Global Blood Therapeutics, Inc. - Annual Report: 2019 (Form 10-K)

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

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule of the Exchange Act.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule of the Act.)    Yes      No  

The aggregate market value of the common stock held by of the registrant was approximately $3,070,754,389 as of June 30, 2019 based upon the closing sale price on the NASDAQ Global Select Market reported for such date. Shares of common stock held by each executive officer and director have been excluded in that such persons may be deemed to be affiliates of the registrant. Shares of common stock held by other persons, including certain holders of more than 10% of the outstanding shares of common stock, have not been excluded in that such persons are not deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

Part I
Item 1.		Business			1
Item 1A.		Risk Factors			34
Item 1B.		Unresolved Staff Comments			78
Item 2.		Properties			78
Item 3.		Legal Proceedings			79
Item 4.		Mine Safety Disclosures			79
Part II
Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			80
Item 6.		Selected Financial Data			82
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			83
Item 7A.		Quantitative and Qualitative Disclosure About Market Risk			97
Item 8.		Financial Statements and Supplementary Data			99
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			133
Item 9A.		Controls and Procedures			133
Item 9B.		Other Information			133
Part III
Item 10.		Directors, Executive Officers and Corporate Governance			134
Item 11.		Executive Compensation			134
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			134
Item 13.		Certain Relationships and Related Transactions and Director Independence			134
Item 14.		Principal Accounting Fees and Services			134
Part IV
Item 15.		Exhibits, Financial Statement Schedules			135
Item 16.		Form 10-K Summary			135
SIGNATURES					139

Statements made in this Annual Report on Form that are not statements of historical information are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements include, but are not limited to, statements regarding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This Annual Report on Form also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. 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 reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data 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.

In this Annual Report on Form unless the context requires otherwise, “GBT,” “Company,” “we,” “our,” and “us” means Global Blood Therapeutics, Inc., together with our consolidated subsidiaries. Oxbryta, GBT Source Solutions and GBT Source are trademarks of GBT. This Form also contains trademarks of third parties, and any such trademark is the property of its owner.

Beyond Oxbryta, we are also engaged in other research and development activities, all of which are currently in earlier development stages. For example, we are advancing our SCD pipeline with inclacumab, a inhibitor in development to address pain crises associated with the disease. In addition, our drug discovery team is working on new targets to develop the next generation of treatments for SCD.

As part of those efforts, we regularly evaluate opportunities to acquire or invest in new business, technology or assets or engage in related discussions with other business entities. In December 2019, we entered

into the License and Collaboration Agreement, or Syros Agreement, with Syros Pharmaceuticals, Inc., or Syros, to discover, develop and commercialize novel therapies for SCD and beta thalassemia. Under the Syros Agreement, Syros will use its leading gene control platform to identify therapeutic targets and discover drugs that potentially induce fetal hemoglobin, and we have an option to obtain an exclusive worldwide license to develop, manufacture and commercialize any compounds or products resulting from the collaboration, subject to Syros’ option to the first product in the United States. We will continue to seek the best scientific approaches to transform the treatment of these devastating lifelong diseases.

Our mission is to discover, develop and deliver life-changing treatments for people living with grievous blood-based disorders, starting with SCD. We believe that with our first approved medicine, Oxbryta, along with the innovative patient program we have developed to accompany it, GBT Source Solutions, we are well-positioned to address many of the needs of the SCD community. Oxbryta is the first and only sickle hemoglobin polymerization inhibitor, a new class of therapy, and it is broadly indicated in the United States for the treatment of SCD in adults and children 12 years of age and older.

To support the launch of Oxbryta, we created GBT Source Solutions, a high-touch program for patients, their families and HCPs that is utilized when Oxbryta is prescribed. GBT Source Solutions provides a wide range of real-time, ongoing, practical, educational, and financial support customized to each patient’s needs. GBT Source Solutions provides support by reviewing insurance coverage options and explaining benefits; working with the specialty pharmacy partner network to coordinate delivery of Oxbryta to wherever the patient chooses; helping with financial and assistance for eligible patients; and helping patients stay on treatment as prescribed by their treating physicians with a nurse support team. GBT Source Solutions is supported by a team of highly trained professionals and regional, field-based patient navigators that will help patients and provide resources to help HCPs understand insurance requirements and other administrative details when prescribing Oxbryta.

We have a comprehensive plan to continue to build clinical evidence supporting the safety and efficacy of Oxbryta, now that our Phase 3 HOPE Study that provided the support for accelerated approval of the product has concluded. This plan includes studies designed to demonstrate that improving hemoglobin and reducing hemolysis leads to an improvement in organ dysfunction—specifically focused on outcomes in the brain, lungs, kidneys and heart—and exercise capacity. We are continuing to study Oxbryta in the ongoing Phase 2a HOPE-KIDS 1 Study, an open-label, single- and multiple-dose Phase 2a study that is evaluating the safety, tolerability, pharmacokinetics and exploratory treatment effect of Oxbryta in pediatric patients aged 4 to 17 years with SCD, and our HOPE-KIDS 2 Study, a Phase 3 clinical trial that we intend to satisfy the FDA’s requirement for us to complete at least one post-approval confirmatory study. Initiated in December 2019, our HOPE-KIDS 2 Study is using TCD flow velocity to seek to demonstrate a decrease in stroke risk in children 2 to 15 years of age. In addition, we are planning a comprehensive program to gather and evaluate real world evidence and historical data to determine the long-term connection between improvements in hemoglobin and organ damage and longer-term outcomes,

In Europe, there are approximately 60,000 SCD patients, the majority of which are in two countries, France and the United Kingdom. The European Medicines Agency, or EMA, has included Oxbryta in its Priority Medicines (PRIME) program, and the European Commission, or EC, has designated Oxbryta as an orphan medicinal product for the treatment of patients with SCD. We plan to meet with the EMA in the first half of 2020 to discuss the regulatory pathway for Oxbryta in Europe.

Our strategy includes the expansion of our product pipeline through the discovery and development of novel therapeutic approaches for SCD and grievous blood disorders. Our lead product candidate is inclacumab, a novel fully human monoclonal antibody against a clinically validated target for the reduction of vaso-occlusive crises, or VOCs. We are developing inclacumab as a treatment for VOC in patients with SCD and expect to initiate a pivotal clinical study in 2021. We also have a collaboration with Syros to discover, develop and commercialize novel therapies for SCD and beta thalassemia utilizing Syros’ gene control platform to identify therapeutic targets and discover small molecule drugs that induce fetal hemoglobin. In addition, our drug discovery and business development teams are actively working on new opportunities to expand our product pipeline.

The majority of the global SCD patient population is outside of the U.S., including more than 75% of the global incidence in Africa and large populations in India, the Middle East, and South America. Each of these regions represent unique challenges to providing access due to complex healthcare systems and will require a customizable approach that meets the needs of the local community. Our clinical programs include sites outside of the U.S. and all participants in our clinical trials will continue to receive Oxbryta until it is available in their countries. We are developing strategies to make Oxbryta available to all patients in these regions in a manner that is sustainable for us over the long-term.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCD is associated with a high healthcare utilization and economic burden. It is estimated that in the United States, the annual cost of medical care for an SCD patient with complications is up to $286,000 and that damage drives major healthcare utilization, with an average SCD patient receiving healthcare services for 30 to 54 days per year. In addition, there is potential for a significant financial burden on patients and society: it is estimated that SCD patients are deprived of approximately $700,000 in lost lifetime income, not including the impact on caregiver productivity. As a result, we believe that a safe, effective and convenient oral treatment for SCD has the potential to be well received by patients, physicians and payors.

In July 2017, the FDA approved oral powder for patients age five and older with SCD to reduce severe complications associated with the disorder. In January 2018, Emmaus Life Sciences, Inc., the marketer for Endari oral powder) announced the availability of the product to patients. Endari is supplied to patients as powder that requires a large volume administration (5 grams—15 grams) mixed with liquid or food twice a day. In November 2019, the FDA approved Adakveo (crizanlizumab) to reduce the frequency of VOCs, or pain crises, in adult and pediatric patients aged 16 years and older with SCD, and it was made available to patients before the end of 2019. Crizanlizumab is administered via a intravenous, or IV, infusion given once per month by a health care provider.

In addition to treatment with hydroxyurea, and crizanlizumab, transfusions with normal blood are an option to help alleviate anemia, which is a common symptom of SCD, and reduce sickling of RBCs. Blood transfusions have a number of limitations, including the expense of treatment, lack of uniform accessibility and risks ranging from allergic reactions to serious complications such as blood-borne infection and iron overload, which can cause organ damage. The only potentially curative treatment currently available for SCD patients is bone marrow transplantation, which requires a suitable matching donor and carries significant risks, including an approximately 5% mortality rate. Despite these other current treatment options, blood transfusion and palliative therapy for acute pain attacks, patients with SCD continue to suffer serious morbidity and premature mortality.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In November 2019, we received FDA accelerated approval for Oxbryta for the treatment of SCD in adults and children 12 years of age and older. Oxbryta, an oral, once-daily therapy, is the first treatment that directly inhibits sickle hemoglobin polymerization, the root cause of SCD. We believe the label for Oxbryta highlights several important attributes for physicians and patients, including:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We recently completed a randomized, double-blind, placebo-controlled, multi-national Phase 3 clinical trial of Oxbryta in adult and adolescent patients with SCD that we refer to as the HOPE (Hemoglobin Oxygen Affinity Modulation to Inhibit HbS PolymErization) Study, the interim results of which we used as the basis for our accelerated approval under Subpart H of FDA’s NDA regulations. Data from the Phase 3 HOPE Study of 274 patients 12 years of age and older with SCD showed that the HOPE Study met its primary endpoint of an improvement in hemoglobin greater than 1 g/dL at 24 weeks with Oxbryta 1500 mg compared with placebo: After 24 weeks of treatment, 51.1% of patients receiving Oxbryta achieved a greater than 1 g/dL increase in hemoglobin compared with 6.5% receiving placebo (p<0.001). In addition, the data demonstrated corresponding improvements in other markers of hemolysis as well as a favorable safety and tolerability profile for Oxbryta. These interim Phase 3 HOPE data were published in the June 2019 issue of the .

In connection with the accelerated approval of Oxbryta, we have agreed with the FDA to submit the final study report by September 2020. We also agreed with the FDA to complete at least five years of for all patients on treatment and submit to the FDA interim reports each year in June from 2021 to 2025.

 

endpoint of TCD flow velocity measures in this study as TCD is a measure of stroke risk in pediatric and adolescent SCD patients. TCD measurement was not a primary or secondary endpoint or eligibility criteria in the HOPE Study. Part B demonstrated a hematologic response to Oxbryta therapy, as evidenced by improvements in one or more markers of hemolysis and anemia (hemoglobin, unconjugated bilirubin and percentage reticulocyte counts).

As a condition of accelerated approval of Oxbryta in the United States, and to potentially obtain full regulatory approval for Oxbryta, we will continue to study Oxbryta in the HOPE-KIDS 2 Study, a post-approval confirmatory study we initiated in December 2019 that is using TCD flow velocity to seek to demonstrate a decrease in stroke risk in children 2 to 15 years of age. Initiated in December 2019, HOPE-KIDS 2 is a randomized, placebo-controlled Phase 3 trial that will enroll approximately 220 patients with conditional TCD flow velocity cm/sec) at about 50 sites in the United States, Europe and Africa. The primary objective of the study is to evaluate the effect of Oxbryta on reducing the risk of stroke in children with SCD at 24 weeks months using mean change in TCD levels. Key secondary measures include conversion to normal or abnormal TCD at 96 weeks, change in hemoglobin over time and effect on clinical measures of hemolysis. The overall treatment period will be 96 weeks, and, in connection with the accelerated approval of Oxbryta, we have agreed with the FDA to submit the interim study report by July 2025, complete the trial by March 2026 and to submit the final study report by September 2026.

With respect to Oxbryta, we expect to face competition from the three currently treatments: hydroxyurea (marketed as DROXIA or Hydrea by Bristol-Myers Squibb Company as well as in generic form), approved to reduce the frequency of painful crises and need for blood transfusions in patients with sickle cell anemia for the treatment of adults with SCD; Endari (marketed by Emmaus), approved to reduce acute complications of SCD in patients age five years and older; and crizanlizumab (marketed by Novartis), approved to reduce the frequency of VOCs in adult and pediatric patients aged 16 years and older with SCD. Several companies are also developing product candidates for chronic treatment in SCD, and several other companies are in early clinical trials to investigate new mechanisms of action for the chronic treatment of SCD. We also may face competition from therapies for patients with severe SCD, including hematopoietic stem cell transplantation, gene therapy and gene editing. For example, bluebird bio, Inc., is currently engaged in the clinical development of LentiGlobin BB305, which aims to treat SCD by inserting a functional human beta-globin gene into the patient’s own hematopoietic stem cells, or HSCs, ex vivo and then transplanting the modified stem cell into the patient’s bloodstream. Bluebird has indicated its plans to pursue an accelerated development and approval pathway for its gene therapy product in SCD. Several agents are also in development for the treatment of VOC in patients with SCD.

Our goal is to build a robust product pipeline focused on the discovery and development of novel therapeutic approaches for SCD and grievous blood disorders. We have an active business development strategy that may provide new opportunities to expand our product pipeline with next-generation treatments for SCD. To this end, we have entered into agreements with F. Roche Ltd. and Roche Inc. (together, “Roche”) and Syros.

to develop and commercialize inclacumab, a novel fully human monoclonal antibody against including any modified compounds targeting and derived from inclacumab, for all indications and uses, except diagnostic use. Roche retained a worldwide, perpetual, royalty-free license to inclacumab solely for any diagnostic use.

Under the Roche Agreement, we paid Roche an upfront payment of $2.0 million, and we will pay Roche up to an aggregate of $125.5 million in milestone payments for the SCD indication, including up to $40.5 million based on achievement of certain clinical development and regulatory milestones for inclacumab in the sickle cell disease indication, and up to $85.0 million based on achievement of certain thresholds for annual net sales of inclacumab. We will also pay Roche up to an additional $5.5 million in milestone payments, which are owed to a third party, based on achievement of such clinical development and regulatory milestones for inclacumab. We will also pay Roche up to $19.25 million in milestone payments based on achievement of certain clinical development and regulatory milestones for inclacumab for any other indication than the SCD indication. We have the right to sublicense our rights under the Roche Agreement to our affiliates without Roche’s consent. Subject to certain conditions and limitations, including Roche’s right of first negotiation described below, we will also have the right to sublicense our rights under the Roche Agreement to pursuant to partner agreements with Roche’s prior written consent, which will not be unreasonably withheld or delayed. If at any time prior to the expiration of royalty or other payment obligations under the Roche Agreement, or the earlier termination of the Roche Agreement, we intend to enter into a partner agreement to sublicense rights to inclacumab, then Roche will have a right of first negotiation during an exclusivity period to negotiate in good faith with us the terms and conditions of such proposed transaction.

In December 2019, we entered into the Syros Agreement to discover, develop and commercialize novel therapies for SCD and beta thalassemia. Under the agreement, Syros will use its leading gene control platform to identify therapeutic targets and discover small molecule drugs that potentially induce fetal hemoglobin, and we have an option to obtain an exclusive worldwide license, with the right to sublicense, under relevant intellectual property rights and of Syros arising from the collaboration, to develop, manufacture and commercialize any compounds or products resulting from the collaboration, subject to Syros’ option to the first product in the United States. If we exercise the option, we will be responsible for all development, manufacture, regulatory activities and commercialization of the compound or product. Syros and we will be responsible for our own costs incurred to conduct research activities, except that we will fund up to $40.0 million in preclinical research for at least three years. Unless earlier terminated or extended, the research program under the agreement will end on the third anniversary of the agreement.

Under the Syros Agreement, we paid Syros an upfront payment of $20.0 million, and, if we exercise the option, we may be obligated to pay Syros up to $315.0 million in option exercise, development, regulatory, commercialization and sales-based milestones per product candidate and product resulting from the collaboration. We will also be obligated to pay Syros, subject to certain reductions, tiered to high-single digit royalties as percentages of calendar year net sales on any product resulting from the collaboration.

We plan to continue to expand our intellectual property portfolio. We endeavor to promptly file domestic and international patent applications for new commercially valuable inventions, including applications directed to compositions and methods of treatment created or identified from our ongoing development of our product candidates. Our success will depend in part on our ability to obtain and maintain patent and other proprietary rights protecting our commercially important technology, inventions and related to our business, defend and enforce our current and future issued patents, if any, preserve the confidentiality of our trade secrets and operate without infringing the valid and enforceable patents and proprietary rights of third parties. We also rely on continuing technological innovation and potential opportunities to develop and maintain our intellectual property portfolio.

The base term of a U.S. patent is 20 years from the filing date of the earliest-filed patent application from which the patent claims priority, assuming that all maintenance fees are paid. The term of a U.S. patent can be lengthened by patent term adjustment, which compensates the owner of the patent for administrative delays at the USPTO, the extent of which is offset by delays by the patent owner before the USPTO in obtaining the patent. In some cases, the term of a U.S. patent is shortened by a terminal disclaimer that reduces its term to that of an earlier-expiring patent. The term of a U.S. patent may be eligible for patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act, to account for at least some of the time the drug is under development and regulatory review after the patent is granted. With regard to a drug for which FDA approval is the first permitted marketing of the active ingredient, the Hatch-Waxman Act allows for extension of the term of one U.S. patent that includes at least one claim covering the composition of matter of an drug, an method of treatment using the drug and/or a method of manufacturing the drug. The extended patent term cannot exceed the shorter of five years beyond the expiration of the patent or 14 years from the date of the FDA approval of the drug. Some foreign jurisdictions, including Europe and Japan, have analogous patent term extension provisions, which allow for extension of the term of a patent that covers a drug approved by the applicable foreign regulatory agency. Following the FDA approval of Oxbryta, we applied for patent term extension Oxbryta, and we would expect to do the same for any other eligible product candidate that receives FDA approval in the future.

In addition to patents, we rely on trade secrets and to develop and maintain our competitive position. We typically rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. We protect trade secrets and by establishing confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors and contractors. These agreements generally provide that all confidential information developed or made known during the course of an individual or entities’ relationship with us must be kept confidential during and after the relationship. These agreements also typically provide that all inventions resulting from work performed for us or relating to our business and conceived or completed during the period of employment or assignment, as applicable, shall be our exclusive property. In addition, we take other appropriate precautions, such as physical and technological security measures, to guard against misappropriation of our proprietary information by third parties.

 

 

 

 

 

 

 

 

 

component, developing the formulation and determining the manufacturing process, as well as carrying out toxicology, pharmacology and drug metabolism studies in the laboratory, which support subsequent clinical testing in humans. As the drug sponsor, we must submit the results of the nonclinical studies, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. An IND is a request for authorization from the FDA to administer an investigational drug product to humans, and must become effective before human clinical trials may begin.

 

 

 

The FDA reviews all NDAs submitted before it accepts them for filing and may request additional information rather than accepting an NDA for filing. The FDA is supposed to make a decision on accepting an NDA for filing within 60 days of receipt of the submission. Once the NDA is accepted for filing, the FDA begins an review of the NDA. Under the goals and policies agreed to by the FDA under PDUFA, the FDA is supposed to complete its initial review of an NDA that it has accepted for review and respond to the applicant

Before approving an NDA, the FDA will conduct a inspection of the manufacturing facilities for the new product (including the facilities of contract manufacturers, if applicable) to determine whether they comply with cGMP requirements. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. The FDA may also audit data from clinical trials to ensure compliance with GCP requirements. Additionally, the FDA may refer applications for novel drug products or drug products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. There are likely to be extensive discussions between the FDA and the applicant during the review process. The review and evaluation of an NDA by the FDA is very comprehensive and time consuming and may take longer than originally planned to complete.

Under the Pediatric Research Equity Act, or PREA, as amended, an NDA or supplement to an NDA must contain data to assess the safety and efficacy of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may grant deferrals for submission of pediatric data or full or partial waivers. A sponsor who is planning to submit a marketing application for a drug that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration is required to submit an initial Pediatric Study Plan, or PSP, within sixty days of an 2 meeting or, if there is no 2 meeting as early as practicable before the initiation of the Phase 3 or Phase 2/3 study. The initial PSP must

Following approval of a new product, a pharmaceutical company and the approved product are subject to continuing regulation by the FDA, including, monitoring and recordkeeping activities, submission of an NDA annual report, reporting of adverse experiences, product sampling and distribution requirements, and complying with complex promotion and advertising requirements, which include restrictions on promoting drugs for uses or for patient populations for which the drug was not approved (known as use”), and limitations on industry-sponsored scientific and educational activities and on interactions with healthcare providers. Although physicians may prescribe legally available drugs for uses, manufacturers may not market or promote such uses. Prescription drug promotional materials must be submitted to the FDA in conjunction with the first use of these materials, and may be required to be reviewed in advance in certain circumstances such as a new product launch, including for drugs such as Oxbryta that are approved pursuant to the FDA’s Subpart H accelerated approval regulations. After 120 days following marketing approval, promotional materials for accelerated approval drugs must be submitted 30 days prior to use. Further, if there are any modifications to the drug, including changes in indications, labeling, or manufacturing processes or facilities, the pharmaceutical company may be required to submit and obtain FDA approval of a new NDA or NDA supplement, which may require additional data or the conduct of additional nonclinical studies and clinical trials. Newly discovered or developed safety or effectiveness data may require changes to a drug’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures, including a Risk Evaluation and Mitigation Strategy, or REMS, or the conduct of post-marketing studies to assess a newly discovered safety issue. The FDA has authority to require post-market studies, in certain circumstances, on reduced effectiveness of a drug and the FDA may require labeling changes related to new reduced effectiveness information.

Any distribution of prescription drug products and pharmaceutical samples must comply with the U.S. Prescription Drug Marketing Act, or PDMA, which regulates the distribution of drugs and drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states. Both the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability in distribution. The Drug Supply Chain Security Act, or DSCSA, was enacted in 2013 with the aim of building an electronic system to identify and trace certain prescription drugs distributed in the United States. The DSCSA mandates and resource-intensive obligations for pharmaceutical manufacturers, wholesale distributors, and dispensers over a period that is expected to culminate in November 2023. The law’s requirements include the quarantine and prompt investigation of a suspect product, to determine if it is illegitimate, and notifying trading partners and the FDA of any illegitimate product. Drug manufacturers and their collaborators are also required to place a unique product identifier on prescription drug packages. This identifier consists of the National Drug Code, serial number, lot number and expiration date, in the form of a two dimensional data matrix barcode that can be read by humans and machines.

Section 505 of the FDCA describes three types of marketing applications that may be submitted to the FDA to request marketing authorization for a new drug. A Section 505(b)(1) NDA is an application that contains full reports of investigations of safety and efficacy. A Section 505(b)(2) NDA is an application in which the applicant, in part, relies on investigations that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted. Section 505(j) establishes an abbreviated approval process for a generic version of approved drug products through the submission of an Abbreviated New Drug Application, or ANDA. An ANDA provides for marketing of a generic drug product that has the same active ingredients, dosage form, strength, route of administration, labeling, performance characteristics and intended use, among other things, to a previously approved product. Limited changes must be preapproved by the FDA via a suitability petition. ANDAs are termed “abbreviated” because they are generally not required to include nonclinical and clinical data to establish safety and efficacy. Instead, generic applicants must scientifically demonstrate that their product is bioequivalent to, or performs in the same manner as, the innovator drug through , , or other testing. The generic version must deliver the same amount of active ingredients into a subject’s bloodstream in the same amount of time as the innovator drug and can often be substituted by pharmacists under prescriptions written for the reference listed drug.

within 20 days after the application has been accepted for filing by the FDA. The NDA holder or patent owner may then initiate a patent infringement lawsuit in response to the notice of the paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a paragraph IV certification notice prevents the FDA from approving the ANDA or 505(b)(2) application until the earlier of 30 months from the date of the lawsuit, expiration of the patent, settlement of the lawsuit, a decision in the infringement case that is favorable to the applicant or such shorter or longer period as may be ordered by a court. This prohibition is generally referred to as the stay.

In instances where an ANDA or 505(b)(2) NDA applicant files a paragraph IV certification, the NDA holder or patent owners regularly take action to trigger the stay, recognizing that the related patent litigation may take many months or years to resolve. Thus, approval of an ANDA or 505(b)(2) NDA could be delayed for a significant period of time depending on the patent certification the applicant makes and the reference drug sponsor’s decision to initiate patent litigation.

Depending upon the timing, duration and specifics of the FDA approval of Oxbryta and any of our drug candidates, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generally the time between the effective date of an IND and the submission date of an NDA, plus the time between the submission date of an NDA and the approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence. Only one patent applicable to an approved drug is eligible for the patent term extension and the application for the extension must be submitted prior to the expiration of the patent. The United States Patent and Trademark Office, or USPTO, in consultation with the FDA, reviews and approves any application for patent term extension or restoration. Following the FDA approval of Oxbryta, we applied for restoration of patent term (also referred to as patent term extension) for Oxbryta.

Marketing exclusivity provisions under the FDCA provide a five-year period of marketing exclusivity within the United States to the first applicant to obtain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an ANDA or a 505(b)(2) NDA submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovator drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or to one of the patents listed with the FDA by the innovator who holds the NDA for the active agent. The FDA has granted Oxbryta five-year marketing exclusivity, which will expire on November 25, 2024.

Five-year and three-year exclusivity will not delay the submission or approval of a full NDA by a competitor. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the nonclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and efficacy. Pediatric exclusivity is another type of regulatory market exclusivity in the United States which, if granted, adds six months to the end of existing exclusivity periods and patent terms, and may be granted based on the voluntary completion of a pediatric trial in accordance with an written request for such a pediatric trial where information relating to the use of the product candidate in a pediatric population may produce health benefits in that population.

 

 

 

 

 

 

 

 

 

 

 

restrictions. Establishing an entity and operations in Europe also subjects us to additional privacy restrictions, including in relation to employee information. The collection, use, storage, disclosure, transfer, or other processing of personal data regarding individuals in the EU, including personal health data, is subject to the GDPR, which became effective in May 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors. The GDPR also imposes strict rules on the transfer of personal data to countries outside the EU, including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to 20 million or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. In addition, the GDPR includes restrictions on cross-border data transfers. The GDPR has increased our responsibility and liability in relation to personal data that we process where such processing is subject to the GDPR, and we may be required to put in place additional mechanisms to ensure compliance with the GDPR, including as implemented by individual countries. Compliance with the GDPR will continue to be a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and reputational harm in connection with our European activities. Further, the United Kingdom’s vote in favor of exiting the EU, often referred to as Brexit, has created uncertainty with regard to data protection regulation in the United Kingdom. In particular, it is unclear how data transfers to and from the United Kingdom will be regulated.

California recently enacted the California Consumer Privacy Act, or CCPA, which creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households. The CCPA requires covered companies to provide certain disclosures to consumers about its data collection, use and sharing practices, and to provide affected California residents with ways to of certain sales or transfers of personal information, and also regulates employee information. The CCPA went into effect in January 2020, and the California Attorney General has stated their office will commence enforcement actions against violators beginning in July 2020. While there is currently an exception for protected health information that is subject to HIPAA, as currently written, the CCPA will impact our business activities. The California Attorney General has proposed draft regulations, which have not been finalized to date, that may further impact our business activities if they are adopted. The uncertainty surrounding the implementation of CCPA exemplifies the vulnerability of our business to the evolving regulatory environment related to personal data and protected health information.

In the EU, new chemical entities, sometimes referred to as new active substances, qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity. The data exclusivity, if granted, prevents regulatory authorities in the EU from referencing the innovator’s data to assess a generic application for eight years, after which generic marketing authorization can be submitted, and the innovator’s data may be referenced, but not approved for two years. The overall period will be extended to a maximum of 11 years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are determined to bring a significant clinical benefit in comparison with existing therapies.

healthcare organizations, as well as the level of reimbursement such third-party payors provide for our products. Patients and providers are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products. In the United States, no uniform policy of coverage and reimbursement for drug products exists, and one payor’s determination to provide coverage and adequate reimbursement for a product does not assure that other payors will make a similar determination. Accordingly, decisions regarding the extent of coverage and amount of reimbursement to be provided for any of our products will be made on a basis. Many private payors, however, use coverage decisions and payment amounts determined by CMS as guidelines in setting their coverage and reimbursement policies. The coverage determination process is often time-consuming and costly and is likely to require us to provide scientific and clinical support for the use of our product candidates to each payor individually, with no assurance that coverage and adequate reimbursement will be obtained.

The Medicaid Drug Rebate Program requires pharmaceutical manufacturers to enter into and have in effect a national rebate agreement with the Secretary of HHS as a condition for states to receive federal matching funds for the manufacturer’s outpatient drugs furnished to Medicaid patients. Effective in 2010, the ACA made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers’ rebate liability by raising the minimum basic Medicaid rebate on most branded prescription drugs from 15.1% of average manufacturer price, or AMP, to 23.1% of AMP, and adding a new rebate calculation for “line extensions” (i.e., new formulations, such as extended release formulations) of solid oral dosage forms of branded products, creating a new methodology by which rebates are calculated for drugs that are inhaled, infused, instilled, implanted or injected, as well as potentially impacting their rebate liability by modifying the statutory definition of AMP. The ACA also expanded the universe of Medicaid utilization subject to drug rebates by requiring pharmaceutical manufacturers to pay rebates on Medicaid managed care utilization as of 2010 and by expanding the population potentially eligible for Medicaid drug benefits by 2014). Pricing and rebate programs must also comply with the Medicaid rebate requirements of the U.S. Omnibus Budget Reconciliation Act of 1990.

limitations in setting their own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments from payors.

The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that could affect our ability to profitably sell our products. In the United States, there have been and continue to be laws enacted by the federal government, state governments, regulators and third-party payers to control healthcare costs, and generally, to reform the healthcare system in the United States. For example, the ACA was passed in March 2010 and has substantially changed the way healthcare is delivered and financed by both governmental and private insurers. The ACA expanded coverage for the uninsured while at the same time containing overall healthcare costs. With regard to pharmaceutical products, the ACA, among other things, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees and taxes on manufacturers of certain branded prescription drugs, and a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D. The required discount was increased to 70% on January 1, 2019 pursuant to subsequent legislation.

There has been increasing legislative and enforcement interest in the United States with respect to drug pricing practices, including for specialty drugs. For example, there have been several recent federal Congressional inquiries and proposed federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. At the federal level, the Trump administration’s budget proposal for fiscal years 2019 and 2020 contain further drug price control measures that could be enacted during the budget process or in other future legislation, including, for example, measures to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug prices under Medicaid, and to eliminate cost sharing for generic drugs for patients. Additionally, the Trump administration released a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the costs of drug products paid by consumers. HHS has already started the process of soliciting feedback on some of these

We were incorporated in Delaware in February 2011 and commenced operations in May 2012. Our principal executive offices are located at 171 Oyster Point Blvd., Suite 300, South San Francisco, California 94080. Our telephone number is (650) and our address is investor@gbt.com. Our Internet website address is www.gbt.com. No portion of our website is incorporated by reference into this Annual Report on Form

You are advised to read this Annual Report on Form in conjunction with other reports and documents that we file from time to time with the Securities and Exchange Commission, or SEC. In particular, please read our Quarterly Reports on Form and any Current Reports on Form that we may file from time to time. You may obtain copies of these reports directly from us or from the SEC. In addition, the SEC maintains information for electronic filers (including Global Blood Therapeutics, Inc.) at its website at www.sec.gov. We make our periodic and current reports available on our internet website, free of charge, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.

Our target patient populations are small, and, accordingly, the pricing, coverage and reimbursement of Oxbryta or any of our product candidates, if approved, must be adequate to support our commercial infrastructure. To achieve profitability, our prices must be sufficient to recover our development and manufacturing costs, and we must be able to sell sufficient amounts of product at these prices. Additionally, the availability of government funded or private insurance coverage for Oxbryta and any other product candidates for

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved drug products, and even more uncertainty related to the insurance coverage for products, such as Oxbryta, that receive accelerated approval by the FDA under Subpart H (including in the period before required post-marketing confirmatory studies to verify clinical benefit). The process for determining whether a third-party payor will provide coverage for a product may be separate from the process for setting the reimbursement rate that the payor will pay for the product. Third-party payors may limit coverage to specific products on an approved list, or formulary, which might not include all of the products for a particular indication. Moreover, a third-party payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. For example, the payor’s reimbursement payment rate may not be adequate or may require that patients find unacceptably high. Additionally, coverage and reimbursement for products can differ significantly from payor to payor.

In many jurisdictions, including some countries in the European Union, the proposed pricing for a drug must be approved before it may be lawfully marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted and reimbursement may in some cases be unavailable. As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay commercial launch of the product, possibly for lengthy time periods, which may negatively impact the revenues we are able to generate from the sale of the product in that country. The requirements governing drug pricing vary widely from country to country and products may be subject to continuing governmental control following approval. For example, reimbursement in the European Union must be negotiated on a basis and, in many countries, the product cannot be commercially launched until reimbursement is approved. Furthermore, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use, including by approving a specific price for the medicinal product or adopting a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. In addition, to obtain coverage and reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies, or to meet other criteria for pricing approval. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products or product candidates.

 

 

 

 

 

 

 

 

 

 

If the FDA or any comparable foreign regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with a sponsor’s activities relating to the promotion, marketing, or labeling of a product, these regulatory agencies may impose restrictions or sanctions on that product or us, including requiring withdrawal of the product from the market. In addition, in the United States, a wide range of commercialization and activities relating to a drug candidate are subject to potential for significant civil and/or criminal liability and sanctions under federal anti-kickback and fraud and abuse statutes and regulations. If we fail to comply with any of these complex applicable regulatory requirements, a regulatory agency or enforcement authority may:

 

 

 

 

 

 

 

 

 

 

 

Our current and future operations are or will be directly, or indirectly through our prescribers, customers and third-party payors, subject to various U.S. federal and state healthcare laws and regulations. These laws may impact, among other things, our current business operations, including our sales, marketing, distribution, commercialization, medical and educational programs and our clinical research activities, and they may constrain our business and financial arrangements and relationships with healthcare providers, physicians and other parties through which we market, sell and distribute Oxbryta and any future drugs we may develop or obtain. We may also be subject to additional healthcare, statutory and regulatory requirements and enforcement by foreign regulatory authorities in jurisdictions in which we conduct our business. The laws that may affect our ability to operate include the federal Anti-Kickback Statute, the federal False Claims laws, the U.S. Federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, the Physician Payment Sunshine Act, and analogous state laws and regulations such as state anti-kickback and false claims laws and analogous fraud and abuse laws and regulations, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by third-party payors.

resolve allegations of with these laws, contractual damages, reputational harm, diminished profits, and the curtailment or restructuring of our operations. Further, defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired. If any of the physicians or other providers or entities with whom we expect to do business is found to not be in compliance with applicable requirements, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment. If any of the above occur, it could adversely affect our ability to operate our business and our results of operations.

The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We are currently aware of various existing therapies and development candidates that are or may compete with Oxbryta and inclacumab for the potential treatment of SCD. For example, the FDA approved Novartis’ crizanlizumab in November 2019. Both crizanlizumab and inclacumab are human monoclonal antibodies against for the treatment of vaso-occlusive crises, or VOC, in patients with SCD. The FDA’s approval of crizanlizumab results in another new and innovative SCD product entering the United States SCD market approximately one week earlier than Oxbryta, and substantially earlier than any potential approval of our inclacumab product candidate (which could be a direct competitor to crizanlizumab). As a result, the commercialization of crizanlizumab may also impact our commercialization of Oxbryta in the United States, as well as inclacumab if we are successful in developing and obtaining approval for it for SCD patients. In addition, Novartis has announced a conditional EMA approval application for a potential conditional approval of crizanlizumab in the third quarter of 2020.

We are a biopharmaceutical company with only one drug, Oxbryta, approved for marketing, and such approval is only for the United States. We also have a limited operating history upon which you can evaluate our business and prospects. Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. To date, we have focused principally on developing Oxbryta, and our current clinical development activities are focused on Oxbryta and inclacumab. In August 2018, we entered into an exclusive worldwide license agreement with F. Hoffman-LaRoche and Roche Inc., collectively, Roche, for the development and commercialization of inclacumab.

 

 

 

 

 

 

 

We are currently commercializing Oxbryta and investigating Oxbryta in clinical development to support its potential full approval by the FDA and opportunities for potential label expansion. We are evaluating the safety and pharmacokinetics of single and multiple doses of Oxbryta in our HOPE-KIDS 1 Study, a Phase 2a clinical trial in adolescent and pediatric patients with SCD, which we expanded to include a new single-dose cohort in children aged Our clinical program for Oxbryta also includes multi-national open label extension, or OLE,

Our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations or license and development agreements. Any additional fundraising efforts may divert our management from their activities, which may adversely affect our ability to develop and commercialize Oxbryta, inclacumab or any other product candidates that we may identify and pursue. Moreover, such financing may result in dilution to stockholders, imposition of debt covenants and repayment obligations, or other restrictions that may affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

If we are unable to generate sufficient cash to repay our debt obligations when they become due and payable, we may not be able to obtain additional debt or equity financing on favorable terms, if at all, which may negatively affect our business operations and financial condition.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All of our other programs are in earlier stages of research and development, and we have no other product candidates in clinical trials other than Oxbryta. As a result, even after the inclacumab program, we are very dependent on Oxbryta for our business, prospects, financial condition and results of operations.

success depends on the success of this therapeutic approach. The clinical trial requirements of the FDA and other comparable regulatory agencies and the criteria these regulators use to determine the safety and efficacy of any product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential product. To date, there are only four approved therapies for SCD, Oxbryta, crizanlizumab, hydroxyurea, and and Oxbryta is the first approved therapy directed toward preventing the polymerization of hemoglobin molecules as a mechanism to reduce red blood cell sickling in SCD patients. As a result, the design and conduct of clinical trials for a therapeutic product candidate such as Oxbryta that targets this mechanism in SCD patients are subject to unknown risks, and we may experience setbacks with our ongoing or planned clinical trials of Oxbryta in SCD because of the limited clinical experience with its mechanism of action in these patients.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clinical trials by their nature utilize only a small sample of the potential patient population. For example, our Phase 3 HOPE Study in SCD patients represents only a very small fraction of all patients with SCD. Side effects of Oxbryta, inclacumab or any other product candidates that we may develop may be uncovered only in later stages of clinical trials, or only in trials involving different patient populations (such as pediatric patients), or only during post-approval studies, such as our HOPE-KIDS 2 Study (our TCD confirmatory study), or the safety reporting required for approved products. Many approved drugs and product candidates that initially showed promise in early stage testing have later been found to cause side effects that prevented their further development. Moreover, a nonclinical toxicology study with Oxbryta in and clinical trials involving other hemoglobin modifiers (other than Oxbryta) have shown a decrease in oxygen delivery to tissue when a significant percentage of hemoglobin is modified. Hemoglobin modifiers, by increasing HbS’s affinity for oxygen, can cause a shift in oxygen levels, potentially resulting in tissue hypoxia. To date, clinical studies of

In addition, in connection with any NDA for our product candidates, inspections by the FDA of our facilities and/or those of third parties involved in the drug development program may occur, including at clinical trial sites, CMOs or other third parties on which we are very reliant. Significant negative results from inspections, if any, could materially delay potential approval of the drug candidate.

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reliance on the third party for regulatory compliance and quality assurance;

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the possible breach or termination of the manufacturing agreement by the third party or by us, including at a time that is costly or inconvenient for us;

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the inability of the third party to satisfy our ordering requirements as to quality, quantity and/or price, including, without limitation, potential impact on supply chain due to the impact of public health risks, such as the recent spread of the coronavirus;

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the possible misappropriation of our proprietary information, including our trade secrets and know-how; and

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the unwillingness of the third party to extend or renew terms with us when desired.

Among other requirements, we or our contract manufacturers must supply all necessary documentation in support of an NDA or MAA seeking approval of a product candidate on a timely basis and must adhere to GLP and cGMP regulations enforced by the FDA and other regulatory agencies through their facilities inspection programs. The facilities and quality systems of some or all of our third-party contractors must pass a inspection for compliance with the applicable regulations as a condition of regulatory approval for Oxbryta. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of Oxbryta, inclacumab or any of our future product candidates or the associated quality systems. Although we oversee the contract manufacturers, we cannot control the manufacturing process of, and are completely dependent on, our contract manufacturing partners for compliance with these complex regulatory requirements. If these manufacturers, facilities, records or systems do not pass inspections and reviews, additional regulatory approval of Oxbryta or regulatory approval of inclacumab or any of our other future product candidates may never be granted or may be substantially delayed.

Because we rely on third parties to manufacture Oxbryta and to conduct other aspects of our clinical development activities, as well as for inclacumab and any other product candidates we may pursue, we must, at times, share trade secrets with them. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, other forms of agreement with any collaborators, CROs, manufacturers and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets and confidential information may become known by our competitors, may inadvertently be incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our and trade secrets, a competitor’s discovery of our trade secrets or confidential information, or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal, technological and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States, or vice versa. Further, we may not be aware of all third-party intellectual property rights potentially relating to Oxbryta or our product candidates. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing or, in some cases, not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are and will remain highly uncertain. The patent examination process may require us or our licensors, licensees or collaboration partners to narrow the scope of the claims of our or our licensors’, licensees’ or collaboration partners’ pending and future patent applications, which may limit the scope of patent protection that may be obtained. Our pending and future patent applications may not result in patents being issued that protect Oxbryta, inclacumab or any future product candidates, in whole or in part, or which effectively prevent others from commercializing competitive product candidates. Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our patents by developing similar or alternative product candidates in a manner, or by successfully seeking to narrow or invalidate our patents or render them unenforceable. Our and our licensors’, licensees’ or collaboration partners’ patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent issues from such applications, and then only to the extent the issued claims cover the technology.

We cannot assure you that all of the potentially relevant prior art relating to our patents and patent applications has been found. If such prior art exists, it can invalidate a patent or prevent a patent from issuing from a pending patent application. Moreover, we may be subject to a third-party preissuance submission of prior art to the United States Patent and Trademark Office, or USPTO, or become involved in opposition, derivation, reexamination, review, post-grant review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize Oxbryta or our product candidates and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize drugs without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize Oxbryta, inclacumab or any future product candidates.

Assuming the other requirements for patentability are met, in the United States prior to March 15, 2013, the first to make the claimed invention is entitled to the patent, while outside the United States, the a patent application is entitled to the patent. After March 15, 2013, under the Leahy-Smith America Invents Act, or AIA, enacted in 2011, the United States has moved to a system similar to other countries’ systems. The AIA also includes a number of significant changes that affect the way patent applications are prosecuted, and may also affect patent litigation. The effects of these changes are currently unclear as the USPTO must still implement various regulations, the courts have yet to address certain of these provisions and the applicability of the AIA and new regulations remain to be issued. Accordingly, it is not clear what, if any, impact the AIA will have on the operation of our business. However, the AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of patents that may issue from such patent applications, all of which could have a material adverse effect on our business and financial condition. Any further changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents and patent applications or narrow the scope of our potential patent protection.

We may be subject to claims that former employees, collaborators or other third parties have an interest in our patents or other intellectual property as an inventor or For example, inventorship disputes may arise from conflicting obligations of third parties involved in developing our product candidates or as a result of questions regarding of potential joint inventions. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership or we may enter into agreements to clarify the scope of our rights in such 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 right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business and operations including our ability to raise the funds necessary to commercialize Oxbryta, continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring our product candidates to market. 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.

We jointly own certain patents and patent applications with third parties. In the absence of an agreement with each of jointly owned patent rights, we will be subject to default rules pertaining to joint ownership. Some countries require the consent of all joint owners to exploit, license or assign jointly owned patents, and if we are unable to obtain that consent from the joint owners, we may be unable to exploit the invention or to license or assign our rights under these patents and patent applications in those countries. For example, we have exclusively licensed from the Regents of the University of California, or Regents, worldwide patent rights covering Oxbryta and certain Oxbryta analogs, some of which patent rights we jointly own with the Regents. Additionally, in the United States, each may be required to be joined as a party to any claim or action we may wish to bring to enforce these patent rights, which may limit our ability to pursue third party infringement claims.

We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical 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 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’ former employers or 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 adversely impact 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.

collaborators. These agreements are designed to protect our proprietary information. However, we cannot be certain that such agreements have been entered into with all relevant parties, and we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. For example, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. We also seek to preserve the integrity and confidentiality of our confidential proprietary information by maintaining physical security of our premises and physical and electronic security of our information technology systems, but it is possible that these security measures could be breached. Enforcing a claim that a third party obtained illegally and is using trade secrets or confidential is expensive, time consuming and unpredictable. The enforceability of confidentiality agreements may vary from jurisdiction to jurisdiction. If any of our confidential proprietary information were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret.

Failure to obtain or maintain trade secrets or confidential trade protection could adversely affect our competitive position. Moreover, our competitors may independently develop substantially equivalent proprietary information and may even apply for patent protection in respect of the same. If successful in obtaining such patent protection, our competitors could limit our use of our trade secrets or confidential

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. We employ outside firms and rely on them to pay many of these fees. The USPTO and various governmental patent agencies require compliance with a number of complex 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, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, 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. In such an event, our competitors might be able to enter the market, with a material adverse effect on our business.

An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned to a system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention. A third party that files a patent application in the USPTO after that date but before us could, therefore, be awarded a patent covering an invention of ours even if we had made the invention before it was made by the third party. This will require us to be cognizant going forward of the time from invention to filing of a patent application, but circumstances could prevent us from promptly filing patent applications on our inventions.

Although a substantial amount of our effort will focus on the continued commercialization, clinical testing and seeking of additional regulatory approval of Oxbryta, a key element of our strategy is to pursue, develop and commercialize a portfolio of products utilizing proprietary discovery and development technology. We are seeking to do so through our internal research programs and may also selectively pursue commercially synergistic or acquisition of additional assets, such as inclacumab. With the exception of Oxbryta, all of our other potential product candidates remain in the earlier development stages. Research programs to identify product candidates require substantial technical, financial and human resources, whether or not any product candidates are ultimately identified. Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for many reasons, including the following:

substantial criminal fines and civil penalties, imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations. We also expect our activities to increase over time. We engage third parties for clinical trials and/or to obtain necessary permits, licenses, patent registrations, and other regulatory approvals. We can be held liable for the corrupt or other illegal activities of our personnel, agents, or partners, even if we do not explicitly authorize or have prior knowledge of such activities.

 

 

 

 

 

Additionally, 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. The FCPA generally prohibits offering, promising, giving, or authorizing others to give anything of value, either directly or indirectly, to a 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 governments. Additionally, in many other countries, the health care providers who prescribe pharmaceuticals 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 cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a basis may not be meaningful. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated financial guidance we may provide.

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authorize “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;

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create a classified board of directors whose members serve staggered three-year terms;

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specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, our chief executive officer or our president;

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prohibit stockholder action by written consent;

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establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;

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provide that our directors may be removed only for cause;

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provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;

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specify that no stockholder is permitted to cumulate votes at any election of directors;

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expressly authorize our board of directors to modify, alter or repeal our amended and restated bylaws; and

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require supermajority votes of the holders of our common stock to amend specified provisions of our amended and restated certificate of incorporation and amended and restated bylaws.

		8/12/15				12/15				12/16				12/17				12/18				12/19
Global Blood Therapeutics, Inc.			100.00				74.99				33.52				91.28				95.22				184.39
NASDAQ Composite			100.00				98.18				106.88				138.56				134.62				184.02
NASDAQ Biotechnology			100.00				88.59				69.68				84.75				77.24				96.64
NASDAQ Pharmaceutical			100.00				86.87				69.06				82.80				78.25				91.94

		Years Ended December 31,
		2019				2018				2017
Summary of Operations Data:
Product sales, net		$	2,108			$	—			$	—
Costs and operating expenses
Cost of sales			48				—				—
Research and development			174,556				131,307				87,807
Selling, general and administrative			117,088				51,435				31,438
Gain on lease modification (1)			(8,301	)			—				—
Total costs and operating expenses			283,391				182,742				119,245
Loss from operations			(281,283	)			(182,742	)			(119,245	)
Interest income, net			14,697				8,618				2,555
Other expenses, net			(180	)			(69	)			(334	)
Net loss		$	(266,766	)		$	(174,193	)		$	(117,024	)
Basic and diluted net loss per common share		$	(4.57	)		$	(3.41	)		$	(2.76	)
Weighted-average number of shares used in computing basic and diluted net loss per common share			58,321,612				51,150,728				42,323,686

(1)	During the year ended December 31, 2019, we recorded a gain on lease modification related to our existing premises located in South San Francisco, California.

		As of December 31,
(in thousands)		2019				2018				2017
Selected Consolidated Balance Sheet Data:
Cash and cash equivalents and marketable securities		$	694,999			$	591,815			$	329,432
Working capital			556,544				452,007				298,048
Total assets			796,099				617,643				356,720
Long-term debt			73,559				—				—
Accumulated deficit			(738,916	)			(472,150	)			(297,957	)
Total stockholders’ equity			578,694				572,799				318,804

		Rebates,  co-payment assistance, Medicare Part D coverage gap, product returns and distributor fees				Prompt payment discounts and chargebacks				Total
Balances at December 31, 2018		$	—			$	—			$	—
Provision related to current period sales			529				113				642
Credit or payments made during the period			—				—				—
Balance at December 31, 2019		$	529			$	113			$	642

														Change
		Year Ended December 31,												2019/2018								2018/2017
(in thousands, except percentages)		2019				2018				2017				$				%				$				%
Product sales, net		$	2,108			$	—			$	—			$	2,108				*			$	—				*
Costs and operating expenses:
Cost of sales			48				—				—				48				*				—				*
Research and development			174,556				131,307				87,807				43,249				33	%			43,500				50	%
Selling, general and administrative			117,088				51,435				31,438				65,653				128				19,997				64
Gain on lease modification			(8,301	)			—				—				(8,301	)			*				—				*
Total costs and operating expenses			283,391				182,742				119,245				100,649				55				63,497				53
Loss from operations			(281,283	)			(182,742	)			(119,245	)			(98,541	)			54				(63,497	)			53
Interest income, net			14,697				8,618				2,555				6,079				71				6,063				237
Other expenses, net			(180	)			(69	)			(334	)			(111	)			(161	)			265				(79	)
Net loss		$	(266,766	)		$	(174,193	)		$	(117,024	)		$	(92,573	)			53	%		$	(57,169	)			49	%

*	Change is not meaningful

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employee-related expenses, which include salaries, benefits and stock-based compensation;

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expenses incurred under agreements with consultants, third-party research and manufacturing organizations, and investigative clinical trial sites that conduct research and development activities on our behalf;

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the costs related to production of clinical supplies, including fees paid to contract manufacturers;

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laboratory and vendor expenses related to the execution of nonclinical studies and clinical trials;

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payments upon achievement of certain clinical development and regulatory milestones in relation with license agreement; and

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facilities and other allocated expenses, which include expenses for rent and maintenance of facilities, depreciation and amortization expense and other supplies.

														Change
		Years Ended December 31,												2019/2018								2018/2017
		2019				2018				2017				$				%				$				%
Costs incurred by development program:
Oxbryta for the treatment of SCD		$	117,827			$	103,613			$	64,860			$	14,214				14	%		$	38,753				60	%
Other preclinical programs			47,015				23,036				14,512				23,979				104				8,524				59
Inclacumab for the treatment of SCD			9,472				3,818				—				5,654				148				3,818				*
Oxbryta for the treatment of hypoxemic pulmonary disorders			242				840				8,435				(598	)			(71	)			(7,595	)			(90	)
Total research and development expenses		$	174,556			$	131,307			$	87,807			$	43,249				33	%		$	43,500				50	%

*	Change is not meaningful