integrity and availability of our technology systems and data. Our key business partners face similar risks and any security breach of their systems could adversely affect our security posture. Although we continue to build and improve our systems and infrastructure, and believe we have taken appropriate security measures to reduce these risks to our data and information technology systems, there can be no assurance that our efforts will prevent, detect or appropriately respond to breakdowns or breaches in our systems that could adversely affect our business and operations and/or result in the loss of critical or sensitive information, including personal information, which could result in financial, legal, business or reputational harm to us. We continue to invest in industry standard IS/IT solutions and managed services that often include the relevant, layered protection and monitoring practices surrounding our data and IT systems and related infrastructure. These investments reduce further these risks in that they enable organizations such as ours to leverage the resources necessary to monitor IT systems and infrastructure for any current or potential threats. These investments can be costly, and as cyber threats continue to evolve, we may be required to expend significant, additional resources to continue to modify and/or enhance our protective, detective and responsive measures required to remediate any identified information security vulnerabilities. Claims related to security breaches, cyber-attacks and other related breaches may result in significant fines, penalties and payment of damages. We may be required to expend significant capital and other resources to protect against and respond to any attempted or existing cybersecurity incidents. In addition, our remediation efforts may not be successful.

Changes in laws, rules or regulations relating to data privacy and security, or any actual or perceived failure by us to comply with such laws, rules, regulations and standards, or contractual or other obligations relating to data privacy and security, could have a material adverse effect on our reputation, results of operations, financial condition and cash flows.

We are, and may increasingly become, subject to various laws, rules, regulations and standards, as well as contractual obligations, relating to data privacy and security in the jurisdictions in which we operate. The regulatory environment related to data privacy and security is increasingly rigorous, with new and constantly changing requirements applicable to our business, and enforcement practices are likely to remain uncertain for the foreseeable future. These laws, rules, regulations and standards may be interpreted and applied differently over time and from jurisdiction to jurisdiction in a manner that could have a material

 

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adverse effect on our results of operations, financial condition and cash flows. New laws, amendments to or reinterpretations of existing laws, rules, regulations, standards and other obligations may require us to incur additional costs and restrict our business operations, and may require us to change how we use, collect, store, transfer or otherwise process certain types of personal information and to implement new processes to comply with those laws.

Evolving compliance and operational requirements impose significant costs, which are likely to increase over time. In addition, such requirements may require us to modify our data-processing practices and policies, distract management or divert resources from other initiatives and projects. For instance, the European Union (EU) Court of Justice and the Swiss Federal Data Protection and Information Commissioner have declared that the EU-U.S. Privacy Shield and the Swiss-U.S. Privacy Shield, respectively, do not provide for an adequate level of protection when transferring personal data from the EU to the U.S. respectively from Switzerland to the U.S. which could increase our compliance burden. If we are unable to properly protect the privacy and security of personal information, including protected health information, we could be found to have breached our contracts. In addition, any failure or perceived failure by us to comply with any applicable federal, state or similar foreign laws and regulations relating to data privacy and security could result in damage to our reputation and our relationship with our customers, as well as proceedings or litigation by governmental agencies, customers, partners, collaborators and/or study subjects, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, sanctions, awards, penalties or judgments, all of which could have a material adverse effect on our business, results of operations, financial condition and prospects.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This registration statement contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this registration statement, other than statements of historical fact, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, projects, plans and objections of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend”, “may,” “plan,” “predict,” “project,” “target,” “potential,” “would,” “could,” “should,” “continue,” and other similar expressions are intended to identify forward-looking statements, though not all forward-looking statements contain these identifying words. The forward-looking statements in this registration statement include, among other things, statements about:

 

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the success, cost and development of our clinical programs, including the progress of, and results from, our (and our partners’) clinical trial and preclinical programs for RLF-100 and ACER-001;

 

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the ability of our collaboration partners to obtain authorizations to commercialize products that are the subject of the respective collaborations;

 

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the outcome of our lawsuit against NeuroRx for breach of our collaboration agreement with NeuroRx;

 

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our ability or our collaboration partners’ abilities to obtain and maintain regulatory approval of our product candidates and any related restrictions, limitations or warnings on the label of any such product, if approved;

 

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our plans to pursue research and development of product candidates we may obtain in the future;

 

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•

our ability to compete with companies currently marketing or engaged in the development of treatments for indications that our product candidates are designed to target;

 

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the potential advantages or disadvantages of our product candidates;

 

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the rate and degree of market acceptance and clinical utility of our product candidates;

 

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the success of our collaborations and partnerships with third parties;

 

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our estimates regarding the potential market opportunities for our product candidates;

 

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our sales, marketing, and distribution capabilities and strategy;

 

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our ability to establish and maintain arrangements for the manufacture of our product candidates;

 

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our ability to protect and defend our intellectual property;

 

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whether any of our product candidates (or our collaboration partners’ product candidates) will ever be approved for commercialization;

 

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whether we will ever achieve cash flow positive operations or profitability;

 

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our expectations related to our use of capital;

 

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the effect of the COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including, but not limited to our preclinical studies and clinical trials;

 

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our estimates regarding expenses, future revenues, capital requirements and our needs for additional financing;

 

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the impact of government laws and regulations; and

 

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our competitive position.

You should refer to the section of this prospectus titled “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act do not protect any forward-looking statements that we make in connection with this offering.

You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

 

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MARKET, INDUSTRY AND OTHER DATA

This prospectus contains estimates, projections and other information concerning our industry, our business and the markets for our product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from our own internal estimates and research as well as from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources which we believe to be reliable.

In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Special Note Regarding Forward-Looking Statements.”

TRADEMARKS AND SERVICE MARKS

We own trademarks for Relief Therapeutics in Switzerland. All other trade names, trademarks and service marks of other companies appearing in this Registration Statement on Form 20-F are the property of their respective holders. Solely for convenience, the trademarks and trade names in this Registration Statement on Form F-1 are referred to without the ^® and ^™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend to use or display other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

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USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of approximately $ (CHF) million, assuming a public offering price of $ (CHF) per American Depositary Share, or ADS, based on the closing price of our common shares on the SIX Swiss Exchange on , 2022, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, and assuming no exercise of the underwriters’ option to purchase additional ADSs. If the underwriters exercise in full their options to purchase additional ADSs, we estimate that we will receive net proceeds from this offering of approximately $ (CHF ) million, assuming a public offering price of $ (CHF) per ADS, based on the closing price of our common shares on the SIX Swiss Exchange on , 2022, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Each $0.01 (CHF) increase (decrease) in the assumed offering price of $ (CHF ) per common share, based on the closing price of our common shares on the SIX Swiss Exchange on , 2022, would increase or decrease our net proceeds from the offering by $ (CHF) million, assuming the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions. We may also increase or decrease the number of ADSs we are offering. An increase or decrease of _______ ADSs offered by us would increase or decrease the net proceeds to us from the sale of the ADSs we are offering by $ (CHF) million, assuming that the assumed offering price remains the same and after deducting underwriting discounts and commissions. The actual net proceeds payable to us will adjust based on the actual number of ADSs offered by us, the actual offering price and other terms of the offering determined at pricing.

We currently expect to use the net proceeds from this offering, together with our existing cash and cash equivalents of $ (CHF ) million as of , 2022, as follows:

 

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To fund our existing and planned clinical trials for our product candidates; and

 

•

To fund the advancement of our platform and other potential product candidates, the acquisition of (direct and indirect) participations in enterprises of all kind in Switzerland and abroad, working capital, and other general corporate purposes.

We currently have no specific plans as to how the net proceeds from this offering will be allocated beyond the expected uses specified above and therefore management will retain discretion with respect to the use of the remainder of the net proceeds of this offering. We may also use a portion of the net proceeds to acquire, license or invest in complementary products, technologies or businesses; however, we currently have no agreements, plans or commitments to complete any such transaction.

This expected use of the net proceeds from this offering represents our intentions based upon our current plans and business conditions. As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the completion of this offering or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual expenditures and the extent of clinical development may vary significantly depending on numerous factors, including the progress of our development efforts, the status of and results from preclinical studies and any ongoing clinical trials or clinical trials that we may commence in the future, as well as any collaboration that we may enter into with third parties for our product candidates and any unforeseen cash needs. As a result, our future financing needs remain uncertain and our management will retain broad discretion over the allocation of the net proceeds from this offering.

 

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Pending our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including term deposits, short-term, investment-grade, interest-bearing instruments and government securities.

DIVIDEND POLICY

We have not paid any dividends since our incorporation. Even if future operations lead to significant levels of distributable profits, we currently intend that any earnings will be reinvested in our business and that dividends will not be paid until we have an established revenue stream to support continuing dividends. Under our articles of association, the declaration of dividends requires a resolution passed by a simple majority of the votes cast at a shareholders’ meeting regardless of abstentions and empty or invalid votes. The proposal to pay future dividends to shareholders will in addition effectively be at the discretion of our board of directors after considering various factors including our business prospects, liquidity requirements, financial performance and new product development. In addition, payment of future dividends is subject to certain limitation pursuant to Swiss law or by our articles of association. Accordingly, investors cannot rely on dividend income from our common shares and any returns on an investment in our common shares will likely depend entirely upon any future appreciation in the price of our common shares.

The proposal to pay future dividends to shareholders will effectively be at the discretion of our board of directors and subject to approval by, at their discretion, our shareholders after considering various factors including our business prospects, liquidity requirements, financial performance and new product development.

In addition, payment of future dividends is subject to certain limitations pursuant to Swiss law or our articles of association. Investors cannot rely on dividend income from our common shares and any returns on an investment in our common shares will likely depend entirely upon any future appreciation in the price of our common shares. Dividends paid on our common shares are subject to Swiss Federal withholding tax, except if paid out of reserves from capital contributions (apports de capital).

A distribution of cash or property that is based on a reduction of our share capital requires a special audit report confirming that the claims of our creditors remain fully covered by our assets despite the reduction in the share capital recorded in the commercial register. Upon approval by the general meeting of the shareholders of the capital reduction, our board of directors must give public notice of the capital reduction in the Swiss Official Gazette of Commerce three times and notify our creditors that they may request, within two months of the third publication, satisfaction of or security for their claims. Distributions of cash or property that are based upon a capital reduction are not subject to Swiss federal withholding tax. See “Swiss Tax Implications for U.S. Holders-Swiss Tax Considerations-Swiss Federal Withholding Tax” for a summary of certain Swiss tax consequences regarding distributions paid on the common shares that are based upon a capital reduction. For a description of share capital reductions under the revised Swiss corporate law expected to enter into force in 2023, see “Description of Share Capital and Articles of Association-Dividends and Other Distributions.”

Dividend distributions, if any in the future, will be declared and paid in Swiss francs and converted into U.S. dollars with respect to the ADSs, as provided in the deposit agreement.

Our board of directors determines the date on which the dividend entitlement starts. Dividends are usually due and payable shortly after the shareholders have passed the resolution approving the payment, but shareholders may also resolve at the ordinary general meeting of shareholders to pay dividends in quarterly or other installments.

 

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For a discussion of the taxation of dividends, see the section in this prospectus entitled “Taxation-Swiss Federal Withholding Tax.”

CAPITALIZATION

The table below sets forth our cash and cash equivalents and shows our capitalization as of March 31, 2022. You should read this table in conjunction with our financial statements included in this registration statement, together with the accompanying notes and the other information appearing in the audited financial statements included in this registration statement. All amounts below are in Swiss Francs (CHF) and are in thousands. The indebtedness set forth below is unsecured and non-guaranteed.

 

(in thousands, except per-share data)		March 31, 2022
Cash and Cash Equivalents			36,965
Debt
Interest bearing loans and borrowings			1,732
Capitalization
Share Capital			44,163
Treasury Shares			(2,565	)
Reserves			213,837
Accumulated deficit			(77,476	)
Total Capitalization			177,959
Total Capitalization and Indebtedness			179,691

As of June 30, 2022, 4,416,334,617 of our ordinary shares were outstanding, excluding 223,493,832 shares that were held in treasury.

As of August 22, 2022, our cash and cash equivalents were approximately CHF 29.1 million and 4,241,040,744 of our ordinary shares were outstanding, excluding 175,293,873 shares that were held in treasury.

 

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DILUTION

If you invest in our ADSs in this offering, your ownership interest will be diluted to the extent of the difference between the public offering price per ADS in this offering and the as adjusted net tangible book value per ADS after this offering. Our net tangible book value as of March 31, 2022 was CHF [*] million ($[*] million), or CHF [*] ($[*]) per ADS. Net tangible book value per common share was determined by dividing our total assets less our intangible assets and our total liabilities by the number of common shares outstanding as of December 31, 2021, and excludes [*] common shares issuable upon the exercise of options at a weighted average price of CHF [*] ($[*]) per common share granted to our employees and directors but not exercised as of March 31, 2022.

After giving effect to the receipt of the estimated net proceeds from our sale of ADSs in the offering, assuming a public offering price $ (CHF ) per ADS, based on the closing price of our common shares on the SIX Swiss Exchange on , 2022, and the application of the estimated net proceeds therefrom as described under “Use of Proceeds,” our as adjusted net tangible book value at March 31, 2022 would have been approximately CHF ($ ), or CHF ($ ) per common share. This represents an immediate increase in net tangible book value per ADS of CHF ($ ) to existing shareholders and an immediate dilution in net tangible book value per ADS of CHF ($ ) to you, or %.

The following table illustrates this dilution on an ADS basis.

 

Assumed public offering price per ADS							CHF
Net tangible book value per ADS as of March 31, 2022			CHF
Increase in net tangible book value per ADS attributable to new investors			CHF
As adjusted net tangible book value per ADS after this offering							CHF
Dilution per ADS to new investors							CHF

The dilution information discussed above is illustrative only and will change based on the actual offering price and other terms of the offering determined at pricing. Each $1.00 (CHF ) increase or decrease in the assumed offering price of $ (CHF ) per ADS, based on the closing price of our common shares on the SIX Swiss Exchange on , 2022, would increase or decrease our as adjusted net tangible book value by approximately CHF ($ ), or approximately CHF ($ ) per ADS, and the dilution to new investors participating in the offering would be approximately CHF ($ ) per ADS, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions. We may also increase or decrease the number of ADSs we are offering. An increase of 1,000,000 ADSs offered by us would increase the as adjusted net tangible book value by approximately CHF ($ ), or CHF ($ ) per ADS, and the dilution to new investors participating in the offering would be CHF ($ ) per ADS, assuming that the assumed offering price remains the same, and after deducting underwriting discounts and commissions. Similarly, a decrease of 1,000,000 ADSs offered by us would decrease the as adjusted net tangible book value by approximately CHF ($ ), or CHF ($ ) per ADS, and the dilution to new investors participating in the offering would be CHF ($ ) per ADS, assuming that the assumed offering price remains the same, and after deducting underwriting discounts and commissions. The as adjusted information discussed above is illustrative only and will be adjusted based on the actual offering price, the actual number of ADSs offered by us, and other terms of the offering determined at pricing.

If the underwriters exercise their option to purchase additional ADSs in full, the as adjusted net tangible book value per share after the offering would be CHF ($ ) per ADS, the increase in the as adjusted net tangible book value to existing shareholders would be CHF ($ ) per ADS, and the dilution to new investors participating in the offering would be CHF ($ ) per ADS.

 

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The following table sets forth, as of , 2022, consideration paid to us in cash for common shares purchased from us by our existing shareholders and by new investors participating in this offering (including common shares represented by ADSs), based on an assumed offering price of $ (CHF) per ADS, based on the closing price of our common shares on the SIX Swiss Exchange on , 2022, and before deducting underwriting discounts and commissions and estimated offering expenses payable by us:

 

ADSs Purchased

Total Consideration

Number

Percent

Amount

Percent

Average price per ADS

Existing investors

CHF

CHF

New investors

Total

100.0%

CHF

100.0%

Each $1.00 (CHF ) increase or decrease in the assumed offering price of $ (CHF ) per ADS, based on the closing price of our common shares on the SIX Swiss Exchange on , 2021, would increase or decrease the total consideration paid by new investors participating in the offering by CHF ($ ) million, assuming that the number of ADSs offered by us, as set forth on the cover page of the prospectus, remains the same and before deducting underwriting discounts and commissions. We may also increase or decrease the number of ADSs we are offering. An increase or decrease in 1,000,000 ADSs offered by us would increase or decrease the total consideration paid by new investors participating in the offering by CHF ($ ) million, assuming that the assumed offering price remains the same and before deducting underwriting discounts and commissions. The as adjusted information discussed above is illustrative only and will be adjusted based on the actual offering price, the actual number of ADSs offered by us and other terms of the offering determined at pricing.

In addition, if the underwriters exercise their option to purchase additional ADSs in full, the number of shares held by the existing shareholders after this offering would be reduced to , or % of the total number of common shares (including common shares represented by ADSs) outstanding after this offering, and the number of shares held by new investors participating in this offering (including common shares represented by ADSs) would increase to , or % of the total number of common shares outstanding after this offering (including common shares represented by ADSs).

The number of ordinary shares to be outstanding under this offering is based on a total of 4,416,334,617 ordinary shares outstanding as of June 30, 2022, excluding:

 

•

223,493,832 shares held in treasury; and

 

•

72,813,197 unvested stock options at a weighted average exercise price of CHF 0.062 per share.

 

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SELECTED FINANCIAL DATA

Relief Financial Information

The following tables, which have been derived from our audited financial statements for the years ended December 31, 2021 and 2020, summarizes our balance sheet and results of our operations at the date and for the periods indicated, together with the changes for those items in thousands of CHF (TCHF).

 

(in TCHF)						December 31,
Statement of Operations Data		2021				2020				Change (2021 to 2020)
Revenue			3,321				—				3,321
Other gains			1,171				273				898
Total income			4,492				273				4,219
Raw materials and consumables expense			(750	)			—				(750	)
External selling and distribution expense			(365	)			—				(365	)
External research and development expense			(19,024	)			(13,672	)			(5,352	)
Personnel expense			(9,121	)			(2,627	)			(6,494	)
Other administrative expense			(6,750	)			(2,999	)			(3,751	)
Other losses			(752	)			(1,260	)			508
EBITDA			(32,270	)			(20,285	)			(11,985	)
Reversal of impairment losses on intangible assets			—				11,200				(11,200	)
Amortization and depreciation expense			(2,036	)			—				(2,036	)
Operating Result			(34,306	)			(9,085	)			(25,221	)
Gain from disposal of a subsidiary			—				3,382				(3,382	)
Financial income			97				7				90
Financial expense			(1,316	)			(565	)			(751	)
Result before income taxes			(35,525	)			(6,261	)			(29,264	)
Income taxes			820				(1,567	)			2,387
Results for the Period			(34,705	)			(7,828	)			26,877

 

Balance Sheet Data		December 31, 2021
Current Assets			54,970
Total Assets			251,618
Equity			181,530
Non-Current Liabilities			50,355
Current Liabilities			19,733
Total equity and liabilities			251,618

 

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The following tables, which have been derived from APR’s audited financial statements for the year ended December 31, 2020 summarizes the result of APR’s operations for the period indicated, in TCHF.

 

In TCHF		Fiscal Year Ended December 31, 2020
Statement of Operations Data:
Revenue			10,100
Other gains			3,943
Total income			14,043
Goods and service expense			(6,069	)
Personnel expense			(4,809	)
Net impairment losses on financial and contract assets			(657	)
General and administrative expense			(1,019	)
Operating result			1,489
Depreciation and amortization expense			(1,053	)
Profit before interest and taxes			436
Financial income and expense, net			(327	)
Profit before income taxes			109
Income taxes			(315	)
Loss for the year			(206	)

Summary Unaudited Pro Forma Financial Information of Relief and APR

The unaudited pro forma condensed combined statements of operations assume that the acquisition of APR was consummated on January 1, 2021 instead of its actual date (June 28, 2021) and combines the historical results of Relief and APR for the six months ended June 30, 2021 (as to APR) and the year ended December 31, 2021 (as to Relief). The historical financial statements of Relief and APR, which are provided elsewhere in this Registration Statement on Form 20-F, have been adjusted to give pro forma effect to events that are (i) directly attributable to the acquisition,

(ii) factually supportable, and (iii) with respect to the statements of operations, expected to have a continuing impact on the combined results. A more detailed version of the pro forma financial statements is included in this registration statement in “Operating Results-Unaudited Pro Forma Financial Information for Relief and APR.”

 

Statement of Operations Data:		December 31, 2021
Revenue			6,911
Other gains			1,183
Total income			8,094
Raw materials and consumables expense			(1,501	)
External selling and distribution expense			(559	)
External research and development expense			(19,765	)
Personnel expense			(12,053	)
Other administrative expense			(7,064	)
Other losses			(752	)
Net impairment reversal gain on financial and contract assets			117
EBITDA			(33,483	)
Amortization and depreciation expense			(4,079	)
Operating result			(37,562	)
Financial income			166
Financial expense			(1,411	)
Net result before taxes			(38,807	)
Income taxes			(1,126	)
Net result for the period			(37,681	)

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a Swiss, commercial-stage biopharmaceutical company identifying, developing and commercializing novel, patent protected products in selected specialty, rare and ultra-rare disease areas on a global basis.

We currently focus on three therapeutic areas where we can best leverage our internal know-how and assets: Rare Metabolic Disorders, Rare Skin Diseases and Rare Respiratory Diseases. We are developing a direct commercial footprint in the United States (U.S.) and have a direct commercial footprint in Europe (EU), coupled with a strong network of commercial partners in the other major territories.

We leverage our internal R&D laboratories and track record in drug delivery systems and technologies to identify and take to market reformulated and/or repurposed drugs with a history of proven human safety and efficacy using a lean and capital efficient organization where all key strategic functions are internalized, combined with an optimized network of outsourced service providers for various development activities.

Our products are intended for patients and care givers dealing with specialty, rare and ultra-rare debilitating diseases, by offering them novel treatment options engineered with patented drug delivery systems or repurposed and optimized drugs, to help them live their best possible lives and achieve their full potential.

We are led by a proven and seasoned management team of business leaders with significant experience in discovering, developing and commercializing important new medicines, delivering them to market and maximizing shareholder value. Collectively, the members of our management team have overseen research and development of products supporting regulatory approvals as well as commercial launches of marketed products.

Our diversified portfolio comprises a rare disease product that is commercialized in Europe and that we plan to launch in the U.S. in the near future, as well as a pipeline of products at various stages of development and focused on rare and specialty diseases in selected therapeutic areas. In addition, the Company is commercializing several legacy, royalty-generating products via licensing and distribution partners

We are actively pursuing a strategy to diversify our portfolio and are continuously evaluating in-licensing and partnering opportunities. To bring assets to the market as quickly as possible, we are seeking partnerships with, or acquisitions of, companies that have late-stage clinical molecules with a strong human safety profile, allowing for relatively short, capital-efficient clinical trials with clear endpoints. Our focus on rare diseases with significant unmet medical need allows us to maintain a lean organization, with a strong, experienced leadership able to deliver growth by effectively managing partnerships and efficiently allocating capital across the portfolio.

In March 2021, we signed a Collaboration and License Agreement with Acer Therapeutics, Inc. (“Acer”) for the worldwide development and commercialization of ACER-001 for the treatment of Urea Cycle Disorders (“UCDs”) and Maple Syrup Urine Disease (“MSUD”). ACER-001 is a proprietary powder formulation of sodium phenylbutyrate (NaPB) designed to be both taste-masked and immediate release.

In August 2021, Acer submitted an NDA for ACER-001 to the FDA for use as a treatment of UCD, which submission was accepted for filing in November 2021 with a PDUFA decision date of June 5, 2022.

 

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However, on or about the PDUFA decision date, Acer received a complete response letter stating that a satisfactory inspection of Acer’s third-party contract manufacturer would be required before its NDA for ACER-001 could be approved. Acer has now resubmitted its NDA, which has been accepted for filing with a January 15, 2023 PDUFA target date. Further, Acer has recently filed an IND to investigate ACER-001 for the treatment of Maple Syrup Urine Disease.

Assuming Acer’s NDA for ACER-001 for the treatment of UCD is approved, Relief, in accordance with its collaboration agreement with Acer, plans to apply for marketing authorization for this product to European and U.K. regulatory authorities. There can be no assurance, however that ACER-001 will be approved for commercialization in the U.K. or the EU.

In June 2021, we signed and closed a definitive agreement to acquire all outstanding shares of APR Applied Pharma Research SA (“APR”), a privately held Swiss pharmaceutical company with over 25 years’ experience in identifying, developing and commercializing known molecules engineered with drug delivery systems in niche and rare diseases on a global basis.

On March 15, 2022, we signed a binding term sheet with Meta Healthcare Ltd. (“Meta”), our United Kingdom distribution partner for GOLIKE, to acquire the worldwide commercialization rights, except in the United Kingdom, for a novel dosage form of a prescription drug already approved by the FDA and intended for the treatment of patients with PKU. At this time, we plan to file an IND for the novel dosage form in the U.S. as soon as possible and to file for FDA regulatory approval in the first quarter of 2023 and a filing of the 505(b)(2) NDA before the end of 2023. Additionally, Meta has submitted a patent application in the United Kingdom and we intend to seek a patent extension in all major territories including the U.S. and Europe.

Further, in July 2021, Relief acquired AdVita Lifescience GmbH (“AdVita”), a Germany-based privately held pharmaceutical company developing products for the treatment and diagnosis of rare lung diseases. Relief believes that AdVita’s capabilities will help the Company to further progress the development of RLF-100^® for a range of lung diseases.

Previously, Relief had partnered with NeuroRx, Inc. (“NeuroRx” to seek to develop RLF-100^® for the treatment of COVID-19. In March 2020, at the beginning of the first wave of the pandemic in the United States, NeuroRx submitted an Investigational New Drug (“IND”) application to the FDA for a phase 2b/3 trial of RLF-100 for the intravenous (“IV”) treatment of patients with critical COVID-19 respiratory failure. Within 24 hours, the FDA issued a “Study May Proceed” letter and the first patients were subsequently treated in April 2020 at Thomas Jefferson University Hospital in Philadelphia.

In September 2020, Relief entered into a binding collaboration agreement with NeuroRx (the “Collaboration Agreement”). The Collaboration Agreement established the terms under which we and NeuroRx collaborate and assist each other to maximize the revenues in our respective territories from the sale of aviptadil for intravenous and inhale use primarily for the treatment of COVID-19 related conditions. The collaboration agreement provided that NeuroRx would be responsible for developing and commercializing the product in the United States, Canada and Israel and that Relief would be responsible for developing and commercializing the product in the European Union, Switzerland, Iceland, Norway, the United Kingdom, the Channel Islands, Lichtenstein, Monaco, Andorra, San Marino and Vatican City. The collaboration agreement also provided that it would be conducted on an exclusive basis and that neither party could develop or commercialize any product competitive with RLF-100.

 

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In late 2020 and into early 2021, NeuroRx conducted a phase 2b/3 trial of intravenous aviptadil to evaluate its use in the treatment of respiratory failure due to COVID-19. In March 2021, NeuroRx reported the results of that trial. In its press release reporting those results, NeuroRx reported that across all patients and sites RLF-100 IV met the primary endpoint for successful recovery from respiratory failure at days 28 (p=0.14) and 60 (p=0.13) and also demonstrated a meaningful benefit in survival after controlling for ventilation status and treatment site. However, they also reported that the trial did not demonstrate a statistically-significant difference on the study’s primary endpoint without statistical adjustment for these pre-specified covariates. On the basis of these findings, NeuroRx announced on June 1, 2021 that it had applied to the FDA for Emergency Use Authorization (“EUA”) and that it planned to submit a New Drug Application with the FDA. Also in March 2021, NeuroRx announced that RLF-100 had been selected for inclusion in “TESICO” (Therapeutics for Severely Ill Inpatients with COVID-19), a phase 3 multicenter clinical trial that will include sites in the United States and multiple foreign countries, that is being sponsored by the U.S. National Institutes of Health (“NIH”).

While we have received a phase 2b/3 Study Report summary from NeuroRx, NeuroRx has refused to share the full clinical trial data with us, which has prevented us from moving forward to seek approval for the product in its territories. Further, on November 5, 2021, NRx announced that the FDA had declined NeuroRx’s application for EUA of IV aviptadil for the treatment of acute respiratory failure due to critical COVID-19. Subsequent applications filed by NeuroRx with the FDA seeking EUA for more limited use of the product for the treatment of COVID-19 and for breakthrough therapy designation for the product were also denied in the first half of 2022. Finally, in May 2022, Relief learned that the TESICO/Active 3b trial evaluating aviptadil for the treatment of COVID-19 had been discontinued by its Data Safety Monitoring Board based on futility.

Based on numerous breaches of the Collaboration Agreement by NeuroRx, in October 2021, we filed a lawsuit against NeuroRx and its then CEO, Dr. Jonathan Javitt, for multiple breaches of the Collaboration Agreement. The complaint was filed in the Supreme Court of the State of New York in Manhattan. The complaint alleges that the defendants are in breach of numerous provisions of the Collaboration Agreement. The complaint, among other remedies, seeks damages, an order compelling defendants to comply with multiple provisions of the Collaboration Agreement, and a declaration directing NeuroRx to deliver the entire data set from the Phase 2b/3 clinical trial of intravenously-administering aviptadil to Relief. On January 10, 2022, NeuroRx filed a complaint against Relief alleging that we are in breach of the Collaboration Agreement and have thus repudiated and cancelled the Collaboration Agreement. Additionally, NeuroRx’s claims include a count for defamation. We believe that all such claims are without merit. While the parties have had discussions to amicably resolve their dispute, to date no agreement has been reached and there can be no assurance as to the result of this litigation.

On November 24, 2021, we announced that we had entered into a collaboration agreement with InveniAI LLC (“InveniAI”), a U.S. based company that has pioneered the application of artificial intelligence and machine learning across biopharma and other industries, in order to identify promising drug candidates to treat rare and specialty diseases (the “InveniAI Collaboration Agreement”).Under the terms of the InveniAI Collaboration Agreement, InveniAI will use its proprietary platform for the identification of potential pharmaceutical product opportunities using its Pharma Big Innovation Data Lab, consisting of (i) its proprietary AlphaMeld platform, a cloud-based artificial intelligence platform that uses its proprietary machine learning and deep learning based neural networks to identify product opportunities in therapeutic areas, (ii) its cross-functional teams at its Integrated Center of Excellence, and (iii) domain expertise, to generate novel pharmaceutical opportunities and the related development pathway for the development of such concepts.

 

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Comparison of the Years Ended December 31, 2021 and 2020

Revenue

 

(in TCHF)		2021				2020				Change
Revenue			3,321				—				3,321
Other gains			1,171				273				898
Total service expense			4,492				273				4,219

Revenue for 2021 was approximately CHF 3.32 million. Relief began generating revenue as a result of the business combination with APR at the end of June 2021, which generated net sales of approximately CHF 3.2 million in the six-month period from July 1, 2021 to December 31, 2021. In addition, revenue of CHF 0.1 million was derived from the sale of aviptadil by AdVita following its acquisition by Relief on July 28, 2021. Prior to these acquisitions, Relief had no revenues from product sales.

Other gains increased from approximately CHF 273,000 in 2020 to approximately CHF 1.17 million in 2021. These gains related mainly to nonrecurring write-offs of liabilities.

APR generated revenue from sales, licensing fees, and royalties of approximately CHF 10.1 million in 2020, while APR’s combined pre- and post-acquisition revenue in 2021 was approximately CHF 6.8 million.

As disclosed elsewhere in this registration statement, APR’s 2021 annualized sales were less than its reported 2020 annual sales. In 2020, as indicated in note 19 of the accounts of APR for the fiscal year ended December 31, 2020, APR divested an exclusive license for the commercialization of Ondansetron RF in some of its territories. Such license accounted for approximately CHF 2.1 million in product sales in 2020 (0 in 2021). Ondansetron RF remains, however, commercialized by APR and its commercialization partners in other territories and accounts for approximately CHF 300,000 in annual revenue. Additionally, several of APR’s products are at the end of their life cycle. While there can be no assurance, the recently marketed product GOLIKE, the close-to-market nasal spray Sentinox, and the intended growth of development services provided to 3rd parties are expected to reverse the downward trend in the coming year.

Service expense

 

(in TCHF)		2021				2020				Change
Raw materials and consumables expense			750				—				750
External selling and distribution expense			365				—				365
Third-party research and development expense			19,024				13,672				5,352
Total service expense			20,139				13,672				6,467

Raw materials, consumables, selling and distribution expenses were incurred from July 1, 2021, with the acquisition of APR and AdVita and their respective selling activities. Our third-party research and development expenses for 2021 were approximately CHF 20.1 million, an increase of approximately 47.3% compared to CHF 13.7 million in 2020, and were primarily related to the development expenses incurred by Acer under the license and collaboration agreement and to the clinical development of RLF-100 (aviptadil). In 2020, third-party research and development expenses were primarily constituted by services provided by our collaboration partner, NeuroRx and other third parties in relation to clinical trials for RLF-100 in COVID-19 induced ARDS.

 

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Personnel

 

(in TCHF)		2021				2020				Change
Salaries, including social security expense			4,485				76				4,409
Independent contractor fees			2,200				761				1,439
Share-based payment expense			1,143				1,048				95
Social security expense in relation to share-based payments			30				742				742
Service cost for other benefit obligations			1,243				—				1,243
Total personnel expense			9,101				2,627				6,474

Personnel expenses increased from CHF 2.6 million to CHF 9.1 million. The business combinations with APR and AdVita increased the number of full-time equivalents and consultants from a dozen to six dozen, before organizational adjustments realized in the fourth quarter of 2021. As of December 31, 2021, the Group employed 55 full time equivalents and consultants.

Other administrative expenses

 

(in TCHF)		2021				2020				Change
Professional services			6,022				2,774				3,248
Capital tax			180				161				19
Other administrative expense			548				64				484
Total service expense			6,750				2,999				3,751

Our administrative expenses were approximately CHF 6.8 million in 2021, an increase of approximately 125.0% over 2020. The increase in 2021 was primarily attributable to our expanded activities with the addition of APR and AdVita, as well as to legal and consulting service needs to support our operations and development plans.

Other Losses

Our other losses for 2021 were approximately CHF 0.8 million and were primarily constituted by impairment losses on loans to third parties. In 2020, other losses amounted to CHF 1.26 million , of which CHF 1.2 million related to realized and unrealized valuation losses on the 757,933 shares of Sonnet BioTherapeutics Holdings, Inc. we had received in April 2020 as consideration for the sale of our subsidiary Relief Therapeutics SA.

Reversal of impairment losses on intangible assets

 

(in TCHF)		2021				2020
Reversal of impairment losses on intangible assets			—				11,200

In 2020, we reversed the impairment recognized on our aviptadil asset in prior years for CHF 11.2 million. The impairment charge had entirely been recognized in 2019 as a result of the annual impairment test. Assumptions used in the valuation model assessing the recoverable value of the asset at December 31, 2019 did not consider the emergence of COVID-19 and our plan to develop aviptadil for the treatment of COVID-19. As our decision to pursue this development was taken in March 2020, after the balance sheet date, the then-new development plan was assessed as a non-adjusting subsequent event and the potential value of aviptadil for the treatment of COVID-19 was not factored in the valuation of the asset. The asset valuation at December 31, 2020 considered the possible use of aviptadil for COVID-19 and other indications. As a result, the impairment previously recognized was reversed.

 

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Financial expense

Our finance expenses for 2021 were CHF 1.32 million, an increase of 75.6% over finance expenses of CHF 713,000 in 2020. Significant financial expenses in 2021 were the partial recognition of the Share Subscription Facility fee, the change in fair value measurement of contingent liabilities, and negative interests charged on the Group’s Swiss francs deposits. In 2020, financial expenses were mainly constituted by foreign exchange losses.

Summary of critical accounting judgements and key sources of estimation uncertainty

Our operating and financial review and prospects were derived from our consolidated financial statements in conformity with IFRS as issued by the IASB. In the preparation of the financial statements, our management were required to make certain estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, expenses, and related disclosures. The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of our assets and liabilities within the next year are described below.

Valuation and impairment of intangible assets

Determining whether intangible assets are impaired requires our management to estimate the recoverable value of the cash-generating unit to which the intangible assets are attributable. If the recoverable value of the cash-generating unit is lower than the carrying amount of the cash-generating unit to which the intangible assets have been allocated, impairment is recorded. Changes to the assumptions may result in impairment losses or impairment reversals in subsequent periods.

Share-based compensation

The fair values of our options issued at their grant date have been assessed using the Black-Scholes valuation model and spread over the vesting period, with the significant inputs being share price, exercise price, expected life of the options, volatility, expected dividends on the underlying share for the expected term of the option, and risk-free interest rate.

Deferred income taxes

The determination of the recoverability of deferred income tax assets is based on the judgement of our management. Deferred income tax assets are only recognized where our management determines that it is probable that the assets can be used in the future. Whether or not they can actually be used, however, depends on whether they can be offset against future taxable profits. In order to assess this probability, our management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies. Deferred tax assets are only recorded when it becomes evident that sufficient future taxable profits are probable.

Sources of Liquidity

To date, we have funded our operations primarily through direct treasury share sales, private placements, and equity offerings and loans from our main shareholder GEM. As Relief continues to incur significant operating losses, our ability to pursue and finance our operations and our intended development plans depends on our ability to continue to raise additional financing.

 

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We expect to continue to raise financing through sale of equity and license and development agreements in connection with collaborations. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of any additional securities may include liquidation or other preferences that adversely affect your rights as a shareholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

We intend to use future expected proceeds, together with cash on hand, to finance our development activities and the diversification of our pipeline, as well as to fund our outstanding liabilities and other commitments. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue to advance our portfolio of product candidates, initiate further clinical trials and seek marketing approval for our product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to program sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.

As of August 22, 2022, we have cash and cash equivalents of approximately CHF 29.1 million.

Based on current financial projections and available cash, we expect that we have sufficient resources to fund operations well into 2023 without taking into account the proceeds from this offering. We also believe that with a successful launch of ACER-001 and the potential expansion of the GOLIKE^® franchise into the United States, we could reach operating cash flow-positive operations during 2024, of which there can be no assurance.

Our future capital requirements will depend on many factors, including:

 

•

the scope, progress, results and costs of our ongoing and planned preclinical studies and clinical trials;

 

•

the number and development requirements of other product candidates that we may pursue;

 

•

the costs, timing and outcome of regulatory review of our product candidates;

 

•

the duration and severity of the COVID-19 pandemic;

 

•

the timing amount of milestone payments we may have to pay in relation with the acquisitions of APR and AdVita;

 

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the extent to which we in-license or acquire other product candidates and technologies;

 

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the costs and timing of future commercialization activities, including drug manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive or have received marketing approval;

 

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the timing of repayment of the Company’s borrowings; and

 

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a possible settlement agreement with NeuroRx.

 

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Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Cash Flows

The following table summarizes our cash flows for each of the periods indicated:

 

		December 31,
In thousands		2021				2020				2019
Cash flow from operating activities			(35,718	)			(18,254	)			(728	)
Cash flow from investing activities			(30,262	)			3,005				—
Cash flow from financing activities			67,689				58,200				600
Net (decrease) increase in cash and cash equivalents			1,709				42,951				(128	)
Cash and cash equivalents at end of period			44,761				43,154				137

Operating Activities

Net cash used in operating activities was approximately CHF 35.7 million in the year ended December 31, 2021, as compared to approximately CHF 18.3 million in the year ended December 31, 2020 and approximately CHF 728,000 in the year ended December 31, 2019. The gradual increase is mainly due to the funding of clinical trials for RLF-100, of ACER-001 development under our collaboration agreement with Acer, and of administrative expenses engaged for general corporate purpose.

Investing Activities

Cash used in investing activities was approximately CHF 30.3 million in the year ended December 31, 2021, as compared to cash flow from investing activities of approximately CHF 3.0 million in the year ended December 31, 2020, due to our acquisitions of APR Applied Pharma Research and ACER-001 license in 2021.

 

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Financing Activities

Cash flow from financing activities was approximately CHF 67.7 million in the year ended December 31, 2021, as compared to approximately CHF 58.2 million in the year ended December 31, 2020 and approximately CHF 600,000 in the year ended December 31, 2019. Cash flow from financing activities came mainly from our Share Subscription Facility with GEM Global Yield LLC, private placements from third parties, and sale of treasury shares.

APR’s Intangible Assets

APR’s product portfolio is recorded on Relief’s December 31, 2021 balance sheet as follows:

 

		APR product portfolio
TCHF		PKU GOLIKE				Diclofenac				APR- TD011				Sentinox				Others				Total
COST
Balance at December 31, 2020			—				—				—				—				—				—
Acquired in APR business combination			31,244				7,705				47,392				3,487				408				90,236
Balance at December 31, 2021			31,244				7,705				47,392				3,487				408				90,236
ACCUMULATED AMORTIZATION
Balance at December 31, 2020			—				—				—				—				—				—
Amortization expense			(1,008	)			(799	)			—				—				(33	)			(1,840	)
Balance at December 31, 2021			(1,008	)			(799	)			—				—				(33	)			(1,840	)
CARRYING AMOUNT
at December 31, 2020			—				—				—				—				—				—
at December 31, 2021			30,236				6,906				47,392				3,487				375				88,196
Estimated remaining useful lives (years)			15.0				5.0				n/a				n/a				6.5

The intangible assets acquired in the acquisition of APR are comprised of patents, trademarks, licenses, sub-licenses, technologies, in-process research and development products, and other assets without physical substance.

Products that have reached marketing phase consist mainly of:

 

•

PKU GOLIKE®, an amino acid mix product commercialized for the treatment of phenylketonuria; and

 

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Diclofenac, a product line indicated for the treatment of inflammatory conditions and for pain management. The active ingredient diclofenac is combined with APR’s proprietary technologies in products with immediate release formulation, or in the form of a topical patch. These products are commercialized by third parties under different brand names, including Cambia®, Voltfast® and Voltadol®.

The corresponding intangible assets will be amortized over their estimated remaining useful lives. Amortization is charged on a straight-line basis over the estimated economic or useful life, whichever is shorter.

In-process research and development (“IPR&D”) projects consisted of:

 

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APR-TD-011, a clinical-stage drug candidate for the treatment of epidermolysis bullosa; and

 

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•

Sentinox™, a near-to-market product candidate for the reduction of the risk of infections caused by bacteria or viruses.

Quantitative and Qualitative Disclosure about Financial Risks

We are exposed to various financial risks such as credit risk, liquidity risk and market risk (including interest rate and currency risk). The following is an overview of the extent of such risks and our processes employed to handle those risks.

Credit risk

Credit risk refers to the risk that a party will default on its contractual obligations to us, resulting in financial losses. We do not currently have any revenue and as a result we do not have credit risk with relation to our customers. Our financial assets consist of mainly cash, for which the risk is minimal as such deposits are at well-known banks in Switzerland with an “A” rating as per Standard & Poors.

Liquidity risk

Liquidity risk implicates our ability to maintain sufficient cash and cash equivalents to meet our financial obligations. Our management monitors our net liquidity through rolling forecasts of projected cash flows.

Interest rate risk

We have no interest-bearing assets or liabilities, except for short-term cash deposits and a fixed-interest third party loan. Cash deposits held in Swiss francs and Euros are subject to negative interest rates above certain thresholds defined by bank counterparties. We deem interest rate risk as being low.

Currency risk

We are exposed to foreign currency risk primarily through short-term cash deposits held in foreign currencies intended to fund operational expenditures in such currencies (mainly U.S. Dollars, Euros and Swiss francs). We are also exposed to foreign currency risk through third-party loans, other financial assets and trade payables, held or due in foreign currencies. We measure our exposure by periodically assessing future spending needs in foreign currencies.

Based on our analysis and considering that our cash balances in foreign currency are held for the settlement of expected invoices in those currencies, the risk is naturally hedged, and the foreign currency risk is limited.

During the years ended December 31, 2021 and 2020, we did not enter into any forward currency transactions nor any derivative currency contracts.

JOBS Act Exemptions and Foreign Private Issuer Status

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) in the United States. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. This includes an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002. We may take advantage of this exemption for up to five years or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company if we have more than $1.07 billion in total annual gross revenue, have more than $700 million in market value of our common shares held by non-affiliates or issue more than $1 billion of nonconvertible debt over a three-year period. We may choose to take advantage of some but not all of these provisions that allow for reduced reporting and other requirements.

 

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Upon completion of the U.S. listing to which this registration statement relates, we will report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

 

•

the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

 

•

sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time;

 

•

the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events; and

 

•

Regulation FD, which regulates selective disclosures of material information by issuers.

 

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BUSINESS

Overview

We are a Swiss, commercial-stage biopharmaceutical company identifying, developing and commercializing novel, patent protected products in selected specialty, rare and ultra-rare disease areas on a global basis.

We currently focus on three therapeutic areas where we can best leverage our internal know-how and assets: Rare Metabolic Disorders, Rare Skin Diseases and Rare Respiratory Diseases. We are developing a direct commercial footprint in the United States (U.S.) and have a direct commercial footprint in Europe (EU), coupled with a strong network of commercial partners in the other major territories.

We leverage our internal R&D laboratories and track record in drug delivery systems and technologies to identify and take to market reformulated and/or repurposed drugs with a history of proven human safety and efficacy using a lean and capital efficient organization where all key strategic functions are internalized, combined with an optimized network of outsourced service providers for various development activities.

Our products are intended for patients and care givers dealing with specialty, rare and ultra-rare debilitating diseases, by offering them novel treatment options engineered with patented drug delivery systems or repurposed and optimized drugs, to help them live their best possible lives and achieve their full potential.

We are led by a proven and seasoned management team of business leaders with significant experience in discovering, developing and commercializing important new medicines, delivering them to market and maximizing shareholder value. Collectively, the members of our management team have overseen research and development of products supporting regulatory approvals as well as commercial launches of marketed products.

Our diversified portfolio comprises a rare disease product that is commercialized in the EU and that we plan to launch in the U.S. in the near future, as well as a pipeline of products at various stages of development that are focused on rare and specialty diseases in selected therapeutic areas. In addition, the Company is commercializing several legacy, royalty-generating products via licensing and distribution partners

We are actively pursuing a strategy to diversify our portfolio and are continuously evaluating in-licensing and partnering opportunities. To bring assets to the market as quickly as possible, we are seeking partnerships with, or acquisitions of, companies that have late-stage clinical molecules with a strong human safety profile, allowing for relatively short, capital-efficient clinical trials with clear endpoints. Our focus on rare diseases with significant unmet medical need allows us to maintain a lean organization, with a strong, experienced leadership able to deliver growth by effectively managing partnerships and efficiently allocating capital across the portfolio.

In March 2021, we signed a Collaboration and License Agreement with Acer Therapeutics, Inc. (“Acer”) for the worldwide development and commercialization of ACER-001 for the treatment of Urea Cycle Disorders (“UCDs”) and Maple Syrup Urine Disease (“MSUD”). ACER-001 is a proprietary powder formulation of sodium phenylbutyrate (NaPB) designed to be both taste-masked and immediate release.

In August 2021, Acer submitted an NDA for ACER-001 to the FDA for use as a treatment of UCD, which submission was accepted for filing in November 2021 with a PDUFA decision date of June 5, 2022. However, on or about the PDUFA decision date, Acer received a complete response letter stating that a satisfactory inspection of Acer’s third-party contract manufacturer would be required before its NDA for ACER-001 could be approved. Acer has now resubmitted its NDA, which has been accepted for filing with a January 15, 2023 PDUFA target date. Further, Acer has recently filed an IND to investigate ACER-001 for the treatment of Maple Syrup Urine Disease.

 

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Assuming Acer’s NDA for ACER-001 for the treatment of UCD is approved, Relief, in accordance with its collaboration agreement with Acer, plans to apply for marketing authorization for this product to European and U.K. regulatory authorities. There can be no assurance, however that ACER-001 will be approved for commercialization in the U.K. or the EU.

In June 2021, we signed and closed a definitive agreement to acquire all outstanding shares of APR Applied Pharma Research SA (“APR”), a privately held Swiss pharmaceutical company with over 25 years’ experience in identifying, developing and commercializing known molecules engineered with drug delivery systems in niche and rare diseases on a global basis.

On March 15, 2022, we signed a binding term sheet with Meta Healthcare Ltd. (“Meta”), our United Kingdom distribution partner for GOLIKE, to acquire the worldwide commercialization rights, except in the United Kingdom, for a novel dosage form of a prescription drug already approved by the FDA and intended for the treatment of patients with PKU. At this time, we plan to file an IND for the novel dosage form in the U.S. as soon as possible and to file for FDA regulatory approval in the first quarter of 2023 and a filing of the 505(b)(2) NDA before the end of 2023. Additionally, Meta has submitted a patent application in the United Kingdom and we intend to seek a patent extension in all major territories including the U.S. and Europe.

Further, in July 2021, Relief acquired AdVita Lifescience GmbH (“AdVita”), a Germany-based privately held pharmaceutical company developing products for the treatment and diagnosis of rare lung diseases. Relief believes that AdVita’s capabilities will help the Company to further progress the development of RLF-100^® for a range of lung diseases.

Previously, Relief had partnered with NeuroRx, Inc. (“NeuroRx” to seek to develop RLF-100^® for the treatment of COVID-19. In March 2020, at the beginning of the first wave of the pandemic in the United States, NeuroRx submitted an Investigational New Drug (“IND”) application to the FDA for a phase 2b/3 trial of RLF-100 for the intravenous (“IV”) treatment of patients with critical COVID-19 respiratory failure. Within 24 hours, the FDA issued a “Study May Proceed” letter and the first patients were subsequently treated in April 2020 at Thomas Jefferson University Hospital in Philadelphia.

In September 2020, Relief entered into a binding collaboration agreement with NeuroRx (the “Collaboration Agreement”). The Collaboration Agreement established the terms under which we and NeuroRx collaborate and assist each other to maximize the revenues in our respective territories from the sale of aviptadil for intravenous and inhale use primarily for the treatment of COVID-19 related conditions. The collaboration agreement provided that NeuroRx would be responsible for developing and commercializing the product in the United States, Canada and Israel and that Relief would be responsible for developing and commercializing the product in the European Union, Switzerland, Iceland, Norway, the United Kingdom, the Channel Islands, Lichtenstein, Monaco, Andorra, San Marino and Vatican City. The collaboration agreement also provided that it would be conducted on an exclusive basis and that neither party could develop or commercialize any product competitive with RLF-100.

In late 2020 and into early 2021, NeuroRx conducted a phase 2b/3 trial of intravenous aviptadil to evaluate its use in the treatment of respiratory failure due to COVID-19. In March 2021, NeuroRx reported the results of that trial. In its press release reporting those results, NeuroRx reported that across all patients and sites RLF-100 IV met the primary endpoint for successful recovery from respiratory failure at days 28 (p=0.14) and 60 (p=0.13) and also demonstrated a meaningful benefit in survival after controlling for

 

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ventilation status and treatment site. However, they also reported that the trial did not demonstrate a statistically-significant difference on the study’s primary endpoint without statistical adjustment for these pre-specified covariates. On the basis of these findings, NeuroRx announced on June 1, 2021 that it had applied to the FDA for Emergency Use Authorization (“EUA”) and that it planned to submit a New Drug Application with the FDA. Also in March 2021, NeuroRx announced that RLF-100 had been selected for inclusion in “TESICO” (Therapeutics for Severely Ill Inpatients with COVID-19), a phase 3 multicenter clinical trial that will include sites in the United States and multiple foreign countries, that is being sponsored by the U.S. National Institutes of Health (“NIH”).

While we have received a phase 2b/3 Study Report summary from NeuroRx, NeuroRx has refused to share the full clinical trial data with us, which has prevented us from moving forward to seek approval for the product in its territories. Further, on November 5, 2021, NRx announced that the FDA had declined NeuroRx’s application for EUA of IV aviptadil for the treatment of acute respiratory failure due to critical COVID-19. Subsequent applications filed by NeuroRx with the FDA seeking EUA for more limited use of the product for the treatment of COVID-19 and for breakthrough therapy designation for the product were also denied in the first half of 2022. Finally, in May 2022, Relief learned that the TESICO/Active 3b trial evaluating aviptadil for the treatment of COVID-19 had been discontinued by its Data Safety Monitoring Board based on futility.

Based on numerous breaches of the Collaboration Agreement by NeuroRx, in October 2021, we filed a lawsuit against NeuroRx and its then CEO, Dr. Jonathan Javitt, for multiple breaches of the Collaboration Agreement. The complaint was filed in the Supreme Court of the State of New York in Manhattan. The complaint alleges that the defendants are in breach of numerous provisions of the Collaboration Agreement. The complaint, among other remedies, seeks damages, an order compelling defendants to comply with multiple provisions of the Collaboration Agreement, and a declaration directing NeuroRx to deliver the entire data set from the Phase 2b/3 clinical trial of intravenously-administering aviptadil to Relief. On January 10, 2022, NeuroRx filed a complaint against Relief alleging that we are in breach of the Collaboration Agreement and have thus repudiated and cancelled the Collaboration Agreement. Additionally, NeuroRx’s claims include a count for defamation. We believe that all such claims are without merit. While the parties have had discussions to amicably resolve their dispute, to date no agreement has been reached and there can be no assurance as to the result of this litigation.

On November 24, 2021, we announced that we had entered into a collaboration agreement with InveniAI LLC (“InveniAI”), a U.S. based company that has pioneered the application of artificial intelligence and machine learning across biopharma and other industries, in order to identify promising drug candidates to treat rare and specialty diseases (the “InveniAI Collaboration Agreement”).Under the terms of the InveniAI Collaboration Agreement, InveniAI will use its proprietary platform for the identification of potential pharmaceutical product opportunities using its Pharma Big Innovation Data Lab, consisting of (i) its proprietary AlphaMeld platform, a cloud-based artificial intelligence platform that uses its proprietary machine learning and deep learning based neural networks to identify product opportunities in therapeutic areas, (ii) its cross-functional teams at its Integrated Center of Excellence, and (iii) domain expertise, to generate novel pharmaceutical opportunities and the related development pathway for the development of such concepts.

Capital Resources

As of December 31, 2021, we had cash and cash equivalents of approximately CHF 44.8 million, As of August 22, 2022, we have cash and cash equivalents of approximately CHF 29.1 million.

 

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Based on current financial current projections and available cash, we expect that we have sufficient resources to fund operations well into 2023, without taking into account the proceeds from this offering. We also believe that that with a successful launch of ACER-001 and the potential expansion of our the GOLIKE^® franchise into the United States, of which there can be no assurance, we could reach operating cash flow-positive operations during 2024, of which there can be no assurance. These forecasts of available cash assume no revenues from sales of RLF-100 (aviptadil).

Our Strategy

We leverage our internal R&D capabilities and track record in drug delivery systems and technologies to identify and take to market reformulated and/or repurposed drugs with a history of proven safety and efficacy using a lean and capital efficient organization where all key strategic functions are internalized, combined with an optimized network of outsourced service providers for various development activities.

Our products are intended for patients and care givers dealing with specialty, rare and ultra-rare debilitating diseases, by offering them novel treatment options engineered with patented drug delivery systems or repurposed and optimized drugs, to help them live their best possible life and achieve their full potential.

We currently focus on three therapeutic areas for which we can best leverage our internal know how and assets: Rare Metabolic Disorders, Rare Skin Diseases and Rare Respiratory Diseases. We have a direct commercial footprint in the U.S. and in the EU, coupled with a strong network of commercial partners in the other major territories.

Our goal is to focus on clinical stage projects with a history of clinical testing and use in human patients or a strong scientific rationale. We are dedicated to developing these drugs to make a positive difference in the lives of patients suffering from severe conditions. Specifically, we intend to:

 

•

Develop ACER-001. Together with our collaboration partner Acer Therapeutics Inc. (“Acer”), we are currently pursuing approvals for use of ACER-001 for the treatment of Urea Cycle Disorders (“UCDs”). We also intend to pursue the development of ACER-001 for the treatment of Maple Syrup Urine Disease (“MSUD”).

 

•

Develop RLF-100 for the treatment of certain lung conditions. We intend to focus on developing RLF-100 for the treatment of, among other indications, non-COVID-19 related ARDS, Checkpoint Inhibitor-induced Pneumonitis, and pulmonary sarcoidosis. We believe that the work of our AdVita subsidiary, will help us develop this product for multiple lung diseases.

 

•

Maximize the value of the development and commercial pipeline of APR, including the imminent commercial launch in the U.S. of PKU GOLIKE® as a medical supplement for the treatment of Phenylketonuria (“PKU”) as well as the completion of the development of the recently acquired product from Meta Healthcare for the treatment of PKU.

 

•

Seek to acquire additional products. We have in the past sought out late-stage products that fit our profile and we plan to continue to seek such products in the future.

 

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Product Portfolio and development pipeline

Relief’s product portfolio includes assets for a number of therapeutic indications and encompasses all stages of the product life cycle, thereby presenting a diversified and risk-mitigated portfolio.

 

ACER-001

Sodium phenylbutyrate (NaPB) is currently approved in the U.S. and the European Union to treat patients with Urea Cycle Disorders (“UCDs”). In collaboration with Acer Therapeutics, we are developing ACER-001 (proposed trade name Olpruva), a proprietary immediate release multi-particulate powder formulation of NaPB with a taste-masked coating designed potentially to treat UCDs and MSUD.

ACER-001 for the Treatment of Urea Cycle Disorders

The urea cycle is a series of biochemical reactions that occur primarily in the liver, which converts toxic ammonia produced by the breakdown of protein and other nitrogen-containing molecules in the human body into urea for excretion. UCDs are a group of disorders caused by genetic mutations that result in a

 

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deficiency in one of the six enzymes that catalyze the urea cycle, which can lead to an excess accumulation of ammonia in the bloodstream: a condition known as hyperammonemia. Acute hyperammonemia can cause lethargy, somnolence, coma, and multi-organ failure, while chronic hyperammonemia can lead to headaches, confusion, lethargy, failure to thrive, behavioral changes, and learning and cognitive deficits. Common symptoms of both acute and chronic hyperammonemia also include seizures and psychiatric symptoms.

Diagnosis and Incidence

The diagnosis of UCDs is based on clinical observations, confirmed by biochemical and molecular genetic testing. A plasma ammonia concentration of 150 µmol/L or higher associated with a normal anion gap and a normal plasma glucose concentration is an indication for the presence of UCDs. Plasma quantitative amino acid analysis and measurement of urinary orotic acid can distinguish between the various types of UCDs. A definitive diagnosis of UCDs depends on either molecular genetic testing or measurement of enzyme activity. Molecular genetic testing is possible for all urea cycle defects. Studies suggest that the incidence of UCDs in the U.S. is 1 in 35,000 live births. Approximately 2,000 patients suffer from UCDs in the U.S.

Current treatment options for UCDs

The current treatment of UCDs consists of dietary management to limit ammonia production in conjunction with medications that provide alternative pathways for the removal of ammonia from the bloodstream. Dietary protein must be carefully monitored, and some restriction is necessary; too much dietary protein causes excessive ammonia production. However, if protein intake is too restrictive or insufficient calories are consumed, the body will break down lean muscle mass to obtain the amino acids or energy it requires, which can also lead to excessive ammonia in the bloodstream. Dietary management may also include supplementation with special amino acid formulas developed specifically for UCDs, which can be prescribed to provide approximately 50% of the daily dietary protein allowance. Some patients may also require individual branched-chain amino acid supplementation.

Medications for UCDs primarily comprise nitrogen scavenger drugs, which are substances that provide alternative metabolic excretion pathways for nitrogen, thereby bypassing the urea cycle. The use of these alternative pathways for nitrogen removal is important for the management of acute episodes of hyperammonemia and are also included as part of a long-term treatment regime for UCD patients. Current nitrogen scavenger treatments for UCDs are based on sodium benzoate or phenylbutyrate, which conjugate with glycine and glutamine, respectively, allowing for urinary excretion of nitrogen as hippurate and phenylacetylglutamine, respectively.

According to a 2016 study by Shchelochkov et al., published in Molecular Genetics and Metabolism Reports, while nitrogen scavenging medications are effective in helping to manage UCD, non-compliance with treatment is common. Reasons given for non-compliance include the unpleasant taste associated with available medications, the frequency with which medication must be taken and the high cost of the medication.

Phenylbutyrate is available as NaPB, which is marketed as BUPHENYL (sodium phenylbutyrate), and RAVICTI (glycerol phenylbutyrate). While a study provided by Horizon Therapeutics, Inc. in the RAVICTI package insert involving 46 adults with UCD demonstrated that BUPHENYL and RAVICTI were similarly effective in controlling the blood level of ammonia over a 24-hour period, many patients who take their medicine orally prefer RAVICTI, as it is significantly more palatable than BUPHENYL. However, the very high annual treatment cost of RAVICTI, based on patient weight, is often prohibitive. Phenylburate is also marketed in Europe, Australia and New Zealand under the trade name Pheburane.

 

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Ammonaps, another formulation of NaPB that claims to be tasteless and odor free is approved and marketed in Europe.

In cases where dietary management or medication is not effective, patients with UCD may require a liver transplant.

Rationale for ACER-001 treatment in UCDs

In February 2020, Acer reported the completion and acquisition of the final data from the clinical trial evaluating the bioavailability and bioequivalence of ACER-001 to BUPHENYL (sodium phenylbutyrate) both under fasted conditions. The trial was a single-center, single-blind, randomized, single-dose crossover study designed to show bioequivalence of ACER-001 compared to BUPHENYL in 36 healthy adult subjects under fasted conditions. Data showed ACER-001 to have similar pharmacokinetic (“PK”) profiles for both phenylbutyrate (“PBA”) and phenylacetate (“PAA”) compared to BUPHENYL under fasted conditions.

This trial also included an arm of ACER-001 administered under fed conditions. When the fed and fasted arms of the study were compared, it was shown that administration of ACER-001 in a fasted state achieved more than two times the maximum concentration (“Cmax”) of PBA compared to administration of the same dose of ACER-001 in a fed state. These results are consistent with previously published data by Nakano, et al that evaluated PK of NaPB in patients with progressive familial intrahepatic cholestasis, also demonstrating that administration of NaPB in a fasted state significantly increased PBA peak plasma concentration compared to administration of NaPB in a fed state.

Currently approved therapies for UCDs, including BUPHENYL and RAVICTI, are required to be administered with food. BUPHENYL is required to be administered in a fed state due to its aversive odor and taste, with side effects including nausea, vomiting and headaches, which can lead to discontinuation of treatment. Additionally, prescribing information states that the BUPHENYL food effect is unknown. RAVICTI PK and pharmacodynamic (“PD”) properties were determined to be indistinguishable in fed or fasted states. ACER-001 is uniquely formulated with its multi-particulate, taste-masked coating to allow for administration in a fasted state, while still allowing for rapid systemic release.

Based on the results from the food effect study within the first ACER-001 BE trial, Acer commissioned Rosa & Co. LLC to create a PhysioPD PK model to evaluate the potential food effect on exposure, tolerability, and efficacy of ACER-001 in UCDs patients. Results from this in silico model suggested that administration of ACER-001 in a fasted state required approximately 30% less PBA to achieve comparable therapeutic benefit to that in a fed state. In addition, the model predicted that administration of ACER-001 in a fasted state compared to administration of BUPHENYL or RAVICTI (same amounts of PBA) in their required fed states would be expected to result in higher peak blood PBA, PAA and PAGN concentrations, which should achieve a 43% increase in urinary PAGN levels (a negative correlation between blood ammonia area under the curve and 24-hour urinary PAGN amount has been demonstrated).

 

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In February 2021, Acer announced topline results from its bioequivalence trial in which ACER-001 showed similar relative bioavailability to BUPHENYL (sodium phenylbutyrate) under fed conditions. The single-center, single-blind, randomized, single-dose crossover trial evaluated BE of ACER-001 compared to BUPHENYL when administered under fed conditions in 36 healthy adults. The topline data from this trial showed ACER-001 to have similar PK profiles for both PBA and PAA compared to BUPHENYL under fed conditions.

Registration Plan for UCDs

In August 2021, Acer submitted an application in the U.S. to market ACER-001 for administration initially under fed conditions for the treatment of UCDs using a regulatory pathway established under section 505(b)(2) of the Federal Food, Drug and Cosmetic Act (“FDCA”) that allows applicants to rely at least in part on third party data for approval, which may expedite the preparation, submission, and approval of a marketing application. We also intend to seek EMA approval in the European Union and potentially other territories outside the U.S., after the 505(b)(2) NDA for treatment of UCDs is filed. Because the FDA has approved an NDA for BUPHENYL, which is referred to as the reference listed drug (“RLD”), we intend to rely on the RLD’s preclinical and clinical safety and efficacy data, while supplementing the data with a bridging study that shows similar relative bioavailability of ACER-001 to BUPHENYL.

On May 25, 2021, Acer and Relief announced the outcome of Acer’s pre-NDA meeting with the FDA for ACER-001 for the treatment of UCDs. The purpose of the pre-NDA meeting was to discuss the content of Acer’s planned NDA submission. Based on FDA feedback, the companies believe the proposed data package will be sufficient to support an NDA submission under the Section 505(b)(2) regulatory pathway for ACER-001. As a result, Acer submitted its NDA application on August 5, 2021. The FDA designated the NDA as a Class 2 resubmission and set a PDUFA target action date of January 15, 2023. Assuming the

 

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NDA is approved, Relief anticipates commercialization of ACER-001 for UCDs in the U.S. in the first half of 2023, pursuant to FDA approval in early 2023, after which Relief, in accordance with its collaboration agreement with Acer, intends to submit a Marketing Authorization Application for approval of ACER-001 for the treatment of UCDs in the U.K. and EU. There can be no assurance, however, that ACER-001 will be approved for commercialization in the U.K. or the EU.

In parallel or after initial potential FDA approval for administration under fed conditions, and subject to additional capital, we also plan to evaluate potential development of ACER-001 for administration under fasted (pre-meal) conditions, which will likely require additional nonclinical and clinical studies to provide the necessary evidence of safety and efficacy of ACER-001 to be considered for FDA approval for administration under fasted (pre-meal) conditions.

ACER-001 for the treatment of MSUD

MSUD is a rare inherited disorder caused by defects in the mitochondrial branched-chain ketoacid dehydrogenase complex, which results in elevated blood levels of the branched-chain amino acids (“BCAA”), leucine, valine, and isoleucine, as well as the associated branched-chain ketoacids (“BCKA”) in a patient’s blood. Left untreated, this can result in neurological damage, mental disability, coma, or death. The most severe presentation of MSUD, known as “classic” MSUD, accounts for 80% of cases and can result in neonatal onset with encephalopathy and coma. Although metabolic management of the disease is possible via a highly restrictive diet, the outcome is unpredictable, and a significant portion of affected individuals are mentally impaired or experience neurological complications.

Diagnosis and incidence of MSUD

MSUD is typically diagnosed at birth via newborn screening. Studies indicate that MSUD affects an estimated 1 in 185,000 infants worldwide. The disorder occurs more frequently in the Old Order Mennonite population, with an estimated incidence of about 1 in 380 newborns, and the Ashkenazi Jewish population, with an estimated incidence of 1 in 26,000. Approximately 3,000 patients suffer from MSUD worldwide, of whom approximately 1,000 are located in the U.S.

Current treatment options in MSUD

There are currently no approved pharmacologic therapies in the U.S. or the European Union for MSUD. Treatment of MSUD consists primarily of a severely restricted diet to limit the intake of BCAA, with aggressive medical interventions when blood-levels of BCAA or BCKA become elevated.

Rationale for ACER-001 Treatment in MSUD

Therapy with NaPB in UCD patients has been associated with a selective reduction in BCAA despite adequate dietary protein intake.

Based on this clinical observation, investigators at Baylor College of Medicine (“BCM”) explored the potential of NaPB treatment to lower BCAA and their corresponding BCKA in patients with MSUD. The investigators found that BCAA and BCKA were both significantly reduced following NaPB therapy in control subjects and in patients with MSUD, although there was no simple correlation between the patients’ levels of residual enzymatic activity with the response of plasma BCAA and their BCKA to NaPB. NaPB showed a statistically significant reduction of BCAA leucine, in all three healthy subjects and in three out of the five MSUD patients who participated in the trial. The reduction in leucine, the most toxic of the BCAAs, in the three responsive MSUD patients ranged between 28-34%, which is considered by clinicians to be a clinically meaningful response.

 

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Investigators at BCM further explored the mechanistic rationale for NaPB lowering BCAA/BCKA levels. NaPB was found to be an allosteric inhibitor of the branched-chain keto acid dehydrogenase complex kinase (“BCKD-kinase”), and enzyme that regulates the activity of the branched-chain keto acid dehydrogenase complex (“BCKDC”) enzyme that is responsible for the normal metabolism of BCKAs. By inhibiting the BCKD-kinase, the BCKDC is constitutively activated, thus the increased activity results in a reduction in the plasma levels of BCAA and BCKA in all people, including those with MSUD, suggesting that NaPB may be an effective treatment for people with MSUD, who experience elevated BCAA levels.

In November 2020, study results evaluating the effect of NaPB in the management of acute MSUD attacks in pediatric patients (n=10) were published in the Journal of Pediatric Endocrinology and Metabolism showing a significant reduction in leucine levels in MSUD patients experiencing an acute attack. The results suggested that NaPB can be safely administered in combination as part of an emergency protocol and may provide additional clinical benefit beyond emergency protocol alone. However, verifying this outcome would require additional validation in a controlled trial. If ACER-001 is approved for the treatment of chronic MSUD, we believe patients will not be required to interrupt their therapy in the event of an acute crisis.

Registration Plan for MSUD

Acer has submitted an IND application to the FDA to evaluate the safety and efficacy of ACER-001 for the treatment of MSUD, and although there can be no assurance, we expect that Acer will begin such study during the first quarter of 2023. Given its regulatory status with regard to UCDs, there is no requirement for phase 1 studies in healthy volunteers. The timing of a phase 2 clinical trial, if such a trial occurs, would be subject to completion of a commercial assessment of the opportunity, including, but not limited to, a possible pre-IND meeting with the FDA and/or the EMA, with an objective of validation and agreement on the primary and secondary clinical trial end-points, which remain important given that there are presently no approved treatment options for this disease nor are there guidelines to assess efficacy and safety of an investigational drug in this disease. If a successful clinical trial for ACER-001 in MSUD is completed, along with our partner Acer, we plan to seek FDA approval to market ACER-001 for the treatment of MSUD as an added indication in the U.S. by submitting a supplemental NDA (sNDA) incorporating the efficacy and safety data from the MSUD population, assuming ACER-001 is approved for the treatment of UCDs prior to sNDA submission. We also intend to seek approval in the European Union and other territories outside the U.S. after the sNDA for treatment of MSUD is filed, or simultaneously with the U.S. filing.

PKU GOLIKE^®

Phenylketonuria

Phenylketonuria is a rare metabolic disorder that hinders the body’s ability to break down the amino acid phenylalanine, resulting in a dangerous build-up of phenylalanine when patients eat foods containing protein or aspartame. According to a study published in August 2020 in the American Journal of Human Genetics, approximately 450,000 people suffer from PKU worldwide. If diet is not controlled in patients with PKU, these high levels of the amino acid can lead to severe symptoms, including:

 

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a musty odor in the breath, skin or urine, caused by too much phenylalanine in the body;

 

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neurological problems, which may include seizures;

 

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skin rashes (eczema);

 

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fair skin and blue eyes, because phenylalanine can’t transform into melanin, the pigment responsible for hair and skin tone;

 

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abnormally small head (microcephaly);

 

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hyperactivity;

 

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cognitive disorders and intellectual disability;

 

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delays in development;

 

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behavioral, emotional and social problems; and

 

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psychiatric disorders.

In classic PKU, the enzyme needed to convert phenylalanine (PHE) is missing or severely reduced, which can result in high build-up of phenylalanine and severe systemic damages mainly in the brain. These patients have a diet composed by 75% of PHE-free AA supplementation and only 25% of natural proteins. In more mild or moderate forms, the enzyme retains some function, but a reduced intake of PHE is still recommended to reduce the risk of significant symptoms.

A further reduction of PHE levels is important before conception: pregnant women with PKU, including those with less severe forms of the disease, may place their unborn children at risk by not following the PKU diet. Children of woman with untreated PKU may have an unusually small head (microcephaly), congenital heart disease, developmental abnormalities, or facial abnormalities. There is a strong relationship between the severity of these symptoms and high PHE levels in the mother.

Current treatment options for PKU

While PKU is not curable, if diagnosed early enough, an affected newborn can grow up with normal brain development by managing and controlling PHE levels through diet, or a combination of diet and medication. Diet is composed by few amounts of natural food (based on severity of the disease) supplemented with AA mix with absence or low PHE content plus low protein foods. Diet is recommended for the entire life since it has been demonstrated that high PHE levels has an impact not only during growing but also in adulthood. In 2018, the FDA approved an enzyme substitute called pegvaliase, sold by BioMarin Pharmaceuticals under the brand name Palynziq. Palynziq is a derivative of e phenylalanine ammonia-lyase that metabolizes phenylalanine to reduce its blood levels (but it is not able to produce Tyrosine as the natural enzyme, which need to be still supplemented). Tetrahydrobiopterin (BH4), a cofactor for the oxidation of phenylalanine, when taken by mouth, is also thought to reduce blood levels of phenylalanine in some people. Along with Palynziq, BioMarin Pharmaceuticals also markets Kuvan (sapropterin dihydrochloride) for the treatment of PKU. There are also other amino acid products, sold both by prescription and over-the-counter, that are marketed towards PKU patients

PKU GOLIKE for the dietary treatment of PKU

Patients with PKU require supplementation of amino-acid based foods for special medical purposes (“FSMP” or “Medical Formula”) to prevent protein deficiency and optimize metabolic control. Many of these FSMPs can result in poor dietary compliance due to their taste and odor. Further, the unpleasant odor and aftertaste of current amino acid supplements can become a barrier to social interaction for PKU patients. In addition, proteins needed for normal growth and coming from natural food sources are broken down during the digestion process and are gradually absorbed, keeping blood amino acid levels sufficient stable over time. On the opposite, free-AA mix administered to PKU patients in the form of FSMPs are not comparable to natural proteins because they do not need to be broken down before they are absorbed, resulting in a rapid peak of absorption and rapid decrease of their concentration into the bloodstream.

 

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