F-1/A 1 d59382df1a.htm F-1/A F-1/A
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As filed with the Securities and Exchange Commission on July 12, 2021.

Registration No. 333-257420

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1

to

Form F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

DYNACURE S.A.

(Exact Name of Registrant as Specified in its Charter)

 

 

Not Applicable

(Translation of Registrant’s Name into English)

 

 

 

France   2834   Not Applicable
(State or other Jurisdiction of
Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

Bioparc III

850, Boulevard Sébastien Brant

67400 Illkirch-Graffenstaden

France

Tel: +33 3 74 95 20 50

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

 

 

C T Corporation System

28 Liberty Street

New York, New York 10005

+ 1 877 467 3525

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

 

 

Copies to:

 

Nathan Ajiashvili

Ian D. Schuman

Latham & Watkins LLP

1271 Avenue of the Americas

New York, New York 10020

+1 212 906 1200

 

Emmanuelle Trombe

Bertrand Delafaye

McDermott Will & Emery AARPI

23 rue de l’Université, 75007

Paris, France

+ 33 1 81 69 15 00

 

Eric Blanchard
Richard Segal

Divakar Gupta

Lily Colahan

Cooley LLP
55 Hudson Yards
New York, New York 10001
+1 212 479 6000

  

Arnaud Duhamel

Guilhem Richard

Gide Loyrette Nouel A.A.R.P.I.

15 rue de Laborde, 75008

Paris, France

+33 1 40 75 00 00

 

 

Approximate date of commencement of proposed sale to the public:

As soon as practicable after this Registration Statement becomes effective.

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

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

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

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

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

Emerging growth company  ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of
Securities To Be Registered
  Amount to be
Registered(2)
  Proposed Maximum
Aggregate Offering
Price per Share
  Proposed Maximum
Aggregate
Offering Price(3)
  Amount of
Registration Fee(4)

Ordinary shares, nominal value €0.04 per share(1)

  7,187,500   $17.00   $122,187,500.00   $13,330.66

 

 

(1)

These ordinary shares are represented by American Depositary Shares, or ADSs, with each ADS representing one ordinary share. ADSs issuable upon deposit of the ordinary shares registered hereby are registered pursuant to a separate registration statement on Form F-6 (File No. 333-257568)

(2)

Includes ordinary shares, represented by ADSs, which the underwriters have the option to purchase.

(3)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.

(4)

Includes $10,910 that the registrant previously paid in connection with the registration statement.

 

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

 

 

 


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The information in this preliminary prospectus is not complete and may be changed. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED JULY 12, 2021

PRELIMINARY PROSPECTUS

6,250,000 American Depositary Shares

 

LOGO

Representing 6,250,000 Ordinary Shares

 

 

This is an initial public offering of American Depositary Shares, or ADSs, of Dynacure S.A. We are offering 6,250,000 ADSs, representing ordinary shares. Each ADS represents the right to receive one ordinary share, nominal value €0.04 per share, and the ADSs may be evidenced by American Depositary Receipts, or ADRs. We currently expect the initial public offering price to be between $15.00 and $17.00 per ADS.

Prior to this initial public offering, there has been no public market for our ADSs. We have applied to list our ADSs on the Nasdaq Global Market under the symbol “DYCU.”

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and, as such, will be eligible for reduced public company disclosure requirements.

 

     Per ADS      Total  

Initial public offering price

   $        $    

Underwriting commissions(1)

   $        $    

Proceeds to Dynacure S.A., before expenses

   $                    $                

 

  (1)

See the section titled “Underwriting” for a description of the compensation payable to the underwriters.

Investing in our ADSs involves a high degree of risk. See  “Risk Factors” beginning on page 12 of this prospectus.

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

We have agreed to issue, at the option of the underwriters, within 30 days from the date of this prospectus, up to an additional 937,500 ADSs to be sold to the several underwriters at the initial public offering price.

The underwriters expect to deliver the shares against payment in New York, New York on                     , 2021.

 

 

 

J.P. Morgan                     BofA Securities   Wells Fargo Securities
Needham & Company

Prospectus dated                     , 2021.


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TABLE OF CONTENTS

 

ABOUT THIS PROSPECTUS

     ii  

PRESENTATION OF FINANCIAL INFORMATION

     iii  

PROSPECTUS SUMMARY

     1  

RISK FACTORS

     12  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     85  

MARKET AND INDUSTRY DATA

     87  

USE OF PROCEEDS

     88  

DIVIDEND POLICY

     89  

CAPITALIZATION

     90  

DILUTION

     92  

SELECTED CONSOLIDATED FINANCIAL DATA

     95  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     97  

BUSINESS

     115  

MANAGEMENT

     158  

PRINCIPAL SHAREHOLDERS

     174  

RELATED PARTY TRANSACTIONS

     178  

DESCRIPTION OF SHARE CAPITAL

     182  

LIMITATIONS AFFECTING SHAREHOLDERS OF A FRENCH COMPANY

     203  

DESCRIPTION OF AMERICAN DEPOSITARY SHARES

     205  

ORDINARY SHARES AND ADSs ELIGIBLE FOR FUTURE SALE

     217  

MATERIAL TAX CONSIDERATIONS

     219  

UNDERWRITING

     228  

EXPENSES OF THE OFFERING

     240  

LEGAL MATTERS

     241  

EXPERTS

     241  

ENFORCEMENT OF CIVIL LIABILITIES

     242  

WHERE YOU CAN FIND MORE INFORMATION

     243  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

     F-1  

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

For investors outside the United States, neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our ADSs and the distribution of this prospectus outside the United States.

We are incorporated under the laws of France and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the U.S. Securities and Exchange Commission, or the SEC, we are currently eligible for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act.


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ABOUT THIS PROSPECTUS

Unless otherwise indicated or the context otherwise requires, all references in this prospectus to the terms “Dynacure,” the “Company,” “we,” “us” and “our” refer to (i) Dynacure SAS, together with our wholly owned subsidiaries, Dynacure US, Inc., and Dynacure NL B.V., prior to the conversion of Dynacure SAS into Dynacure S.A. and (ii) Dynacure S.A., together with our wholly owned subsidiaries, Dynacure US, Inc. and Dynacure NL B.V, subsequent to the conversion of Dynacure SAS into Dynacure S.A. which occurred on November 10, 2020.

Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus are without the ® and symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This prospectus contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

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PRESENTATION OF FINANCIAL INFORMATION

Our consolidated financial statements included in this prospectus have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, and are presented in euro. Unless otherwise indicated, all monetary amounts in this prospectus are in euro. U.S. dollar amounts have been translated into euros at a rate of $1.17 to €1.00, the noon buying rate of the Federal Reserve Bank of New York on March 31, 2021. Such U.S. dollar amounts are not necessarily indicative of the amounts of U.S. dollars that could actually have been purchased upon exchange of euros at the dates indicated. All references in this prospectus to “$,” “U.S. Dollars” and “dollars” mean U.S. dollars and all references to “€,” “euro” and “EUR” mean euros. We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

The consolidated financial statements in this prospectus as of and for the years ended December 31, 2019 and 2020, and as of March 31, 2021 and for the three months ended March 31, 2020 and 2021 are the consolidated financial statements for Dynacure S.A.

We converted our corporate form of a simplified joint stock company (société par actions simplifiée or S.A.S) into a public limited company (société anonyme or S.A.) on November 10, 2020.

 

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in our ADSs. You should read this entire prospectus carefully, including “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, including the notes thereto, before making an investment decision.

Overview

We are a clinical-stage company focused on developing and commercializing novel therapies to transform the lives of patients with rare diseases who have limited or no treatment options. We are initially focused on developing treatments for neuromuscular diseases, beginning with myotubular and centronuclear myopathies, or CNM, a group of devastating rare genetic disorders characterized by severe muscle weakness, or myopathy, with shortened life expectancy and significant morbidity. Our lead product candidate, DYN101, is an antisense oligonucleotide, or ASO, designed to be a disease-modifying medicine for treatment of the majority of CNM patients across multiple mutations in both adult and pediatric populations. ASOs are single-stranded, chemically synthesized nucleic acid analogs designed to bind a corresponding strand of ribonucleic acid and alter protein expression. We are conducting a Phase 1/2 clinical trial in Europe of DYN101, which is called UNITE-CNM, and we intend to expand this trial to sites in the United States in the second half of 2021. We expect to report interim pharmacokinetic, or PK, and safety data from this trial in the second half of 2022 and expect to report final data in 2023. DYN101 has been granted orphan drug designation by the U.S. Food and Drug Administration, or FDA, and European Medicines Agency, or EMA, and rare pediatric disease designation by the FDA. In addition, we are currently preparing to conduct a Phase 1/2 clinical trial of DYN101 called DyNaMic in a pediatric population in Europe, which may be expanded to the United States. Following interim data from the UNITE-CNM Phase 1/2 trial in adults, and subject to regulatory authorization, we expect to commence this pediatric clinical trial in the second half of 2022 in Europe. Our second program, DYN201, is a discovery-stage program focused on developing a treatment for a group of rare inherited neurodegenerative disorders characterized by spasticity and motor dysfunction called hereditary spastic paraplegias, or HSP.

Our Approach

We leverage our team’s core strength in translational research and development to identify what we believe to be the most suitable target and modality to address a particular rare disease, aiming to mitigate challenges faced by others in the development of therapeutics. We select diseases with high unmet need that correspond to patient populations with genetic mutations whom we believe can be treated by altering the expression of a specific gene. We aim to match the target with the most suitable technical modality to address the disease. In our DYN101 program, we identified dynamin 2, or DNM2, a protein which when elevated is toxic in muscle cells, as the principal disease-causing mechanism in CNM. We selected ASOs as a treatment modality based on their advantageous properties that we believe make them well suited to target DNM2 and our previous experience with this technology in our preclinical studies.

Leveraging our relationships in the industry, we formed a strategic collaboration with Ionis Pharmaceuticals, Inc., or Ionis, a world leader in the discovery and development of ASOs. Our initial research collaboration and license agreement with Ionis provides us access to its state-of-the-art ASO technology, which underpins our lead product candidate, DYN101.

Patients are at the core of what we do. We are strengthening and growing our relationships with patient advocacy groups, key opinion leaders and practitioners, to establish Dynacure as a patient-focused leader in the treatment of rare neuromuscular disorders.


 

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Our Pipeline

The following table summarizes our current pipeline of wholly owned programs with an initial focus on treating rare neuromuscular diseases.

LOGO

 

*

In June 2021, our IND to expand our ongoing Phase 1/2 clinical trial of DYN101 to sites in the United States was accepted by the FDA.

DYN101

Background to CNM

CNM is a group of rare and severe neuromuscular diseases that result from genetic mutations that impair the function of protein within muscle cells. Affected muscles in CNM patients have a distinctive histological appearance and severely impaired function, but the muscle tissue remains present and does not become fibrotic as in muscular dystrophies. People with CNM begin experiencing muscle weakness at any time from birth to early adulthood and many patients die within the first 18 months of life. Patients who survive longer require intense medical management and nearly uninterrupted support, including permanent ventilation, brace with head support and feeding tubes. There is currently no FDA- or EMA-approved therapeutic treatment for CNM. An AAV-based gene therapy, focusing on a small pediatric population in a subset of CNM patients, is in clinical development by Audentes Therapeutics; however, serious adverse events in this clinical trial, including patient deaths, have sparked safety concerns.

Three classical forms of CNM have been identified, which make up approximately 72% of the estimated 4,000 to 5,000 CNM patient population in the United States, European Union, Japan and Australia. The most severe form is X-linked myotubular myopathy, or XLCNM, caused by mutations in the MTM1 gene, which encodes for the myotubularin protein. Autosomal dominant CNM, or ADCNM, results from mutations in one copy of the DNM2 gene. Autosomal recessive CNM, or ARCNM, results from mutations in both copies of the B1N1 gene.

Our cofounder and Chief Scientific Officer, Belinda Cowling, Ph.D. conducted the foundational research that identified the central role that DNM2 protein expression plays in disease pathogenesis in all three classical forms of CNM. We have demonstrated in our preclinical studies that DNM2 protein when elevated is toxic to muscle cells and leads to structural disruption to the fibers resulting in impaired function. These observations drove the design of what we believe to be an optimal therapeutic strategy: by aiming to reduce DNM2 protein expression with our lead product candidate, DYN101, we are potentially able to provide a disease-modifying treatment to the majority of CNM patients.


 

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Overview of Our DYN101 Program

We are developing our lead product candidate, DYN101, an ASO designed to reduce the expression of DNM2 protein, for the treatment of CNM. We believe that the unique properties of ASO technology provide several advantages for this program, including:

 

   

Validated technology with several antisense medicines approved by the FDA or comparable regulatory authorities, including one for a neuromuscular disease.

 

   

Precise specificity by targeting a single strand of ribonucleic acid, or RNA, without permanently changing the patient’s genome.

 

   

Broad tissue distribution allowing the targeting of diseases affecting various tissue types, including muscle, and potential use without the need for vehicles or conjugates to help with targeted tissue delivery.

 

   

Ability for dose titration, allowing for dose-dependent and reversible control of level and duration of protein expression, with a long half-life in the range of weeks to months, which could allow for weekly, monthly or even less frequent dosing depending on the disease and target tissue.

 

   

Low immunogenicity that allows for a potentially broader addressable patient population and repeat dosing compared to other therapeutic approaches, such as gene therapies.

 

   

Well-established and scalable manufacturing processes, which could make ASOs more cost effective to produce than other therapeutic approaches, such as gene therapies.

We have an exclusive, worldwide, royalty-bearing license, under our agreement with Ionis to research, develop, manufacture and commercialize our lead product candidate, DYN101, an ASO for the treatment of CNM.

We are developing DYN101 to treat both adult and pediatric patients with XLCNM, ADCNM and ARCNM. In our preclinical studies, we observed that a reduction in DNM2 protein expression through treatment with an ASO via injection reversed CNM disease features, improved muscle mass and muscle force and extended lifespan in mouse models of the most severe forms of CNM. We are conducting our UNITE-CNM Phase 1/2 clinical trial, dosing intravenously (IV) once per week, in Europe for the treatment of patients aged 16 or older with XLCNM and ADCNM, the two most common forms of CNM. We intend to expand this trial to sites in the United States in the second half of 2021. We expect to report interim PK and safety data from the low- and mid-dose cohorts from this trial in the second half of 2022 and expect to report final data in 2023. We also plan to initiate a Phase 1/2 clinical trial of DYN101 in pediatric patients in Europe, which may be expanded to the United States. Following interim data from the UNITE-CNM Phase 1/2 trial in adults, and subject to regulatory authorization, we expect to commence this pediatric clinical trial in the second half of 2022 in Europe. We believe that DYN101 represents a differentiated therapeutic approach and, if approved, could provide the first disease-modifying treatment for a majority of patients suffering from CNM. Patents covering DYN101 expire in 2039, exclusive of possible patent term extensions or adjustments.

DYN201

Our second program, DYN201, is a discovery-stage program to develop a potential treatment for HSP. HSP affects approximately five out of every 100,000 people worldwide and is characterized by debilitating and severe progressive weakness and spasticity and can be associated with mild to severe cognitive defects. There are currently no disease-modifying therapies for any form of HSP. We are conducting initial target-validation studies and expect to report on these studies in 2021. If target validation is achieved, we will proceed to candidate selection.


 

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Our Team

We have assembled an international, seasoned management and scientific research and development team with extensive experience in identifying, developing and commercializing novel therapies for rare diseases. We are led by our Chief Executive Officer, Stephane van Rooijen, M.D., MBA, who has a deep understanding of rare disease drug development and commercialization from leading roles at companies such as Genzyme and Viropharma. Belinda Cowling, Ph.D., our cofounder and Chief Scientific Officer, has nearly 20 years of experience in neuromuscular disease research and has published more than 35 publications in peer-reviewed journals, including the proof-of-concept studies for DYN101. Leen Thielemans, Ph.D., our Chief Development Officer, and Chris Freitag, M.D., our Chief Medical Officer, have more than 40 years of combined experience, from drug discovery through late-stage clinical development, at small biotechnology and large pharmaceutical companies. Our Chief Operating Officer, Frédéric Legros, Ph.D., has an extensive track record in corporate and business development, and our Chief Financial Officer, Dave Garrett, has over 15 years of experience in finance functions in life sciences companies. In addition, Brett Monia, the Chief Executive Officer of Ionis, has been a member of our board of directors since our inception in 2016, supporting our development strategy.

We are supported by a syndicate of leading international life sciences investors, including Andera Partners, Bpifrance, Eurazeo Investment Manager (f/k/a Idinvest Partners), Kurma Partners, Perceptive Advisors, Pontifax, Sphera and Tekla Capital Management. Since our inception, we have raised €85.8 million in net proceeds through private financings with these investors.

Our Strategy

Our vision is to become a global leader in rare inherited disorders by developing and commercializing therapeutics that transform the lives of patients suffering from life-threatening disorders.

The key elements of our strategy are to:

 

   

Advance the development of DYN101 for the treatment of the majority of patients with CNM.

 

   

Develop DYN101 for the treatment of both adult and pediatric CNM patient populations.

 

   

Advance our DYN201 program for the treatment of HSP.

 

   

Expand the treatment potential of our programs to additional neuromuscular diseases.

 

   

Continue to build strategic collaborative relationships to expand our access to cutting-edge technologies and platforms.

 

   

Establish Dynacure as a patient-focused leader in the treatment of rare neuromuscular disorders by strengthening and growing our relationships with key opinion leaders, practitioners and patient advocacy groups.

 

   

Build a purpose-driven company for the long term with development, marketing and commercial capabilities.

Corporate Information

We were incorporated as société par actions simplifiée under the laws of France in 2016 and we converted to a société anonyme on November 10, 2020. We are registered at the Strasbourg Trade and Company Registry (Registre du commerce et des sociétés) under the number 817 666 217. Our principal office is located at Bioparc III, 850, Boulevard Sébastien Brant, 67400 Illkrich-Graffenstaden, France, and our telephone number is +33 (0)3 74 95 20 50. Our website address is www.dynacure.com. The information contained on, or accessible through, our website does not constitute a part of this prospectus. We have included our website address in this prospectus solely as an inactive textual reference.


 

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Risks Associated with Our Business

Our business is subject to a number of risks of which you should be aware before making an investment decision. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under “Risk Factors” in deciding whether to invest in our ADSs. Among these important risks are the following:

 

   

We have a limited operating history, which may make it difficult for you to evaluate our prospects and likelihood of success.

 

   

We have incurred significant net losses since inception and we expect to continue to incur significant net losses for the foreseeable future. We have never generated any revenue from product sales and may never achieve or sustain profitability.

 

   

Even if this offering is successful, we will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs or future commercialization efforts or other operations.

 

   

Our business has been and could continue to be adversely affected by the evolving and ongoing COVID-19 global pandemic in regions where we or third parties on which we rely have significant manufacturing facilities, concentrations of clinical trial sites or other business operations. The COVID-19 pandemic could adversely affect our operations, as well as the business or operations of our manufacturers, CROs, or other third parties with whom we conduct business.

 

   

We are substantially dependent on the success of our lead product candidate, DYN101, which is currently in clinical development in Europe. If we are unable to complete development of, obtain approval for and commercialize DYN101 in a timely manner, our business will be harmed.

 

   

We are early in our development efforts and currently have only one clinical-stage product candidate. If we are unable to successfully develop, obtain regulatory approval and ultimately commercialize any current or future product candidates, or experience significant delays in doing so, our business will be materially harmed.

 

   

The Ionis License Agreement is important to our business. If we or Ionis fail to adequately perform under the Ionis Agreement, or if we or Ionis terminate the Ionis License Agreement, the development and commercialization of DYN101 would be materially delayed and our business would be adversely affected.

 

   

The regulatory approval processes of the FDA, EMA and other comparable regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, we will be unable to generate product revenue and our business will be substantially harmed.

 

   

Clinical development is lengthy and uncertain. The clinical trials of our product candidates may not demonstrate safety and efficacy to the satisfaction of the FDA, EMA or other comparable regulatory authorities or otherwise produce positive results. We may encounter substantial delays and costs in our clinical trials, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all, including our ongoing Phase 1/2 trial of DYN101 in adults and our planned Phase 1/2 trial of DYN101 in pediatric patients.

 

   

We face significant competition, and if our competitors develop and market technologies or products more rapidly than we do or that are more effective, safer or less expensive than the product candidates we develop, our commercial opportunities will be negatively impacted.

 

   

We rely, and expect to continue to rely, on third parties, including independent clinical investigators and CROs, to conduct certain aspects of our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties, comply with applicable regulatory requirements


 

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or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

 

   

In order to successfully implement our plans and strategies, we will need to grow the size of our organization, and we may experience difficulties in managing this growth.

 

   

Our international operations subject us to various risks, and our failure to manage these risks could adversely affect our results of operations.

 

   

Our success depends on our ability to protect our intellectual property and our proprietary technologies.

Implications of Being an Emerging Growth Company and a Foreign Private Issuer

Emerging Growth Company

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we may take advantage of certain exemptions from various reporting requirements that are applicable to other publicly traded entities that are not emerging growth companies. These exemptions include:

 

   

the option to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in this prospectus;

 

   

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002;

 

   

not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

 

   

not being required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes;” and

 

   

not being required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.

As a result, we do not know if some investors will find our ADSs less attractive. The result may be a less active trading market for our ADSs, and the price of our ADSs may become more volatile.

Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption from complying with new or revised accounting standards and, therefore, will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies

We will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion; (ii) the last day of the fiscal year following the fifth anniversary of the closing of this offering; (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common equity held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during any three-year period.


 

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Foreign Private Issuer

Upon the closing of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

 

   

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

 

   

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

 

   

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

In addition, we will not be required to file annual reports and financial statements with the SEC as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, and we will not be required to comply with Regulation FD, which restricts the selective disclosure of material information.

Both foreign private issuers and emerging growth companies also are exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no longer qualify as an emerging growth company, but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of companies that are neither an emerging growth company nor a foreign private issuer.


 

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The Offering

 

ADSs offered by us

6,250,000 ADSs, each representing one ordinary share.

 

Ordinary shares to be outstanding immediately after this offering

19,675,884 ordinary shares (or 20,613,384 ordinary shares if the underwriters exercise in full their option to purchase additional ADSs).

 

Option to purchase additional ADSs

We have agreed to issue, at the option of the underwriters, within 30 days from the date of this prospectus, up to an additional 937,500 ADSs to be sold to the several underwriters at the initial public offering price.

 

American Depositary Shares

Each ADS represents one ordinary share, nominal value €0.04 per share. As an ADS holder you will not be treated as one of our shareholders and you will not have shareholder rights. The depositary will hold the ordinary shares underlying the ADSs, and you will have the rights of an ADS holder as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time. To better understand the terms of our ADSs, see “Description of American Depositary Shares.” We also encourage you to read the deposit agreement, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part.

 

Depositary

Citibank, N.A.

 

Use of proceeds

We estimate that the net proceeds to us from this offering will be approximately $89.2 million (€76.0 million) (or approximately $103.2 million (€87.8 million) if the underwriters exercise in full their option to purchase additional ADSs), based on an assumed initial public offering price of $16.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering, together with our existing cash, to (i) complete our ongoing Phase 1/2 clinical trial of DYN101, to commence our Phase 1/2 clinical trial of DYN101 in a pediatric population in Europe and to start the CMC activities required for future clinical studies including potential pivotal studies in both adult and pediatric populations; (ii) complete target validation for DYN201 and, if target validation is achieved, complete candidate selection; and (iii) the remaining amounts to fund the development of our future pipeline programs, as well as for working capital and other general corporate purposes. See “Use of Proceeds.”

 

Dividend policy

We do not expect to pay any dividends on the ordinary shares or ADSs in the foreseeable future. See “Dividend Policy.”

 

Risk factors

See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our ADSs.

 

Proposed Nasdaq symbol

“DYCU”

 

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The number of our ordinary shares (including ordinary shares represented by ADSs) to be outstanding after this offering is based on 13,425,884 ordinary shares outstanding as of March 31, 2021, and excludes:

 

   

202,418 ordinary shares issuable upon the exercise of options (options de souscription et/ou d’achats d’actions, or SO) outstanding as of March 31, 2021, with a weighted average exercise price of €5.97 per ordinary share;

 

   

553,563 ordinary shares issuable upon the vesting of free shares (actions gratuites, or AGA) outstanding as of March 31, 2021;

 

   

1,137,793 ordinary shares issuable upon the exercise of share warrants (bons de souscription d’actions, or BSA) outstanding as of March 31, 2021, with a weighted average exercise price of €5.20 per share; and

 

   

2,691,104 ordinary shares that we may grant after this offering pursuant to delegations of authority from our shareholders underlying options (SO), free shares (AGA), and share warrants (BSA) to our directors, executive officers, employees, consultants, board observers and advisors, including the IPO Awards (as defined in the section “Management—IPO Awards”) expected to be issued in connection with this offering, or issue under our 2021 Employee Share Purchase Plan, or 2021 ESPP (which will become effective in connection with this offering), based on the number of ordinary shares outstanding following this offering; however, the number of ordinary shares that we may grant underlying options (SO), free shares (AGA), and share warrants (BSA) or issue under our 2021 ESPP is subject to change as our outstanding share capital changes. See “Management—Equity Incentives”

Unless otherwise indicated, all information contained in this prospectus assumes:

 

   

a 2.5573-for-one forward share split of our ordinary shares (including our Series A, Series B and Series C ordinary shares) effected on July 9, 2021;

 

   

662,451 Series A ordinary shares issued upon the conversion of the Convertible Promissory Note (as defined in Related Party Transactions—Ionis Convertible Promissory Note) on July 9, 2021;

 

   

the reclassification of all outstanding Series A, Series B and Series C ordinary shares into 12,301,660 ordinary shares upon the termination of the Amended and Restated Shareholders’ Agreement, dated March 31, 2020, among the Company and the investors party thereto, or the Shareholders Agreement, which will occur upon the effectiveness of the registration statement of which this prospectus forms a part;

 

   

the effectiveness of our amended and restated bylaws, or bylaws, in connection with this offering;

 

   

no exercise, vesting or settlement of the outstanding options (SO), free shares (AGA) or share warrants (BSA) described above; and

 

   

no exercise by the underwriters of their option to purchase additional ADSs in this offering.


 

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Summary Consolidated Financial Data

The following tables set forth our summary consolidated financial data for the periods indicated. We have derived the consolidated statements of operations data for the years ended December 31, 2019 and 2020 from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statements of operations data for the three months ended March 31, 2020 and 2021 and the consolidated balance sheet data as of March 31, 2021 have been derived from our unaudited interim consolidated financial statements included elsewhere in this prospectus and have been prepared on a consistent basis as our audited consolidated financial statements. In our opinion, these unaudited interim consolidated financial statements contain all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of such financial data. Our historical results are not necessarily indicative of the results that should be expected for any future period and our operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or any other interim periods or any future year or period. You should read the following summary consolidated financial data together with the consolidated financial statements included elsewhere in this prospectus and the sections titled “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We maintain our books and records in euros, and we prepare our consolidated financial statements in accordance with U.S. GAAP.

 

     Year Ended
December 31,
    Three Months Ended
March 31,
 
     2019     2020     2020     2021  
     (in thousands, except share and per ordinary share amounts)  

Consolidated Statements of Operations Data:

        

Operating expenses:

        

Research and development

   8,330      12,727     5,934     2,040  

General and administrative

     2,753       5,753       851       1,889  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (11,083     (18,480     (6,785     (3,929

Interest expense

     (205     (214     (52     (68

Foreign currency gains (losses)

     (33     (17     (7     6  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax expense

     (11,321     (18,711     (6,844     (3,991

Income tax expense

     (2     (24     (12     (2
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   (11,323   (18,735   (6,856   (3,993
  

 

 

   

 

 

   

 

 

   

 

 

 

Per share information:

        

Net loss per ordinary share, basic and diluted(1)

   (2.54   (2.08   (1.29   (0.31
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average ordinary shares outstanding, basic and diluted(1)

     4,449,571       9,010,367       5,301,345       12,748,603  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

Series A, Series B and Series C ordinary shares are included in the basic and diluted net loss per share. For details on the calculation of our basic and diluted net loss per ordinary share see Note 2 to our audited and unaudited consolidated financial statements, respectively, included elsewhere in this prospectus. The information presented in this table does not give effect to the issuance of 662,451 Series A ordinary shares issued upon the conversion of the Convertible Promissory Note (as defined in Related Party Transactions—Ionis Convertible Promissory Note) on July 9, 2021.


 

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     As of March 31, 2021  
     Actual      Pro Forma(2)      Pro Forma
As Adjusted(3)
 
     (in thousands)  

Consolidated Balance Sheet Data:

        

Cash

   50,086      50,086      126,939  

Working capital(1)

     50,295        50,295        128,275  

Total assets

     56,107        56,107        130,956  

Convertible promissory note with related party

     4,117        —          —    

Loans payable (current and noncurrent)

     2,350        2,350        2,350  

Series A, B and C ordinary shares

     89,529        —          —    

Total stockholders' equity (deficit)

     (43,002      50,644        126,620  

 

(1) 

Working capital is calculated as current assets minus current liabilities.

 

(2) 

The pro forma column reflects: (i) 662,451 Series A ordinary shares issued upon the conversion of the Convertible Promissory Note (as defined in Related Party Transactions—Ionis Convertible Promissory Note) on July 9, 2021 and (ii) the reclassification of all outstanding Series A, Series B and Series C ordinary shares into 12,301,660 ordinary shares upon the termination of the Shareholders Agreement, which will occur upon the effectiveness of the registration statement of which this prospectus forms a part.

 

(3) 

The pro forma as adjusted column reflects: (i) the pro forma adjustments set forth in footnote (2) above and (ii) the issuance and sale of 6,250,000 ADSs in this offering at an assumed initial public offering price of $16.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting commissions and estimated offering expenses payable by us.

Each $1.00 increase or decrease in the assumed initial public offering price of $16.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the pro forma as adjusted amount of each of cash, total assets and total shareholders’ equity (deficit) by €4.9 million, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same.

An increase or decrease of 1,000,000 in the number of ADSs offered by us, as set forth on the cover page of this prospectus, would increase or decrease, as applicable, the pro forma as adjusted amount of each of cash, total assets and total shareholders’ equity (deficit) by €12.7 million, assuming that the assumed initial public offering price remains $16.00, which is the midpoint of the price range set forth on the cover page of this prospectus.

The pro forma as adjusted information discussed above is illustrative only and will depend on the actual public offering price, the actual number of ADSs offered by us and other terms of this offering determined at pricing. U.S. dollar amounts have been translated into euros at a rate of $1.17 to €1.00, the noon buying rate of the Federal Reserve Bank of New York on March 31, 2021. Such U.S. dollar amounts are not necessarily indicative of the amounts of U.S. dollars that could actually have been purchased upon exchange of euros at the dates indicated.


 

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RISK FACTORS

You should carefully consider the risks and uncertainties described below and the other information in this prospectus, including our consolidated financial statements and related notes appearing elsewhere in this prospectus and in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our ADSs. Our business, financial condition, results of operations or prospects could be materially and adversely affected if any of these risks occurs, and as a result, the market price of our ADSs could decline and you could lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. See “Cautionary Statement Regarding Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below.

Risks Related to Our Financial Position and Need for Additional Capital

We have a limited operating history, which may make it difficult for you to evaluate our prospects and likelihood of success.

We are a clinical-stage biopharmaceutical company with a limited operating history upon which you can evaluate our business and prospects. We were incorporated in 2016, have no products approved for commercial sale and have not generated any revenue from product sales. To date, we have devoted substantially all of our resources and efforts to organizing and staffing our company, business planning, executing collaborations, raising capital, licensing, discovering, identifying and developing potential product candidates, establishing and securing related intellectual property rights, conducting preclinical studies of our product candidates and initiating and conducting our ongoing Phase 1/2 clinical trial of DYN101, our lead product candidate, and providing general and administrative support for these operations. We have not yet demonstrated our ability to successfully complete any clinical trials, obtain marketing approvals, manufacture a commercial-scale product or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. As a result, it may be more difficult for you to accurately predict our future success or viability than it could be if we had a longer operating history or a history of successfully developing, obtaining marketing approval for and commercializing products.

In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors and risks frequently experienced by clinical-stage biopharmaceutical companies in rapidly evolving fields. We also may need to transition from a company with a research focus to a company capable of supporting commercial activities. We have not yet demonstrated an ability to successfully overcome such risks and difficulties, or to make such a transition. If we do not adequately address these risks and difficulties or successfully make such a transition, it could have a material adverse impact on our business.

We have incurred significant net losses since inception and we expect to continue to incur significant net losses for the foreseeable future. We have never generated any revenue from product sales and may never achieve or sustain profitability.

We have incurred net losses since our inception, have not generated any revenue from product sales to date and have financed our operations principally through private financings of our Series A, Series B and Series C ordinary shares, grants, research credits and subsidies afforded to us under French law, and loans from Bpifrance in connection with our research and development efforts. We continue to incur significant research and development and other expenses related to our ongoing operations. We incurred net losses of €11.3 million, €18.7 million and €4.0 million for the years ended December 31, 2019 and 2020 and the three months ended March 31, 2021, respectively. As of March 31, 2021, we had an accumulated deficit of €50.1 million. Our losses have resulted principally from expenses incurred in the research and development of our lead product candidate, DYN101, and other programs and from management and administrative costs and other expenses that we have incurred while building our business infrastructure. We are conducting a Phase 1/2 clinical trial of our lead product candidate, DYN101, for the treatment of myotubular and centronuclear myopathies, or CNM, and our

 

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other program, DYN201, is in the discovery stage. As a result, we expect that it will be several years, if ever, before we have a commercialized product and generate revenue from product sales. Furthermore, the costs of advancing product candidates into each succeeding clinical phase tend to increase substantially over time. The total costs to advance any of our product candidates to marketing approval in even a single jurisdiction would be substantial and difficult to accurately predict. Because of the numerous risks and uncertainties associated with the development of drug products, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to begin generating revenue from the commercialization of products or achieve or maintain profitability.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future as we continue to advance product candidates through clinical development, continue preclinical development, expand our research and development activities, develop new product candidates, complete preclinical studies and clinical trials, operate as a U.S. public company, seek regulatory approval and, if we receive regulatory approval, commercialize our product candidates or make milestone, royalty or other payments under in-license or collaboration agreements. The net losses we incur may fluctuate significantly from quarter to quarter such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. The amount of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our working capital and shareholders’ equity. If we are unable to develop and commercialize one or more product candidates, either alone or through collaborations, or if revenue from any product that receives marketing approval are insufficient, we will not achieve profitability. Even if we obtain regulatory approval for and successfully commercialize DYN101, we expect that we will continue to incur substantial research and development and other expenses to identify and develop other product candidates. Even if we do achieve profitability, we may not be able to sustain profitability or meet outside expectations for our profitability. If we are unable to achieve or sustain profitability or to meet outside expectations for our profitability, the value of our ADSs could be materially adversely affected.

Even if this offering is successful, we will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs or future commercialization efforts or other operations.

Since our inception, we have used substantial amounts of cash to fund our operations, and our expenses will increase substantially in the foreseeable future in connection with our ongoing activities, particularly as we continue the research and development of, initiate clinical trials of, and seek marketing approval for, our current and future product candidates. Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive and uncertain process that takes years to complete. Our operations have consumed substantial amounts of cash since inception, and we expect our expenses to increase in connection with our ongoing activities, particularly as we conduct clinical trials of, and seek regulatory and marketing approval for, our product candidates. Even if one or more of our product candidates is approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate. Our expenses could increase beyond expectations if we are required by the U.S. Food and Drug Administration, or FDA, the European Medicines Agency, or the EMA, or other regulatory agencies to perform clinical trials or preclinical studies in addition to those that we currently anticipate. Other unanticipated costs may also arise. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to drug sales, marketing, manufacturing and distribution. Because the design and outcome of clinical trials are highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of any product candidate we develop. Following this offering, we also expect to incur additional costs associated with operating as a U.S. public company. Accordingly, we will need to obtain substantial additional funding in order to maintain our continuing operations. If we are unable to raise capital when needed or on acceptable terms, we may be forced to delay, reduce or eliminate one or more of our research and drug development programs or future commercialization efforts.

 

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As of March 31, 2021, we had €50.1 million in cash. Based on our current business plans, we believe that the net proceeds from this offering, together with our existing cash, will be sufficient to fund our operating expenses and capital expenditure requirements through 2023. Our estimate as to how long we expect the net proceeds from this offering, together with our existing cash, to be able to continue to fund our operating expenses and capital expenditure requirements is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.

We plan to use the net proceeds from this offering to advance the clinical development of DYN101 and the continued research and development of our DYN201 program, and to fund the development of our future pipeline programs, as well as for working capital and other general corporate purposes. Advancing the development of our product candidates will require a significant amount of capital. The net proceeds from this offering and our existing cash will not be sufficient to fund all of the activities that are necessary to complete the regulatory approval and development of our product candidates.

We will be required to obtain further funding through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources, which may dilute our securityholders or restrict our operating activities. Debt financing may result in imposition of debt covenants, increased fixed payment obligations or other restrictions that may affect our business. If we raise additional funds through upfront payments or milestone payments pursuant to strategic collaborations with third parties, we may have to relinquish valuable rights to our product candidates or grant licenses on terms that are not favorable to us. Adequate additional financing may not be available to us on acceptable terms, or at all. Market volatility resulting from the COVID-19 pandemic or other factors could also adversely impact our ability to access capital as and when needed. Our failure to raise capital as and when needed or on acceptable terms would have a negative impact on our financial condition and our ability to pursue our business strategy, and we may have to delay, reduce the scope of, suspend or eliminate one or more of our product-development programs, clinical trials or future commercialization efforts.

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.

Our business has been and could continue to be adversely affected by the evolving and ongoing COVID-19 global pandemic in regions where we or third parties on which we rely have significant manufacturing facilities, concentrations of clinical trial sites or other business operations. The COVID-19 pandemic could adversely affect our operations, as well as the business or operations of our manufacturers, CROs, or other third parties with whom we conduct business.

In December 2019, the coronavirus disease, COVID-19, was identified in Wuhan, China. Since then, COVID-19 has spread globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic and travel bans and government stay at home orders have caused widespread disruption in business operations and economic activity. Governmental authorities around the world have implemented measures to reduce the spread of COVID-19. The outbreak and government measures taken in response have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. We continue to monitor how the COVID-19 pandemic is affecting our employees, business, development programs and ongoing clinical trial for DYN101. In response to the spread of COVID-19, we closed our executive offices for a period of time in compliance with the requirements of the French government, with our administrative employees continuing their work outside of our offices, limited the number of staff in any given research and development laboratory and have taken other precautionary measures as well. Many of our third-party collaborators, such as our CMOs, CROs, suppliers and others, have taken similar precautionary measures.

 

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The COVID-19 pandemic, and the measures we have taken in response, have disrupted our business and delayed certain of our programs and timelines. For example, the timeline for our Phase 1/2 clinical trial for DYN101 was delayed by approximately six months due to difficulties in enrolling and retaining patients as a result of the COVID-19 pandemic. While there has been an industry-wide slowdown in enrollment in clinical trials due to the COVID-19 pandemic, our patient population for our ongoing Phase 1/2 clinical trial is particularly vulnerable to COVID-19 since many adult CNM patients require ventilator support. This, coupled with the fact that CNM is a rare disease with an estimated prevalence of 4,000 to 5,000 patients in the United States, Europe, Australia and Japan, could result in additional delays and costs in enrolling and retaining patients for our ongoing clinical trial.

The COVID-19 pandemic has also impacted and may continue to impact personnel at our third-party manufacturing facilities or the availability or cost of materials, which would disrupt our supply chain, and it may affect our ability to timely complete our ongoing UNITE-CNM Phase 1/2 trial and delay the initiation of any future preclinical studies or clinical trials, disrupt regulatory activities or have other adverse effects on our business and operations. For example, we have experienced delays in receiving supplies of raw materials for future clinical development due to the impact of COVID-19 on our suppliers’ ability to timely manufacture these materials.

Further, as a result of the COVID-19 pandemic, we may continue to experience additional disruptions that could severely impact our business, preclinical studies and clinical trials, including:

 

   

delays or difficulties enrolling and retaining patients in our ongoing or future clinical trials, such as the delay described above we experienced for our ongoing Phase 1/2 clinical trial for DYN101;

 

   

delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

 

   

delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials, including interruption in global shipping that may affect the transport of clinical trial materials;

 

   

changes in local regulations as part of a response to the COVID-19 pandemic, which may require us to change the ways in which our clinical trials are conducted, and which may result in unexpected costs, or lead us to discontinue the clinical trials altogether;

 

   

diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

 

   

interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints;

 

   

interruption or delays in the operations of regulatory authorities, which may impact review and approval timelines;

 

   

risk that participants enrolled in our clinical trials will acquire COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events;

 

   

interruptions, difficulties or delays arising in our ongoing Phase 1/2 trial for DYN101 as a result of safety concerns that COVID-19 has on these patients;

 

   

refusal by the FDA, EMA or comparable regulatory authorities to accept data from clinical trials in affected geographies;

 

   

increased costs relating to mitigating the impact of COVID-19 on any of the foregoing factors;

 

   

interruption of, or delays in receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems;

 

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interruptions in preclinical studies, including from our CROs and other third parties, due to restricted or limited operations at our laboratory facility;

 

   

interruptions, difficulties or delays arising in our existing operations and company culture as a result of all of our employees working remotely, including those hired during the COVID-19 pandemic;

 

   

limitations on employee resources that would otherwise be focused on the conduct of our preclinical studies and clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;

 

   

interruption or delays to our sourced discovery and clinical activities; and

 

   

additional delays, difficulties or interruptions as a result of current or future shutdowns due to the COVID-19 pandemic in countries where we or our third-party service providers operate.

If patient enrollment is delayed for an extended period of time, our ongoing and planned clinical trials could be delayed or otherwise adversely affected. Similarly, our ability to recruit and retain principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may be adversely impacted. In addition, ongoing or planned clinical trials may also be impacted by interruptions or delays in the operations of the FDA, EMA and comparable foreign regulatory agencies. We continue to monitor the ongoing situation in the European Union and United States, including evaluating new trial sites in order to mitigate risks. Many of these adjustments are new and untested, may not be effective, may affect the integrity of data collected, and may have unforeseen effects on the progress and completion of our clinical trials and the findings from such clinical trials.

In addition, we may encounter a shortage in supplies of, or in delays in shipping, our study drug or other components of the clinical trial vital for successful conduct of the trial. Further, the successful conduct of our clinical trials depends on retrieving laboratory data from patients. Any failure by the laboratories with which we work to send us such data could impair the progress of such clinical trials. These events could delay our clinical trials, increase the cost of completing our clinical trials, and negatively impact the integrity, reliability, or robustness of the data from our clinical trials.

In addition, quarantines, shelter-in-place, and similar government orders, or the perception that such orders, shutdowns, or other restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact personnel at our CROs or third-party manufacturing facilities upon which we rely, or the availability or cost of materials, which could disrupt the supply chain. To the extent our suppliers and service providers are unable to comply with their obligations under our agreements with them or they are otherwise unable to deliver or are delayed in delivering goods and services to us due to the COVID-19 pandemic, our ability to continue meeting clinical supply demand or otherwise advancing development of any product candidate may become impaired.

The spread of COVID-19 and actions taken to reduce its spread may also materially affect us economically. While the potential economic impact brought by, and the duration of, the COVID-19 pandemic may be difficult to assess or predict, there could be a significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity and financial position. In addition, the trading prices for other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic. As a result, we may face difficulties raising capital through sales of our ADSs or such sales may be on unfavorable terms.

The COVID-19 pandemic continues to rapidly evolve. Although many countries, including the United States, have re-opened, rises in new cases have caused certain countries to reimpose restrictions. The extent to which the outbreak impacts our business, preclinical studies and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in

 

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Europe, the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in Europe, the United States and other countries to contain the pandemic and treat the disease. Quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact our personnel and the personnel of third parties in the United States, the European Union and other countries.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

The amount of our future losses is uncertain and our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.

Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control and may be difficult to predict, including the following:

 

   

the timing and success or failure of clinical trials for our current or future product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners;

 

   

our ability to successfully recruit and retain patients for ongoing or future clinical trials, and any delays caused by difficulties in such efforts, including as a result of the COVID-19 pandemic;

 

   

our ability to obtain marketing approval for our current or future product candidates, and the timing and scope of any such approvals we may receive;

 

   

the timing and cost of, and level of investment in, research and development activities relating to our current or future product candidates, which may change from time to time;

 

   

the cost of manufacturing our current or future product candidates, which may vary depending on the quantity of production and the terms of our agreements with manufacturers;

 

   

our ability to attract, hire and retain qualified personnel;

 

   

expenditures that we will or may incur to develop or acquire additional product candidates;

 

   

the level of demand for our current or future product candidates should they receive approval, which may vary significantly;

 

   

the risk/benefit profile, cost and reimbursement policies with respect to our current or future product candidates, if approved, and existing and potential future therapeutics that compete with our product candidates;

 

   

general market conditions or extraordinary external events, such as recessions or the COVID-19 pandemic;

 

   

the changing and volatile U.S., European and global economic environments; and

 

   

future accounting pronouncements or changes in our accounting policies.

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 period-to-period 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 revenue or 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 ADSs could decline substantially. Such a ADS price decline could occur even when we have met any previously publicly stated guidance we may provide.

 

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Risks Related to the Discovery, Development, Preclinical and Clinical Testing and Manufacturing of Our Product Candidates

We are substantially dependent on the success of our lead product candidate, DYN101, which is currently in early clinical development. If we are unable to complete development of, obtain approval for and commercialize DYN101 in a timely manner, our business will be harmed.

Our future success is dependent on our ability to timely complete clinical trials, obtain marketing approval for and successfully commercialize DYN101, our lead product candidate. We are investing significant efforts and financial resources in the research and development of DYN101. We are currently conducting a Phase 1/2 trial of DYN101 for the treatment of CNM.

Our success with DYN101 will depend on several factors, including the following:

 

   

the successful and timely completion of our ongoing Phase 1/2 clinical trial of DYN101;

 

   

the initiation, subject to obtaining regulatory approval, and successful patient enrollment and completion of additional clinical trials of DYN101 on a timely basis, including our planned expansion of the Phase 1/2 clinical trial in the United States and the initiation of a Phase 1/2 clinical trial in pediatric patients in Europe, which may be expanded to the United States;

 

   

acceptance by the FDA and EMA of data from our ongoing Phase 1/2 trial in adults, our planned Phase 1/2 trial in pediatric patients and any subsequent trials;

 

   

maintaining and establishing relationships with CROs and clinical sites for the clinical development of DYN101 in the United States, the European Union and internationally;

 

   

the frequency and severity of adverse events in the clinical trials;

 

   

the efficacy, safety and tolerability profiles that are satisfactory to the FDA, EMA or any other comparable regulatory authority for marketing approval;

 

   

the timely receipt and maintenance of marketing approvals for DYN101 from applicable regulatory authorities;

 

   

the outcome, timing, and cost of meeting regulatory requirements established by the FDA, EMA and other comparable foreign regulatory authorities;

 

   

establishing commercial manufacturing capabilities and receiving/importing commercial supplies approved by the FDA, EMA and other regulatory authorities from any future third-party manufacturer;

 

   

maintaining and growing an organization of people who can develop and, if approved, commercialize, market, and sell DYN101 to physicians, patients, healthcare payors, and others in the medical community;

 

   

the extent of any required post-marketing approval commitments to applicable regulatory authorities;

 

   

the maintenance of existing or the establishment of new supply arrangements with third-party drug product suppliers and manufacturers for clinical development of DYN101;

 

   

the maintenance of existing, or the establishment of new, scaled production arrangements with third-party manufacturers to obtain finished products that are appropriate for commercial sale of DYN101, if approved;

 

   

obtaining and maintaining patent protection, trade secret protection and regulatory exclusivity in the United States, the European Union and internationally;

 

   

obtaining and maintaining regulatory exclusivity;

 

   

the protection of our rights in our intellectual property portfolio;

 

   

addressing any potential delays resulting from factors related to the COVID-19 pandemic;

 

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the successful launch of commercial sales following any marketing approval;

 

   

a continued acceptable safety profile following any marketing approval;

 

   

commercial acceptance by patients, the medical community and third-party payors; and

 

   

our ability to compete with other therapies.

We do not have complete control over many of these factors, including certain aspects of clinical development and the regulatory submission process, potential threats to our intellectual property rights and the manufacturing, marketing, distribution and sales efforts of any future collaborator. If we are not successful with respect to one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize DYN101, which would materially harm our business. If we do not receive marketing approvals for DYN101, we may not be able to continue our operations.

To date, we have invested a significant portion of our efforts and financial resources in the development of DYN101 for the treatment of CNM. Our future success is substantially dependent on our ability to successfully complete clinical development for, obtain regulatory approval for, and successfully commercialize DYN101, which may never occur. We expect that a substantial portion of our efforts and expenditures over the next few years will be devoted to DYN101, which will require additional clinical development, management of clinical and manufacturing activities, regulatory approval, establishing commercial scale manufacturing, and significant sales, marketing, and distribution efforts before we can generate any revenue from any commercial sales. We cannot be certain that we will be able to successfully complete any of these activities or that, even if it receives regulatory approval, DYN101 will be as effective as anticipated at treating CNM.

The research, testing, manufacturing, labeling, approval, sale, packaging, marketing, and distribution of drug products are subject to extensive regulation by the FDA, the EMA and other comparable regulatory authorities in other countries. We are not permitted to market or promote DYN101 before we receive marketing approval from the FDA, EMA or other comparable regulatory authorities, and we may never receive such marketing approval. We have not submitted a New Drug Application, or NDA, to the FDA or comparable applications to other regulatory authorities for DYN101. We may not be in a position to do so for several years, if ever. If we are unable to obtain the necessary regulatory approval for DYN101 in a particular country, we will not be able to commercialize DYN101 for the treatment of CNM in that country. As a result, our financial position will be materially adversely affected and we may not be able to generate sufficient revenue to continue our business.

We are early in our development efforts and currently have only one clinical-stage product candidate. If we are unable to successfully develop, obtain regulatory approval and ultimately commercialize any current or future product candidates, or experience significant delays in doing so, our business will be materially harmed.

We are in the early stages of our development efforts and, while our lead product candidate, DYN101, is currently in an ongoing Phase 1/2 trial in Europe, our other program, DYN201, is in the discovery stage. We have invested substantially all of our efforts in developing DYN101, identifying potential product candidates and conducting preclinical studies. Prior to initiating clinical development for any of our product candidates in the United States, we will need to progress them through IND-enabling studies and receive authorization from the FDA to proceed under an Investigational New Drug application, or IND, or similar filings and authorizations from comparable regulatory authorities. Although our Clinical Trial Application, or CTA, for the UNITE-CNM Phase 1/2 trial was approved in certain countries in Europe, the FDA issued a clinical hold on December 3, 2020, in which the FDA has requested additional supplemental information regarding our in vivo toxicology studies and raised questions regarding our clinical monitoring plan, including a monitoring plan for the potential development of inflammation. We provided the additional supplemental information related to our in vivo toxicology studies to the FDA and met with the FDA to address their questions on our clinical monitoring plan. We submitted a revised protocol and monitoring plan for our clinical trial to the FDA in May 2021 and the

 

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clinical hold was removed in June 2021. The FDA did not require us to perform additional studies or to make material changes to the tests to be performed as part of our clinical monitoring plan. Our ability to generate product revenue, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our product candidates. The success of our product candidates will depend on several factors, including the following:

 

   

successful completion of preclinical studies with favorable results, including those compliant with good laboratory practices toxicology studies, biodistribution studies and minimum effective dose studies in animals;

 

   

acceptance of INDs by the FDA, or similar regulatory filing by the EMA or comparable regulatory authorities for the conduct of clinical trials of our current and future product candidates and our proposed design of future clinical trials;

 

   

successful enrollment in clinical trials and completion of clinical trials with favorable results;

 

   

demonstrating safety and efficacy to the satisfaction of applicable regulatory authorities;

 

   

receipt of marketing approvals from applicable regulatory authorities, including NDAs from the FDA or drug approvals from the EMA, and maintaining such approvals;

 

   

making arrangements with our third-party manufacturers for, or establishing, commercial manufacturing capabilities;

 

   

establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others;

 

   

addressing any potential delays resulting from factors related to the COVID-19 pandemic;

 

   

establishing and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates;

 

   

maintaining an acceptable safety profile of our products following approval;

 

   

commercial acceptance by patients, the medical community and third-party payors; and

 

   

maintaining and growing an organization of people who can develop and commercialize our products and technology.

If we are unable to develop, obtain regulatory approval for, or, if approved, successfully commercialize our product candidates, we may not be able to generate sufficient revenue to continue our business.

Results of preclinical studies, clinical trials, or analyses may not be indicative of results in later trials.

The results of preclinical studies, clinical trials, or analyses of the results from such studies or trials may not be predictive of the results of later clinical trials. Product candidates in later clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and prior clinical trials or having shown promising results based on analyses of data from earlier trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding earlier promising results. In addition, conclusions based on promising data from analyses of clinical results may be shown to be incorrect in subsequent clinical trials or may not be considered adequate by regulatory authorities. Even if we complete later clinical trials, we cannot be certain that their results will support the safety and efficacy requirements sufficient to obtain regulatory approval, and, as a result, our clinical development plans may be materially harmed.

In addition, to date, the proof of concept of our DYN201 program for the treatment of a group of rare inherited neurodegenerative disorders called hereditary spastic paraplegias is based on preclinical models of another compound for a different indication. We are currently conducting target-validation studies and there is no guarantee that any proof of concept trial will provide sufficient evidence to advance our research beyond the proof of concept stage. If we are not successful in validating the target for DYN201 and developing a therapy to

 

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address the target, we may be forced to abandon the program. In the event that DYN201 does satisfactorily establish proof of concept, and it does advance into preclinical or clinical trials, it may face the risks and challenges identified in the preceding paragraph.

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

From time to time, we may publicly disclose preliminary or top-line data from our preclinical studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the top-line or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Top-line data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, top-line data should be viewed with caution until the final data are available.

From time to time, we may also disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available or as patients from our clinical trials continue other treatments for their disease. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects. Further, disclosure of interim data could result in volatility in the price of our ADSs.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.

If the interim, top-line, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

The regulatory approval processes of the FDA, EMA and other comparable regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, we will be unable to generate product revenue and our business will be substantially harmed.

We are not permitted to commercialize, market, promote or sell any product candidate before we receive marketing approval from the FDA, EMA or other comparable regulatory authorities. The time required to obtain approval by the FDA, EMA and other comparable regulatory authorities is unpredictable, typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the type, complexity and novelty of the product candidates involved. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve a product. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other data. Even if we eventually complete clinical testing and receive approval of our product candidates, the FDA, EMA and other comparable regulatory authorities may approve our product

 

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candidates for a more limited indication or a narrower patient population than we originally requested. We have not submitted for, or obtained, regulatory approval for any product candidate, and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval.

Prior to obtaining approval to commercialize a product candidate in the United States, Europe or in other markets, we must demonstrate with substantial evidence from adequate and well-controlled clinical trials, and to the satisfaction of the FDA, EMA or comparable foreign regulatory authorities, that such product candidates are safe and effective for their intended uses. Results from nonclinical studies and clinical trials can be interpreted in different ways. Even if we believe the nonclinical or clinical data for DYN101 are promising, such data may not be sufficient to support approval by the FDA, EMA and comparable foreign regulatory authorities. For example, in connection with our pre-IND meetings with the FDA for our Phase 1/2 clinical trial for DYN101, we proposed using data from natural history studies to support our regulatory submissions for DYN101. Specifically, the natural history study data would assist us in generating an individualized predicted trajectory for each enrolled patient on our endpoints of interest, which would be used as a comparator to evaluate how patients administered DYN101 deviate from that predicted trajectory. While the FDA has not accepted this proposal to date, we plan to continue discussing this strategy with the FDA moving forward. These prospectively designed natural history studies and other real world evidence we may submit to support applications for marketing approval may not be accepted by FDA, EMA, or other comparable regulatory authorities. The FDA, EMA or comparable foreign regulatory authorities, as the case may be, may also require us to conduct additional preclinical studies or clinical trials for DYN101 and any future product candidates either prior to or post-approval, or may object to elements of our clinical development program.

Our product candidates could fail to receive regulatory approval for many reasons, including the following:

 

   

the FDA, EMA or other comparable regulatory authorities may disagree with the design, implementation or results of our clinical trials;

 

   

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

 

   

the FDA, EMA or comparable foreign regulatory authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States and Europe;

 

   

the FDA, EMA or other comparable regulatory authorities may determine that our product candidates are not safe and effective, only moderately effective or have undesirable or unintended side effects, toxicities or other characteristics that preclude our obtaining marketing approval or prevent or limit commercial use;

 

   

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

 

   

the FDA, EMA or other comparable regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

 

   

the data collected from clinical trials of our product candidates may not be sufficient to support a submission for, or to obtain, regulatory approval;

 

   

the results of clinical trials may not meet the level of statistical significance required by the FDA, EMA or comparable foreign regulatory authorities for approval;

 

   

we may be unable to demonstrate that a product candidate’s risk-benefit ratio for its proposed indication is acceptable;

 

   

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

 

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

This lengthy approval process, as well as the unpredictability of the results of clinical trials, may result in our failing to obtain regulatory approval to market any of our product candidates, which would significantly harm our business, results of operations and prospects.

In addition, even if we obtain approval of our product candidates, regulatory authorities may approve our product candidates for fewer or more limited indications than we request, may impose significant limitations in the form of narrow indications, warnings, or a Risk Evaluation and Mitigation Strategy, or REMS. For example, several approved ASO therapeutics are required to be obtained through a REMS program. REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring and the use of patient registries. The requirement for a REMS can materially affect the potential market and profitability of the drug. Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing. Regulatory authorities may not approve the price we intend to charge for products we may develop, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could seriously harm our business.

Clinical development is lengthy and uncertain. The clinical trials of our product candidates may not demonstrate safety and efficacy to the satisfaction of the FDA, EMA or other comparable regulatory authorities or otherwise produce positive results. We may encounter substantial delays and costs in our clinical trials, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.

Drug discovery and development has inherent risks and the historical failure rate of product candidates in development is high. Before we can initiate clinical trials for any future product candidates, we must submit the results of preclinical studies to the FDA, EMA or comparable foreign regulatory authorities, along with other information, including information about chemistry, manufacturing and controls, and our proposed clinical trial protocol, as part of an IND, CTA or similar regulatory filing under which we must receive authorization to proceed with clinical development. Before obtaining marketing approval from the FDA, EMA or other comparable regulatory authorities for the sale of our product candidates, we must complete preclinical development and extensive clinical trials to demonstrate the safety and efficacy of our product candidates. Clinical testing is expensive, difficult to design and implement, and can take many years to complete, and its ultimate outcome is uncertain. A failure of one or more clinical trials can occur at any stage of the process. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their drugs.

In addition, we may rely in part on preclinical, clinical and quality data generated by CROs and other third parties for regulatory submissions for our product candidates. While we have or will have agreements governing these third parties’ services, we have limited influence over their actual performance. In addition, in the future we expect significant portions of clinical trials for our current and future product candidates will be conducted outside of France, which will make it more difficult for us to monitor CROs as well as clinical sites and investigators and perform visits of our clinical sites, and will force us to rely heavily on CROs to ensure the proper and timely conduct of our clinical trials in accordance with the applicable protocols and compliance with applicable regulations. If these third parties do not conduct our clinical trials properly, or, if applicable, make regulatory submissions in a timely manner, in each case pursuant to our agreements with them, our development programs may be significantly delayed, and we may need to conduct additional studies or collect additional data independently. In either case, our development costs would increase.

 

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We do not know whether our future clinical trials will begin on time or enroll patients on time, or whether our ongoing and/or future clinical trials will be completed on schedule or at all. Clinical trials, including our ongoing Phase 1/2 trial of DYN101 in adults and our planned Phase 1/2 trial of DYN101 in pediatric patients, can be delayed for a variety of reasons, including delays related to:

 

   

the FDA, EMA or other comparable regulatory authorities disagreeing as to the design or implementation of our clinical studies;

 

   

obtaining regulatory authorizations to commence a trial or reaching a consensus with regulatory authorities on trial design;

 

   

any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

 

   

obtaining approval from one or more institutional review boards, or IRBs;

 

   

IRBs refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial;

 

   

changes to clinical trial protocol;

 

   

clinical sites deviating from trial protocol or dropping out of a trial;

 

   

manufacturing sufficient quantities of a product candidate;

 

   

subjects failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up;

 

   

subjects choosing an alternative treatment for the indication for which we are developing our product candidates, or participating in competing clinical trials;

 

   

lack of adequate funding to continue the clinical trial;

 

   

subjects experiencing severe or unexpected drug-related adverse effects;

 

   

occurrence of serious adverse events in trials of the same class of agents conducted by other companies;

 

   

selection of clinical end points that require prolonged periods of clinical observation or analysis of the resulting data;

 

   

a facility manufacturing our product candidates or any of their components being ordered by the FDA, EMA or other comparable regulatory authorities to temporarily or permanently shut down due to violations of current good manufacturing practice, or cGMP, regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process;

 

   

any changes to our manufacturing process that may be necessary or desired;

 

   

occurrence of adverse events in clinical trials of the same class of agents conducted by other companies;

 

   

the impacts of the COVID-19 pandemic on our ongoing and future clinical trials;

 

   

third-party vendors not performing manufacturing and distribution services in a timely manner or to sufficient quality standards;

 

   

third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices, or GCP, or other regulatory requirements;

 

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third-party contractors not performing data collection or analysis in a timely or accurate manner;

 

   

third-party contractors becoming debarred or suspended or otherwise penalized by the FDA, EMA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications; or

 

   

other factors outside of our control, such as the COVID-19 pandemic.

In addition, disruptions caused by the COVID-19 pandemic may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical trials. We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA, EMA or other comparable regulatory authorities. Such authorities may impose such a suspension or termination due to a number of other factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA, EMA or other comparable regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial.

Further, conducting clinical trials outside of the United States and the European Union, as we may do for our product candidates, presents additional risks that may delay completion of our clinical trials. These risks include the failure of enrolled patients in such countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with such countries’ regulatory schemes, as well as political and economic risks relevant to such countries.

Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA, EMA or other comparable regulatory authorities. The FDA, EMA or other comparable regulatory authorities may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA, EMA or other comparable regulatory authorities may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA, EMA or other comparable regulatory authorities, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.

If we experience delays in the completion of, or termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenue from any of these product candidates will be delayed. Moreover, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenue.

In addition, many of the factors that cause, or lead to, termination or suspension of, or a delay in the commencement or completion of, clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate. Any delays to our clinical trials that occur as a result could shorten any period during which we may have the exclusive right to commercialize our product candidates and our competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced. Any of these occurrences may harm our business, financial condition and prospects significantly.

 

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We may encounter substantial delays in commencement, enrollment or completion of our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities, which could prevent us from commercializing any product candidates we determine to develop on a timely basis, if at all.

The risk of failure in developing product candidates is high. It is impossible to predict when or if any product candidate would prove effective or safe in humans or will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of product candidates in humans. In March 2020, we commenced dosing patients in our first clinical trial, UNITE-CNM, in Europe, and we have not previously conducted, nor completed, a clinical trial of any product candidate. Clinical trials may fail to demonstrate that our product candidates are safe for humans and effective for indicated uses. Even if the clinical trials are successful, changes in marketing approval policies during the development period, changes in or the enactment or promulgation of additional statutes, regulations or guidance or changes in regulatory review for each submitted product application may cause delays in the approval or rejection of an application.

Before we can commence clinical trials for a product candidate, we must complete extensive preclinical testing and studies that support our INDs, CTAs and comparable regulatory filings. We cannot be certain of the timely identification of a product candidate or the completion or outcome of our preclinical testing and studies and cannot predict whether the FDA, EMA or other comparable regulatory authority will accept our proposed clinical programs or whether the outcome of our preclinical testing and studies will ultimately support the further development of any product candidates. Conducting preclinical testing is a lengthy, time-consuming and expensive process. The length of time may vary substantially according to the type, complexity and novelty of the program, and often can be several years or more per program. As a result, we cannot be sure that we will be able to submit INDs, CTAs or comparable regulatory filings for our preclinical programs on the timelines we expect, if at all, and we cannot be sure that submission of INDs, CTAs or comparable filings will result in the FDA, EMA or comparable regulatory authorities allowing clinical trials to begin.

Furthermore, product candidates are subject to continued preclinical safety studies, which may be conducted concurrently with our clinical testing. The outcomes of these safety studies may delay the launch of or enrollment in future clinical trials and could impact our ability to continue to conduct our clinical trials.

Clinical testing is expensive, is difficult to design and implement, can take many years to complete and is uncertain as to outcome. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, or at all. A failure of one or more clinical trials can occur at any stage of testing, which may result from a multitude of factors, including, but not limited to, flaws in trial design, dose selection issues, patient enrollment criteria and failure to demonstrate favorable safety or efficacy traits.

If we experience delays or difficulties in the enrollment and/or maintenance of patients in clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

Patient enrollment is a significant factor in the timing of clinical trials, and the timing of our clinical trials depends, in part, on the speed at which we can recruit patients to participate in our trials, as well as completion of required follow-up periods. We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials to such trial’s conclusion as required by the FDA, EMA or other comparable regulatory authorities. In particular, each of the conditions for which we plan to evaluate our current product candidates are rare diseases with small patient populations from which to draw for clinical studies. For example, our lead product candidate, DYN101, is designed to treat patients with CNM, which has an estimated prevalence in the United States, Europe, Australia and Japan of 4,000 to 5,000 patients, with approximately 58% in the United States and 26% in the European Union. As a result, the process of finding and enrolling patients in our clinical trials may prove costly and require more effort to identify suitable patients, which could result in slower enrollment than we anticipate. The eligibility criteria of our clinical trials, once established, may further limit the pool of available trial participants.

 

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Patient enrollment may also be affected if our competitors have ongoing clinical trials for product candidates that are under development for the same indications as our product candidates, and patients who would otherwise be eligible for our clinical trials instead enroll in clinical trials of our competitors’ product candidates.

Patient enrollment and retention for any of our clinical trials may be affected by other factors, including:

 

   

size and nature of the patient population;

 

   

severity of the disease under investigation;

 

   

availability and efficacy of approved drugs for the disease under investigation;

 

   

patient eligibility criteria for the trial in question as defined in the protocol;

 

   

perceived risks and benefits of the product candidate under study;

 

   

clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new products that may be approved for the indications we are investigating;

 

   

efforts to facilitate timely enrollment in clinical trials;

 

   

patient referral practices of physicians;

 

   

the ability to monitor patients adequately during and after treatment;

 

   

proximity and availability of clinical trial sites for prospective patients;

 

   

continued enrollment of prospective patients by clinical trial sites;

 

   

the risk that patients enrolled in clinical trials will drop out of the trials before completion; and

 

   

other factors outside of our control, such as the COVID-19 pandemic.

Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our product candidates and jeopardize our ability to obtain marketing approval for the sale of our product candidates. Furthermore, even if we are able to enroll a sufficient number of patients for our clinical trials, we may have difficulty maintaining enrollment of such patients in our clinical trials.

We face significant competition, and if our competitors develop and market technologies or products more rapidly than we do or that are more effective, safer or less expensive than the product candidates we develop, our commercial opportunities will be negatively impacted.

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary and novel products and product candidates. We expect our product candidates to face intense and increasing competition as new products enter the relevant markets and advanced technologies become available. We face potential competition from many different sources, including pharmaceutical, biotechnology and specialty pharmaceutical companies. Academic research institutions, governmental agencies and public and private institutions are also potential sources of competitive products and technologies. Our competitors may have or may develop superior technologies or approaches, which may provide them with competitive advantages. Many of these competitors may also have compounds already approved or in development in the therapeutic categories that we are targeting with our product candidates. In addition, many of these competitors, either alone or together with their collaborators, may operate larger research and development programs or have substantially greater financial resources than we do, as well as greater experience in:

 

   

developing product candidates;

 

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undertaking preclinical testing and clinical trials;

 

   

obtaining regulatory approval;

 

   

formulating and manufacturing products; and

 

   

launching, marketing and selling products.

Moreover, we also compete with these organizations to recruit management, scientists and clinical development personnel, which could negatively affect our level of expertise and our ability to execute our business plan. We will also face competition in establishing clinical trial sites, enrolling subjects for clinical trials and in identifying and in-licensing new product candidates.

If these competitors access the marketplace before we do with safer, more effective, or less expensive therapeutics, our product candidates, if approved, may not be profitable to sell or worthwhile to continue to develop. Technology in the pharmaceutical industry has undergone rapid and significant change, and we expect that it will continue to do so. Any compounds, products or processes that we develop may become obsolete or uneconomical before we recover any expenses incurred in connection with their development.

Established pharmaceutical and biotechnology companies may also invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make the product candidates that we develop obsolete. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies, as well as in acquiring technologies complementary to, or necessary for, our programs. In addition, mergers and acquisitions in the pharmaceutical and biotechnology industries could result in even more resources being concentrated among a small number of our competitors. Competition may reduce the number and types of patients available to us to participate in clinical trials, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. As a result of all of these factors, our competitors may succeed in obtaining approval from the FDA, EMA or other comparable regulatory authorities or in discovering, developing and commercializing products in our field before we do.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe effects, are more convenient, have a broader label, are marketed more effectively, are reimbursed or are less expensive than any products that we may develop. Our competitors also may obtain marketing approval from the FDA, EMA or other comparable regulatory authorities for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. Even if the product candidates we develop achieve marketing approval, they may be priced at a significant premium over competitive products if any have been approved by then, resulting in reduced competitiveness. If we are unable to compete effectively, our opportunity to generate revenue from the sale of our products we may develop, if approved, could be adversely affected.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we focus on research programs, therapeutic platforms and product candidates that we identify for specific indications. As a result, we may forego or delay pursuit of opportunities with other therapeutic platforms or product candidates or for other indications that later prove to have greater commercial potential or a greater likelihood of success. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs, therapeutic platforms and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to

 

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that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights.

Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay.

As product candidates progress through preclinical and clinical trials to marketing approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods and formulation, are altered along the way in an effort to optimize yield and manufacturing batch size, minimize costs and achieve consistent quality and results. Such changes carry the risk that they will not achieve these intended objectives. Any of these changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with the altered materials. This could delay completion of clinical trials, require the conduct of bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidates and jeopardize our ability to commercialize our product candidates, if approved, and generate revenue.

Risks Related to Regulatory Approval and Other Legal Compliance Matters

We may be unable to obtain regulatory approvals from the FDA, EMA and other comparable authorities and, as a result, may be unable to commercialize our product candidates.

Our product candidates are subject to extensive governmental regulations relating to, among other things, research, testing, development, manufacturing, safety, efficacy, approval, recordkeeping, reporting, labeling, storage, packaging, advertising and promotion, pricing, marketing and distribution of drugs. Rigorous preclinical testing and clinical trials and an extensive regulatory approval process must be successfully completed in the United States, European Union and in many other jurisdictions before a new drug can be marketed. Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. We cannot provide any assurance that any product candidate we may develop will progress through required clinical testing and obtain the regulatory approvals necessary for us to begin selling them.

We have not conducted, managed or completed large-scale or pivotal clinical trials nor managed the regulatory approval process with the FDA, EMA or any other regulatory authority. The time required to obtain approvals from the FDA and other regulatory authorities is unpredictable, and requires successful completion of extensive clinical trials which typically takes many years, depending upon the type, complexity and novelty of the product candidate. The standards that the FDA, EMA and comparable regulatory authorities use when evaluating clinical trial data can and often changes during drug development, which makes it difficult to predict with any certainty how they will be applied. We may also encounter unexpected delays or increased costs due to new government regulations, including future legislation or administrative action, or changes in FDA, EMA or other comparable regulatory authority policy during the period of drug development, clinical trials and regulatory review.

Any delay or failure in seeking or obtaining required approvals would have a material and adverse effect on our ability to generate revenue from the particular product candidate for which we developing and seeking approval. Furthermore, any regulatory approval to market a drug may be subject to significant limitations on the approved uses or indications for which we may market the drug or the labeling or other restrictions. In addition, the FDA has the authority to require a REMS as part of approving a NDA, or after approval, which may impose further requirements or restrictions on the distribution or use of an approved drug. These requirements or restrictions might include limiting prescribing to certain physicians or medical centers that have undergone specialized training, limiting treatment to patients who meet certain safe-use criteria and requiring treated patients to enroll in a registry. These limitations and restrictions may significantly limit the size of the market for the drug and affect reimbursement by third-party payors.

Outside of the United States and the European Union, we are also subject to numerous other regulatory requirements governing, among other things, the conduct of clinical trials, manufacturing and marketing

 

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authorization, pricing and third-party reimbursement. The regulatory approval process varies among countries, and generally includes all of the risks associated with FDA and EMA approval described above as well as risks attributable to the satisfaction of local regulations in other jurisdictions. Moreover, the time required to obtain approval may differ from that required to obtain FDA or EMA approval.

Our current or future product candidates may cause severe adverse events, toxicities or other undesirable side effects that may result in a safety profile that could inhibit regulatory approval, prevent market acceptance, limit their commercial potential or result in significant negative consequences.

As is the case with pharmaceuticals generally, it is likely that there may be side effects and adverse events associated with our product candidates’ use. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA, EMA or other comparable regulatory authorities. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.

Our lead product candidate, DYN101, is an antisense oligonucleotide, or ASO, that is designed to treat CNM. DYN101 is the first ASO product candidate designed to reduce expression of DNM2, which means there is uncertainty with respect to the safety characteristics of DYN101. If we cannot demonstrate that DYN101 is safe and effective for human use, we may need to abandon or alter this development program. Additionally, if other ASO product candidates or therapies are found to cause undesirable side effects or to be unsafe, it could adversely affect the clinical, regulatory or commercial perception of DYN101 and our future product candidates.

If our product candidates are associated with undesirable side effects or have unexpected characteristics in preclinical studies or clinical trials we may need to interrupt, delay or abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Treatment-related side effects could also affect patient recruitment or the ability of enrolled subjects to complete the trial, or result in potential product liability claims. Any of these occurrences may prevent us from achieving or maintaining market acceptance of the affected product candidate and may harm our business, financial condition and prospects significantly.

Patients in our ongoing and planned clinical trials may in the future suffer significant adverse events or other side effects not observed in our preclinical studies. Some of our product candidates may be used as chronic therapies or be used in pediatric populations, for which safety concerns may be particularly scrutinized by regulatory agencies.

If significant adverse events or other side effects are observed in any of our current or future clinical trials, we may have difficulty recruiting patients to the clinical trials, patients may drop out of our trials, or we may be required to abandon the trials or our development efforts of that product candidate altogether. We, the FDA, EMA, other comparable regulatory authorities or an IRB may suspend clinical trials of a product candidate at any time for various reasons, including a belief that subjects in such trials are being exposed to unacceptable health risks or adverse side effects. Some potential therapeutics developed in the biotechnology industry that initially showed therapeutic promise in early-stage trials have later been found to cause side effects that prevented their further development. Even if the side effects do not preclude the product candidate from obtaining or maintaining marketing approval, undesirable side effects may inhibit market acceptance due to its tolerability versus other therapies. Any of these developments could materially harm our business, financial condition and prospects.

Further, if any future product candidates receive marketing approval, and we or others later identify undesirable side effects caused by such product candidate, a number of potentially significant negative consequences could result, including:

 

   

we may be forced to suspend marketing of that product, or decide to remove the product form the marketplace;

 

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regulatory authorities may withdraw approvals or change their approvals of such product, or require us to conduct additional clinical trials;

 

   

regulatory authorities may require additional warnings on the label or limit access of that product to selective specialized centers with additional safety reporting and with requirements that patients be geographically close to these centers for all or part of their treatment;

 

   

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

 

   

we may be required to change the way the product is administered;

 

   

we could be subject to fines, injunctions, or the imposition of criminal or civil penalties, or to sued and held liable for harm caused to subjects or patients; or

 

   

we could be sued and held liable for harm caused to patients; and the product may become less competitive, and our reputation may suffer.

We cannot predict whether our product candidates will cause toxicities in humans that would preclude or lead to the revocation of regulatory approval based on preclinical studies or early-stage clinical trials.

The FDA, EMA and other comparable regulatory authorities may not accept data from trials conducted in locations outside of their jurisdiction.

We may choose to conduct international clinical trials in the future. The acceptance of study data by the FDA, EMA or other comparable regulatory authorities from clinical trials conducted outside of their respective jurisdictions may be subject to certain conditions. In cases where data from foreign clinical trials are intended to serve as the basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (1) the data are applicable to the United States population and United States medical practice; (2) the trials are performed by clinical investigators of recognized competence and pursuant to current GCP requirements; and (3) the FDA is able to validate the data through an on-site inspection or other appropriate mean. Additionally, the FDA’s clinical trial requirements, including the adequacy of the patient population studied and statistical powering, must be met. In addition, such foreign trials would be subject to the applicable local laws of the foreign jurisdictions where the trials are conducted. There can be no assurance that the FDA, EMA or any other comparable regulatory authority will accept data from trials conducted outside of its applicable jurisdiction. If the FDA, EMA or any other comparable regulatory authority does not accept such data, it would result in the need for additional trials, which would be costly and time-consuming and delay aspects of our business plan, and which may result in our product candidates not receiving approval for commercialization in the applicable jurisdiction.

Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.

Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction. For example, although our CTA for the UNITE-CNM Phase 1/2 trial was approved by the competent national authorities of the countries in which the trial sites are located in Europe, the FDA initially issued a clinical hold preventing initiation of the trial in the United States on December 3, 2020, which was subsequently cleared by the FDA on June 8, 2021. Further, even if the FDA or EMA grants marketing approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion and reimbursement of the product candidate in those countries. However, a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from those in the United States, including additional preclinical studies or clinical trials as clinical trials

 

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conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we intend to charge for our products is also subject to approval.

Obtaining regulatory approvals and establishing and maintaining compliance with regulatory requirements outside the United States and European Union could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. If we or any future collaborator fail to comply with the regulatory requirements in international markets or fail to receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed.

We have received Rare Pediatric Disease Designation from FDA for DYN101 for the treatment of centronuclear myopathy. Rare Pediatric Disease Designation by the FDA may not lead to a faster development, regulatory review or approval process, and it does not increase the likelihood that DYN101 will receive marketing approval in the United States. Even if DYN101 receives marketing approval in the United States, it may not meet the eligibility criteria for a priority review voucher.

We have received Rare Pediatric Disease designation for DYN101 for the treatment of centronuclear myopathy. In 2012, Congress authorized the FDA to award priority review vouchers to sponsors of certain rare pediatric disease product applications. This provision is designed to encourage development of new drug and biological products for prevention and treatment of certain rare pediatric diseases. Specifically, under this program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease” may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product. The sponsor of a rare pediatric disease drug product receiving a priority review voucher may transfer (including by sale) the voucher to another sponsor. The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application. The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the U.S. within one year following the date of approval.

Congress included a sunset provision in the statute authorizing the rare pediatric disease priority review voucher program. Specifically, the FDA may not award the voucher to sponsors of marketing applications unless either (1) the drug or biologic has received rare pediatric disease designation as of September 30, 2024 and is then approved by the FDA no later than September 30, 2026; or (2) Congress reauthorizes the program. DYN101 may not be approved for the treatment of centronuclear myopathy by the sunset date, or at all, and, therefore, we may not be in a position to obtain a priority review voucher prior to expiration of the program, unless Congress further reauthorizes the program and we obtain approval prior to any extended expiration date. Additionally, designation of a drug for a rare pediatric disease does not guarantee that an application will meet the eligibility criteria for a rare pediatric disease priority review voucher at the time the application is approved. Finally, a Rare Pediatric Disease designation does not lead to faster development or regulatory review of the product, or increase the likelihood that it will receive marketing approval. We may or may not realize any benefit from receiving a voucher.

Even though FDA and EMA have granted orphan designation for DYN101 for the treatment of centronuclear myopathies, we may be unable to obtain orphan drug designation for other product candidates, and we may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity.

Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs or biologics for relatively small patient populations as orphan drugs. Under the Orphan Drug Act of 1983, the FDA may designate a product as an orphan product if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States, or a patient

 

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population of greater than 200,000 individuals in the United States, but for which there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. In the European Union, the EMA’s Committee for Orphan Medicinal Products grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than five in 10,000 persons in the European Union.

We have obtained orphan drug designation in the United States and European Union for DYN101 for the treatment of centronuclear myopathies. In the United States, orphan designation entitles a party to financial incentives such as opportunities for grant funding toward clinical trial costs, tax advantages and user-fee waivers. In addition, if a product candidate that has orphan designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including an NDA, to market the same drug for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or where the manufacturer is unable to assure sufficient product quantity. The applicable exclusivity period is ten years in Europe, but such exclusivity period can be reduced to six years if a product no longer meets the criteria for orphan designation or if the product is sufficiently profitable so that market exclusivity is no longer justified.

Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition. Even after an orphan drug is approved, the FDA, EMA or other comparable regulatory authority can subsequently approve the same drug for the same condition if such regulatory authority concludes that the later drug is clinically superior if it is shown to be safer, more effective or makes a major contribution to patient care. Orphan drug exclusivity may also be lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition. In addition, orphan drug exclusivity does not prevent the FDA from approving competing drugs for the same or similar indication containing a different active ingredient. In addition, if a different drug is later approved for marketing for the same or a similar indication as any of our product candidates that receive marketing approval, we may face increased competition and lose market share regardless of orphan drug exclusivity. In addition, if an FDA orphan designated product receives marketing approval for an indication broader than or different from what is designated, such product may not be entitled to orphan exclusivity. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process. Also, other product candidates may obtain approval before us and receive orphan drug exclusivity, which could block us from entering the market.

Even if our product candidates receive regulatory approval, they will be subject to significant post-marketing regulatory requirements and continued regulatory review, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with any product.

Any regulatory approvals that we may receive for our product candidates will require the submission of reports to regulatory authorities and surveillance to monitor the safety and efficacy of the product candidate, may contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, and may include burdensome post-approval study or risk management requirements. For example, the FDA may require a REMS in order to approve our product candidates, which could entail requirements for a medication guide, physician training and communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA, EMA or other comparable regulatory authorities approve our product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our product candidates will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information

 

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and reports, registration, as well as on-going compliance with cGMPs and GCP for any clinical trials that we conduct post-approval. In addition, manufacturers of drug products and their facilities are subject to continual review and periodic, unannounced inspections by the FDA and other regulatory authorities for compliance with cGMP regulations and standards. If we or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facilities where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. In addition, failure to comply with FDA, EMA and other comparable regulatory requirements may subject our company to administrative or judicially imposed sanctions, including:

 

   

delays in or the rejection of product approvals;

 

   

restrictions on our ability to conduct clinical trials, including full or partial clinical holds on ongoing or planned trials;

 

   

restrictions on the products, manufacturers or manufacturing process;

 

   

warning or untitled letters;

 

   

civil and criminal penalties;

 

   

injunctions;

 

   

suspension, modification or withdrawal of regulatory approvals;

 

   

product seizures, detentions or import bans;

 

   

voluntary or mandatory product recalls and publicity requirements;

 

   

required entrance into a consent decree, which can include imposition of various fines, reimbursement for inspection costs, required due dates for specific actions and penalties for noncompliance;

 

   

total or partial suspension of production; and

 

   

suspension or imposition of restrictions on operations, including costly new manufacturing requirements.

The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenue and could require us to expend significant time and resources in response and could generate negative publicity.

The FDA’s and other regulatory authorities’ policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, and we may not achieve or sustain profitability.

We also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad, particularly in light of the new U.S. presidential administration. Namely, the previous U.S. presidential administration took several executive actions, including the issuance of a number of Executive Orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities such as implementing statutes through rulemaking, issuance of guidance, and review and approval of marketing applications. It is difficult to predict whether or how these executive actions, including the Executive Orders, will be implemented, authority or the extent to which they will be rescinded or replaced under the new U.S. presidential administration. The policies and priorities of the new U.S. presidential administration are not fully known and could materially impact the regulatory framework governing our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may be subject to enforcement action, and we may not achieve or sustain profitability.

 

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Our relationships with healthcare professionals, clinical investigators, CROs and third party payors in connection with our current and future business activities may be subject to federal and state healthcare fraud and abuse laws, false claims laws, transparency laws, and government price reporting laws, which could expose us to, among other things, criminal sanctions, civil penalties, contractual damages, exclusion from governmental healthcare programs, reputational harm, administrative burdens and diminished profits and future earnings.

Healthcare providers and third-party payors play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our current and future arrangements with healthcare professionals, clinical investigators, CROs, third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our products for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations include the following:

 

   

the federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it in order to have committed a violation;

 

   

the federal civil monetary penalties and false claims laws, including the civil False Claims Act, which can be enforced by private citizens through civil whistleblower or qui tam actions, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government may assert that a claim including items or services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act;

 

   

the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, prohibits, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

 

   

the federal Physician Payments Sunshine Act requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS information regarding payments and other transfers of value to physicians, as defined by such law, and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members. Beginning in 2022, applicable manufacturers also will be required to report such information regarding payments and transfers of value provided to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants and certified nurse midwives during the previous year. The information reported is publicly available on a searchable website, with disclosure required annually; and

 

   

analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; some state laws require biotechnology companies to comply with the biotechnology industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; some state laws require

 

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biotechnology companies to report information on the pricing of certain drug products; and some state and local laws require the registration of sales representatives.

Efforts to ensure that our current and future business arrangements with third parties will comply with applicable healthcare laws and regulations will involve on-going substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our operations. 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. Further, if any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. If DYN101 and any future product candidate is approved for marketing, and we are found to have improperly promoted off-label uses, or if physicians prescribe or use DYN101 and any future product candidates off-label, we may become subject to prohibitions on the sale or marketing of DYN101 and any future product candidates, significant fines, penalties, sanctions, or product liability claims, and our image and reputation within the industry and marketplace could be harmed

If any of our product candidates are approved and we are found to have improperly promoted off-label uses of those products, we may become subject to significant liability. The FDA, the Department of Justice, or DOJ, the Office of Inspector General of the Department of Health and Human Services, or HHS, state attorneys general, and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products, such as our product candidates, if approved. In particular, a product may not be promoted for uses that are not approved by the FDA or such other regulatory agencies as reflected in the product’s approved labeling. If we receive marketing approval for a product candidate, physicians may nevertheless prescribe it to their patients in a manner that is inconsistent with the approved label. Although the FDA and other regulatory agencies do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment, they do restrict promotional communications from companies or their sales force with respect to off-label uses of products for which marketing clearance has not been issued. However, companies may share truthful and not misleading information that is otherwise consistent with a product’s FDA approved labeling. If we are found to have promoted such off-label uses, we may become subject to significant liability. The U.S. federal government has levied large administrative, civil and criminal fines against companies for alleged improper promotion of off-label use and has enjoined several companies from engaging in off-label promotion. If we become the target of such an investigation or prosecution based on our marketing and promotional practices, we could face similar sanctions, which would materially harm our business. In addition, management’s attention could be diverted from our business operations, significant legal expenses could be incurred, and our reputation could be damaged. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If we cannot successfully manage the promotion of our product candidates, if approved, we could become subject to significant liability, which would materially adversely affect our business and financial condition. If we are deemed by the FDA, DOJ, or other governmental authorities to have engaged in the promotion of DYN101 or any future product candidate for off-label use, we could be subject to certain prohibitions or other restrictions on the sale or marketing and other operations or significant fines and penalties, and the imposition of these sanctions could also affect our reputation and position within the industry.

 

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Disruptions at the FDA, the SEC and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes, and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the Securities and Exchange Commission, or the SEC, and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, in recent years, including in 2018 and 2019, the U.S. government shut down several times and certain regulatory agencies, such as the FDA and the SEC, had to furlough critical employees and stop critical activities. If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, upon closing of this offering and in our operations as a U.S. public company, future government shutdowns or delays could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

We may attempt to secure approval from the FDA, EMA or other comparable regulatory authorities through the use of accelerated approval pathways. If we are unable to obtain such approval, we may be required to conduct additional preclinical studies or clinical trials beyond those that we contemplate, which could increase the expense of obtaining, and delay the receipt of, necessary marketing approvals. Even if we receive accelerated approval from the FDA, if our confirmatory trials do not verify clinical benefit, or if we do not comply with rigorous post-marketing requirements, the FDA may seek to withdraw accelerated approval.

We may in the future seek an accelerated approval for our one or more of our product candidates. Under the accelerated approval program, the FDA may grant accelerated approval to a product candidate designed to treat a serious or life-threatening condition that provides meaningful therapeutic benefit over available therapies upon a determination that the product candidate has an effect on a surrogate endpoint or intermediate clinical endpoint that is reasonably likely to predict clinical benefit. The FDA considers a clinical benefit to be a positive therapeutic effect that is clinically meaningful in the context of a given disease, such as irreversible morbidity or mortality. For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. An intermediate clinical endpoint is a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit. The accelerated approval pathway may be used in cases in which the advantage of a new drug over available therapy may not be a direct therapeutic advantage, but is a clinically important improvement from a patient and public health perspective. If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verity and describe the drug’s clinical benefit. If such post-approval studies fail to confirm the drug’s clinical benefit, the FDA may withdraw its approval of the drug.

Prior to seeking accelerated approval for any of our product candidates, we intend to seek feedback from the FDA and will otherwise evaluate our ability to seek and receive accelerated approval. There can be no assurance that after our evaluation of the feedback and other factors we will decide to pursue or submit an NDA for

 

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accelerated approval or any other form of expedited development, review or approval. Similarly, there can be no assurance that after subsequent FDA feedback we will continue to pursue or apply for accelerated approval or any other form of expedited development, review or approval, even if we initially decide to do so. Furthermore, if we decide to submit an application for accelerated approval or receive an expedited regulatory designation (e.g., breakthrough therapy designation) for our product candidates, there can be no assurance that such submission or application will be accepted or that any expedited development, review or approval will be granted on a timely basis, or at all. The FDA, EMA or other comparable regulatory authorities could also require us to conduct further studies prior to considering our application or granting approval of any type. A failure to obtain accelerated approval or any other form of expedited development, review or approval for our product candidate would result in a longer time period to commercialization of such product candidate, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.

We may face difficulties from changes to current regulations and future legislation.

In the United States and other jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes and proposed changes to the healthcare system that could affect our future results of operations. In particular, there have been and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare.

In the United States, in March 2010, the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the ACA, was passed, which substantially changed the way healthcare is financed by both the government and private insurers, and significantly impacted the U.S. pharmaceutical industry. Since its enactment, there have been executive, judicial and Congressional challenges to certain aspects of the ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the ACA will impact the ACA. We are continuing to monitor any changes to the ACA that, in turn, may potentially impact our business in the future.

In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, will stay in effect through 2030, with a temporary suspension from May 1, 2020 through December 31, 2021, unless additional congressional action is taken. In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our drugs, if approved, and accordingly, our financial operations.

Moreover, there has been heightened governmental scrutiny recently over the manner in which drug manufacturers set prices for their marketed products, which has resulted in several presidential executive orders, Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. The likelihood of implementation of the reform initiatives from the former Trump administration is uncertain, particularly in light of the new Biden administration. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or

 

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patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payors. Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.

Existing regulatory policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability.

In addition, the European Union adopted the Clinical Trials Regulation, or CTR, in April 2014, which is expected to become applicable by early 2022. The CTR will be directly applicable in all EU member states, repealing the current Clinical Trials Directive. Conduct of all clinical trials performed in the European Union will continue to be bound by currently applicable provisions until the new CTR becomes applicable. The extent to which ongoing clinical trials will be governed by the CTR will depend on when the CTR becomes applicable and on the duration of the individual clinical trial. If a clinical trial continues for more than three years from the day on which the CTR becomes applicable the CTR will at that time begin to apply to the clinical trial. The CTR harmonizes the assessment and supervision processes for clinical trials throughout the European Union via a Clinical Trials Information System, which will notably contain a centralized EU portal and database.

Our employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs, CMOs, suppliers and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk that our employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs, CMOs, suppliers and vendors may engage in misconduct or other improper activities. Misconduct by these parties could include failures to comply with FDA regulations, provide accurate information to the FDA, comply with federal and state health care fraud and abuse laws and regulations, accurately report financial information or data or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the health care industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Misconduct by these parties could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter misconduct by these parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our operations.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on our business.

We are subject to numerous French and U.S. federal, state, local and foreign environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage,

 

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treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of hazardous and flammable materials, including chemicals and biological materials.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or commercialization efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Our research and development activities could be affected or delayed as a result of possible restrictions on animal testing.

Certain laws and regulations require us to test our product candidates on animals before initiating clinical trials involving humans. Animal testing activities have been the subject of controversy and adverse publicity. Animal rights groups and other organizations and individuals have attempted to stop animal testing activities by pressing for legislation and regulation in these areas and by disrupting these activities through protests and other means. To the extent the activities of these groups are successful, our research and development activities may be interrupted, delayed or become more expensive.

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

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

Our business activities may be subject to the Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery and anti-corruption laws in countries where we operate, as well as U.S. and foreign export controls and trade sanctions. Violations of such legal requirements could subject us to liability.

Our business activities may be subject to the Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate, including the U.K. Bribery Act 2010. The FCPA generally prohibits companies and their employees, officers, and third-party intermediaries from offering, promising, giving, or authorizing others to give anything of value, either directly or indirectly, to a non-U.S. government official in order to influence official action, or otherwise obtain or retain business or secure any other improper advantage. 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

 

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significant interaction with public officials, including officials of non-U.S. governments. Additionally, in many other countries, hospitals are owned and operated by the government, and doctors, healthcare providers, and other hospital employees would be considered foreign officials under the FCPA. Recently, the SEC, and Department of Justice have increased their FCPA enforcement activities with respect to pharmaceutical companies. There is no certainty that all of our employees, agents, contractors, or collaborators, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws. Violations of these laws and regulations could result in significant administrative, civil and criminal fines and sanctions against us, our officers, or our employees, the closing down of our facilities, exclusion from participation in federal healthcare programs including Medicare and Medicaid, implementation of compliance programs, integrity oversight and reporting obligations, and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, and our business, prospects, operating results and financial condition.

In addition, our products may be subject to U.S. and foreign export controls and trade sanctions. Compliance with applicable regulatory requirements regarding the export of our products may create delays in the introduction of our products in international markets or, in some cases, prevent the export of our products to some countries altogether. Furthermore, U.S. export control laws and economic sanctions prohibit the shipment of certain products and services to countries, governments, and persons targeted by U.S. sanctions. If we fail to comply with export regulations and such economic sanctions, penalties could be imposed, including fines and/or denial of certain export privileges. Moreover, any new export restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or in the countries, persons, or products targeted by such regulations, could result in decreased use of our solutions by, or in our decreased ability to export our solutions to, existing or potential customers with international operations. Any decreased use of our products or limitation on our ability to export or sell or products would likely adversely affect our business.

Risks Related to Our Dependence on Third Parties

The Ionis License Agreement is important to our business. If we or Ionis fail to adequately perform under the Ionis Agreement, or if we or Ionis terminate the Ionis License Agreement, our business would be adversely affected.

We have entered into a research collaboration and license agreement, or Ionis License Agreement, with Ionis Pharmaceuticals, Inc., or Ionis, under which we agreed to a research collaboration with Ionis to discover and develop antisense oligonucleotide, or ASO, drugs to treat CNM and other neuromuscular diseases. We are currently developing our lead product candidate, DYN101, as an ASO designed to reduce the expression of DNM2, for the treatment of CNM. Under the Ionis License Agreement, we are solely responsible for the research, development, manufacture and commercialization of DYN101. We are required to pay Ionis milestone payments of up to €25.1 million ($29.5 million) and €94.5 million ($111.0 million) upon the achievement of development and regulatory milestones, respectively, and up to €51.1 million ($60.0 million) in commercial milestones. Of such total milestone payments, those specifically related to our initial indication focused on CNM are up to €10.6 million ($12.5 million) and €46.8 million ($55.0 million) upon the achievement of development and regulatory milestones, respectively, and up to €51.1 million ($60.0 million) in commercial milestones. If we are unable to make the required milestone payments, Ionis may terminate the Ionis License Agreement. Termination of the Ionis License Agreement upon a material breach would result in our inability to continue our development and commercialization efforts for DYN101.

 

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We rely, and expect to continue to rely, on third parties, including independent clinical investigators and CROs, to conduct certain aspects of our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties, comply with applicable regulatory requirements or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

We have relied upon and plan to continue to rely upon third parties, including independent clinical investigators and third-party CROs, to conduct certain aspects of our preclinical studies and clinical trials and to monitor and manage data for our ongoing preclinical and clinical programs. We rely on these parties for execution of our preclinical studies and clinical trials, and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies and trials is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on these third parties does not relieve us of our regulatory responsibilities. We and our third-party contractors and CROs are required to comply with GCP requirements, which are regulations and guidelines enforced by the FDA, the competent authorities of the Member States of the EEA and other comparable regulatory authorities for all of our products candidates in clinical development. Regulatory authorities enforce these GCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of these third parties or our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, EMA or other comparable regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP regulations. In addition, our clinical trials must be conducted with product produced under cGMP regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process. Moreover, our business may be adversely affected if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.

Further, these investigators and CROs are not our employees and we will not be able to control, other than by contract, the amount of resources, including time, which they devote to our product candidates and clinical trials. These third parties may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other product development activities, which could affect their performance on our behalf. If independent investigators or CROs fail to devote sufficient resources to the development of our product candidates, or if CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed or precluded entirely.

Our CROs have the right to terminate their agreements with us in the event of an uncured material breach. In addition, some of our CROs have an ability to terminate their respective agreements with us if it can be reasonably demonstrated that the safety of the subjects participating in our clinical trials warrants such termination, if we make a general assignment for the benefit of our creditors or if we are liquidated.

The COVID-19 pandemic and government measures taken in response have also had a significant impact on our CROs, and we expect that they will face further disruption which may affect our ability to initiate and complete our preclinical studies and clinical trials.

If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms. Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. If laboratories, CROs, clinical investigators, or other third

 

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parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our preclinical or clinical protocols, regulatory requirements or for other reasons, our preclinical or clinical trials may be extended, delayed, or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase, and our ability to generate revenues could be delayed. Switching or adding additional laboratories or CROs (or investigators) involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new laboratory or CRO, or other third party vendor, commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Additionally, CROs may lack the capacity to absorb higher workloads or take on additional capacity to support our needs. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

We contract with third parties for the manufacture of our product candidates for preclinical studies and our ongoing clinical trials, and expect to continue to do so for additional clinical trials and ultimately for commercialization. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or drugs or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

We do not currently have, nor do we plan to develop or acquire, the infrastructure or internal capability to manufacture supplies of our product candidates for use in development and commercialization. We rely, and expect to continue to rely, on third-party manufacturers for the production of our product candidates for preclinical studies and clinical trials under the guidance of members of our organization. If we are unable to arrange for such third-party manufacturing sources, or fail to do so on commercially reasonable terms, we may not be able to successfully produce sufficient supply of product candidate or we may be delayed in doing so. Such failure or substantial delay could materially harm our business. We do not have long-term supply agreements. Furthermore, the raw materials for our product candidates are sourced, in some cases, from a single-source supplier. If we were to experience an unexpected loss of supply of any of our product candidates or any of our future product candidates for any reason, whether as a result of manufacturing, supply or storage issues or otherwise, we could experience delays, disruptions, suspensions or terminations of, or be required to restart or repeat, any pending or ongoing clinical trials. For example, the extent to which the COVID-19 pandemic impacts our ability to procure sufficient supplies for the development of our products and product candidates will depend on the severity and duration of the spread of the virus, and the actions undertaken to contain COVID-19 or treat its effects.

Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including reliance on the third party for regulatory compliance and quality control and assurance, volume production, the possibility of breach of the manufacturing agreement by the third party because of factors beyond our control (including a failure to synthesize and manufacture our product candidates in accordance with our product specifications) and the possibility of termination or nonrenewal of the agreement by the third party at a time that is costly or damaging to us.

In addition, the FDA, EMA and other regulatory authorities require that our product candidates be manufactured according to cGMPs and similar foreign standards relating to methods, facilities, and controls used in the manufacturing, processing, and packing of the product, which are intended to ensure that biological products are safe and that they consistently meet applicable requirements and specifications. Pharmaceutical manufacturers are required to register their facilities and products manufactured at the time of submission of the marketing application and then annually thereafter with the FDA and certain state and foreign agencies. If the FDA, EMA or a comparable regulatory authority does not approve our proposed contract manufacturer’s facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain

 

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regulatory approval for, or market our product candidates, if approved. Any discovery of problems with a product, or a manufacturing or laboratory facility used by us or our strategic partners, may result in restrictions on the product or on the manufacturing or laboratory facility, including marketed product recall, suspension of manufacturing, product seizure, or a voluntary withdrawal of the drug from the market. We may have little to no control regarding the occurrence of third-party manufacturer incidents.

If we were unable to find an adequate replacement or another acceptable solution in time, our clinical trials could be delayed, or our commercial activities could be harmed. In addition, the fact that we are dependent on our collaborators, our suppliers, and other third parties for the manufacture, filling, storage, and distribution of our product candidates means that we are subject to the risk that the products may have manufacturing defects that we have limited ability to prevent or control. The sale of products containing such defects could adversely affect our business, financial condition, and results of operations. Any failure by our third-party manufacturers to comply with cGMP or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product candidates in a timely manner, could lead to a delay in, or failure to obtain, regulatory approval of any of our product candidates.

We expect to continue to rely on third-party manufacturers for the commercial supply of any of our product candidates for which we obtain marketing approval. We may be unable to maintain or establish required agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:

 

   

the failure of the third party to manufacture our product candidates according to our schedule, or at all, including if our third-party contractors give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily perform according to the terms of the agreements between us and them;

 

   

the reduction or termination of production or deliveries by suppliers, or the raising of prices or renegotiation of terms;

 

   

the termination or nonrenewal of arrangements or agreements by our third-party contractors at a time that is costly or inconvenient for us;

 

   

the breach by the third-party contractors of our agreements with them;

 

   

the failure of third-party contractors to comply with applicable regulatory requirements;

 

   

the failure of the third party to manufacture our product candidates according to our specifications;

 

   

the mislabeling of clinical supplies, potentially resulting in the wrong dose amounts being supplied or active drug or placebo not being properly identified;

 

   

clinical supplies not being delivered to clinical sites on time, leading to clinical trial interruptions, or of drug supplies not being distributed to commercial vendors in a timely manner, resulting in lost sales; and

 

   

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

We do not have complete control over all aspects of the manufacturing process of, and are dependent on, our contract manufacturing collaborators for compliance with cGMP regulations for manufacturing both active drug substances and finished drug products. Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside of the United States. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA, EMA or others, they will not be able to secure and/or maintain marketing approval for their manufacturing facilities. In addition, we do not have control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA, the competent authorities of the Member States of the EEA or a comparable regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may

 

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need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain marketing approval for or market our product candidates, if approved. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or drugs, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates or drugs and harm our business and results of operations.

Our current and anticipated future dependence upon others for the manufacture of our product candidates or drugs may adversely affect our future profit margins and our ability to commercialize any product candidates that receive marketing approval on a timely and competitive basis.

The manufacture of drugs is complex and our third-party manufacturers may encounter difficulties in production. If any of our third-party manufacturers encounter such difficulties, our ability to provide adequate supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or prevented.

Manufacturing drugs, especially in large quantities, is complex and may require the use of innovative technologies. Each lot of an approved drug product must undergo thorough testing for identity, strength, quality, purity and potency. Manufacturing drugs requires facilities specifically designed for and validated for this purpose, and sophisticated quality assurance and quality control procedures are necessary. Slight deviations anywhere in the manufacturing process, including filling, labeling, packaging, storage and shipping and quality control and testing, may result in lot failures, product recalls or spoilage. For example, although we and our third-party manufacturers have introduced extensive quality assurance and quality control procedures, the manufacturing process is not fully automated and, thus, human error in the manufacturing process by our third-party manufacturers has in the past, and in the future may, influence timing and delivery of our product candidates. In addition, as we transfer processes to other third-party manufactures, we may experience delays or difficulties and incur additional costs. When changes are made to the manufacturing process, we may be required to provide preclinical and clinical data showing the comparable identity, strength, quality, purity or potency of the products before and after such changes. If microbial, viral or other contaminations are discovered at the facilities of our manufacturer, such facilities may need to be closed for an extended period of time to investigate and remedy the contamination, which could delay clinical trials and adversely harm our business. The use of biologically derived ingredients can also lead to allegations of harm, including infections or allergic reactions, or closure of product facilities due to possible contamination. If our manufacturers are unable to produce sufficient quantities for clinical trials or for commercialization as a result of these challenges, or otherwise, our development and commercialization efforts would be impaired, which would have an adverse effect on our business, financial condition, results of operations and growth prospects.

A portion of our manufacturing of our lead product candidate, DYN101, takes place in China through a third-party manufacturer. A significant disruption in the operation of this manufacturer, a trade war or political unrest in China could materially adversely affect our business, financial condition and results of operations.

We currently contract manufacturing operations to third parties, and certain raw materials for our lead product candidate, DYN101, are manufactured by a third party in China, and we expect to continue to use such third-party manufacturer or other third-party manufacturers in China for DYN101 and future product candidates. Any disruption in production or inability of our current or future manufacturers in China to produce adequate quantities to meet our needs, whether as a result of a natural disaster or other causes, could impair our ability to operate our business on a day-to-day basis and to continue our development of our current or future product candidates. Furthermore, since these manufacturers are located in China, we are exposed to the possibility of product supply disruption and increased costs in the event of changes in the policies of the United States or Chinese governments, political unrest or unstable economic conditions in China. For example, a trade war could lead to tariffs on the chemical intermediates we use that are manufactured in China. Any of these matters could

 

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materially and adversely affect our business and results of operations. In addition, manufacturing interruptions or failure to comply with regulatory requirements by third-party manufacturers could significantly delay clinical development of potential products and reduce third-party or clinical researcher interest and support of proposed trials. These interruptions or failures could also impede commercialization of our current or future product candidates and impair our competitive position. Further, we may be exposed to fluctuations in the value of the local currency in China. Future appreciation of the local currency could increase our costs. In addition, our labor costs could continue to rise as wage rates increase due to increased demand for skilled laborers and the availability of skilled labor declines in China.

If we decide to establish additional collaborations in the future, but are not able to establish those collaborations on commercially reasonable terms, we may have to alter our development and commercialization plans.

Our drug development programs and the potential commercialization of our product candidates will require substantial additional cash to fund expenses. We may continue to seek to selectively form collaborations to expand our capabilities, potentially accelerate research and development activities and provide for commercialization activities by third parties. Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing securityholders, or disrupt our management and business.

We would face significant competition in seeking appropriate collaborators and the negotiation process is time-consuming and complex. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA, EMA or comparable regulatory authorities, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing drugs, the existence of uncertainty with respect to our ownership of intellectual property and industry and market conditions generally. The potential collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such collaboration could be more attractive than the one with us for our product candidate. Further, we may not be successful in our efforts to establish a collaboration or other alternative arrangements for future product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view them as having the requisite potential to demonstrate safety and efficacy.

In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. Even if we are successful in entering into a collaboration, the terms and conditions of that collaboration may restrict us from entering into future agreements on certain terms with potential collaborators.

If and when we seek to enter into collaborations, we may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of a product candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate product revenue.

 

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We have and in the future may enter into collaborations with third parties for the development and commercialization of product candidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates.

We have and may in the future seek third-party collaborators for the development and commercialization of one or more of our product candidates. Our likely collaborators for any future collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies.

We have and will likely have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates. Our ability to generate revenue from these arrangements will depend on our collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements. Collaborations involving our product candidates could pose numerous risks to us, including the following:

 

   

collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations and may not perform their obligations as expected;

 

   

collaborators may deemphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, including as a result of a sale or disposition of a business unit or development function, or available funding or external factors such as an acquisition that diverts resources or creates competing priorities;

 

   

collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

 

   

collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

 

   

a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative to other products;

 

   

collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and intellectual property in such a way as to invite litigation or other intellectual property related proceedings that could jeopardize or invalidate our proprietary information and intellectual property or expose us to potential litigation or other intellectual property related proceedings;

 

   

disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management attention and resources;

 

   

collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates;

 

   

collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all;

 

   

collaborations may be impacted due to difficulties or interruptions experienced by our collaborators as a result of the COVID-19 pandemic; and

 

   

if a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our drug development or commercialization program could be delayed, diminished or terminated.

 

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One of our directors may have actual or potential conflicts of interest because of their positions with Ionis.

Following this offering, Brett Monia, Chief Executive Officer for Ionis Pharmaceuticals, Inc., or Ionis, will continue to serve on our board of directors and will retain his position with Ionis. In addition, he will own equity in Ionis, which represent a significant portion of his net worth. Given Ionis is a major collaborator with Dynacure, and despite the rules applied by our Board of Directors to handle conflict of interests, this individual’s position at Ionis and his equity ownership of Ionis may lead him to make decisions that could have different implications for Ionis than the decisions have for us.

Risks Related to Commercialization

If the market opportunity for any product candidate that we develop is smaller than we believe, our revenue may be adversely affected and our business may suffer.

We focus our research and product development on treatments for rare diseases. We intend to initially focus our product candidate development on treatments for CNM and other neuromuscular diseases. Given the small number of patients who have the diseases that we are targeting, it is critical to our ability to grow and become profitable that we continue to successfully identify patients with these rare diseases. Our projections of addressable patient populations that may benefit from treatment with our product candidates are based on our estimates. These estimates, which have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations and market research, may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these disorders. The number of patients may turn out to be lower than expected. The effort to identify patients with diseases we seek to treat is in early stages, and we cannot accurately predict the number of patients for whom treatment might be possible. Additionally, the potentially addressable patient population for our product candidates may not ultimately be amenable to treatment with our product candidates, and new patients may become increasingly difficult to identify or gain access to, which would adversely affect our results of operations and our business. Our market opportunity may also be limited by future competitor treatments that enter the market. If any of our estimates prove to be inaccurate, the market opportunity for any product candidate that we develop could be significantly diminished and have an adverse material impact on our business. Further, even if we obtain significant market share for our product candidates, because the potential target populations are very small, we may never achieve profitability despite obtaining such significant market share.

Our target patient populations are relatively small, and there is currently no standard of care treatment directed at some of our target indications, such as CNM. As a result, the pricing and reimbursement of any product candidates we may develop, if approved, is uncertain, but must be adequate to support commercial infrastructure. If we are unable to obtain adequate levels of reimbursement, our ability to successfully market and sell product candidates will be adversely affected.

The estimates of market opportunity and forecasts of market growth included in this prospectus may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business may not grow at similar rates, or at all.

Market opportunity estimates and growth forecasts included in this prospectus are subject to significant uncertainty and are based on assumptions and estimates which may not prove to be accurate. The estimates and forecasts included in this prospectus relating to size and expected growth of our target market may prove to be inaccurate. Even if the markets in which we compete meet the size estimates and growth forecasts included in this prospectus, our business may not grow at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.

 

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If we are unable to establish sales or marketing capabilities or enter into agreements with third parties to sell or market our product candidates, we may not be able to successfully sell or market our product candidates that obtain regulatory approval.

We currently do not have and have never had a marketing or sales team. In order to commercialize any product candidates, if approved, we must build marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services for each of the territories in which we may have approval to sell or market our product candidates. We may not be successful in accomplishing these required tasks.

Establishing an internal sales or marketing team with technical expertise and supporting distribution capabilities to commercialize our product candidates will be expensive and time-consuming, and will require significant attention of our executive officers to manage. Any failure or delay in the development of our internal sales, marketing and distribution capabilities could adversely impact the commercialization of any of our product candidates that we obtain approval to market, if we do not have arrangements in place with third parties to provide such services on our behalf. Alternatively, if we choose to collaborate, either globally or on a territory-by-territory basis, with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems, we will be required to negotiate and enter into arrangements with such third parties relating to the proposed collaboration. If we are unable to enter into such arrangements when needed, on acceptable terms, or at all, we may not be able to successfully commercialize any of our product candidates that receive regulatory approval or any such commercialization may experience delays or limitations. If we are unable to successfully commercialize our approved product candidates, either on our own or through collaborations with one or more third parties, our future product revenue will suffer and we may incur significant additional losses.

We have never commercialized a product candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize any products on our own or together with suitable collaborators.

We have never commercialized a product candidate, and we currently have no sales force, marketing or distribution capabilities. To achieve commercial success for the product candidates, which we may license to others, we will rely on the assistance and guidance of those collaborators. For product candidates for which we retain commercialization rights, we will have to develop our own sales, marketing and supply organization or outsource these activities to a third party.

Factors that may affect our ability to commercialize our product candidates on our own include recruiting and retaining adequate numbers of effective sales and marketing personnel, obtaining access to or persuading adequate numbers of physicians to prescribe our product candidates and other unforeseen costs associated with creating an independent sales and marketing organization. Developing a sales and marketing organization will be expensive and time-consuming and could delay the launch of our product candidates. We may not be able to build an effective sales and marketing organization. If we are unable to build our own distribution and marketing capabilities or to find suitable partners for the commercialization of our product candidates, we may not generate revenue from them or be able to reach or sustain profitability.

Even if approved, our product candidates may not achieve adequate market acceptance among physicians, patients, third-party payors and others in the medical community necessary for commercial success.

Even if our product candidates receive regulatory approval, they may not gain adequate market acceptance among physicians, patients, third-party payors and others in the medical community. The degree of market acceptance of any of our product candidates, if approved, will depend on a number of factors, including:

 

   

the efficacy and safety profile as demonstrated in clinical trials compared to alternative treatments;

 

   

the timing of market introduction of the product candidate as well as competitive products;

 

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the clinical indications for which the product candidate is approved;

 

   

the potential and perceived advantages of our product candidates over alternative treatments;

 

   

the prevalence and severity of any side effects;

 

   

the cost of our product candidates relative to alternative treatments;

 

   

the availability of coverage and adequate reimbursement, as well as pricing, by third-party payors, including government authorities;

 

   

relative convenience and ease of administration;

 

   

the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

 

   

the effectiveness of sales and marketing efforts;

 

   

relative convenience and ease of administration, including as compared to alternative treatments and competitive therapies;

 

   

unfavorable publicity relating to our products or product candidates or similar approved products or product candidates in development by third parties; and

 

   

the approval of other new therapies for the same indications.

In addition, restrictions on the use of our product candidates, such as boxed warnings or contraindications in labeling, or a REMS, if any, which may not be required of alternative treatments and competitive products, may materially and adversely affect market acceptance. For example, the U.S. product label for a currently marketed ASO contains a boxed warning and is only available through a REMS program. In addition, the product label in the EU for another marketed ASO requires blood monitoring.

If any of our product candidates is approved but does not achieve an adequate level of acceptance by physicians, hospitals, third-party payors and patients, we may not generate or derive sufficient revenue from that product candidate and our financial results could be negatively impacted. Even if our product candidates achieve market acceptance, the market may prove not to be large enough to allow us to generate significant revenue.

Any product candidates we develop may become subject to unfavorable third-party payor coverage and reimbursement practices, as well as pricing regulations.

The availability and extent of coverage and adequate reimbursement by third-party payors, including government health administration authorities, private health coverage insurers, managed care organizations and other third-party payors is essential for most patients to be able to afford expensive treatments. Sales of any of our product candidates that receive marketing approval will depend substantially, both in the United States and internationally, on the extent to which the costs of our product candidates will be covered and reimbursed by third-party payors. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize an adequate return on our investment. If reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs. If coverage and reimbursement are not available or reimbursement is available only to limited levels, we may not successfully commercialize any product candidate for which we obtain marketing approval.

There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved products. In the United States, no uniform policy of coverage and reimbursement for drug products exists among

 

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third-party payors. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations. Accordingly, one third-party payor’s determination to provide coverage for a product candidate does not assure that other payors will also provide coverage for the product candidate. As a result, the coverage determination process is often time-consuming and costly. This process will require us to provide scientific and clinical support for the use of our products to each third-party payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Further, third-party payors are increasingly requiring that drug companies provide them with predetermined discounts from list prices and challenging the price, examining the medical necessity and reviewing the cost effectiveness of medical product candidates. There may be especially significant delays in obtaining coverage and reimbursement for newly approved drugs. We may need to conduct expensive pharmaco-economic studies to demonstrate the medical necessity and cost effectiveness of our products. We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be.

For instance, in the European Union healthcare budgetary constraints have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Even if a pharmaceutical product obtains a marketing authorization in the European Union, there can be no assurance that reimbursement for such product will be secured on a timely basis or at all. Governments influence the price of medicinal products through their pricing and reimbursement rules and control of national healthcare systems that fund a large part of the cost of those products to consumers. Member states are free to restrict the range of pharmaceutical products for which their national health insurance systems provide reimbursement, and to control the prices and reimbursement levels of pharmaceutical products for human use. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed to by the government. Member states may approve a specific price or level of reimbursement for the pharmaceutical product, or alternatively adopt a system of direct or indirect controls on the profitability of the company responsible for placing the pharmaceutical product on the market, including volume-based arrangements, caps and reference pricing mechanisms. To obtain reimbursement or pricing approval in some EU member states, we may be required to conduct studies that compare the cost-effectiveness of our product candidates to other therapies that are considered the local standard of care. Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. The downward pressure on healthcare costs in general, particularly prescription medicines, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross border imports from low-priced markets exert a commercial pressure on pricing within a country.

If we are unable to establish or sustain coverage and adequate reimbursement for any future products from third-party payors, the adoption of those products and sales revenue will be adversely affected, which, in turn, could adversely affect the ability to market or sell those products. Coverage policies and third-party payor reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

EU drug marketing and reimbursement regulations may materially affect our ability to market and receive coverage for our products in the European member states.

We intend to seek approval to market our product candidates in both the United States and in selected other jurisdictions. If we obtain approval in one or more jurisdictions outside the United States for our product candidates, we will be subject to rules and regulations in those jurisdictions. In some foreign countries, particularly those in the European Union, the pricing of drugs is subject to governmental control and other market regulations which could put pressure on the pricing and usage of our product candidates. In these countries, pricing negotiations with governmental authorities can take considerable time after obtaining marketing approval of a product candidate. In addition, market acceptance and sales of our product candidates will depend significantly on the availability of adequate coverage and reimbursement from third-party payors for our product candidates and may be affected by existing and future healthcare reform measures.

 

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Much like the federal Anti-Kickback Statute prohibition in the United States, the provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products is also prohibited in the European Union. The provision of benefits or advantages to physicians is governed by the national anti-bribery laws of EU Member States, such as the UK Bribery Act 2010. Infringement of these laws could result in substantial fines and imprisonment.

Payments made to physicians in certain EU Member States must be publicly disclosed. Moreover, agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his or her competent professional organization and/or the regulatory authorities of the individual EU Member States. These requirements are provided in the national laws, industry codes or professional codes of conduct, applicable in the EU Member States. Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.

In addition, in most foreign countries, including the European Economic Area, or EEA, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing and reimbursement vary widely from country to country. For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. Reference pricing used by various EU member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. In some countries, we may be required to conduct a clinical study or other studies that compare the cost-effectiveness of any of our product candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval. There can be no assurance that any country that has price controls or reimbursement limitations for biopharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the European Union do not follow price structures of the United States and generally prices tend to be significantly lower. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If pricing is set at unsatisfactory levels or if reimbursement of our products is unavailable or limited in scope or amount, our revenue from sales and the potential profitability of any of our product candidates in those countries would be negatively affected.

The French “anti-gift” provisions (Articles L.1453-3 to L.1453-12 PHC) set out a general prohibition of payments and rewards from industries, i.e., companies manufacturing or marketing health products, to—but not only—healthcare professionals, with limited exceptions and strictly define the conditions under which such payments or awards are lawful, notably the authorization of the Professional Boards if the financial counterpart is higher than a certain amount, this limit being different according to the nature of the benefit concerned.

Our business entails a significant risk of product liability and if we are unable to obtain sufficient insurance coverage such inability could have an adverse effect on our business and financial condition.

Our business exposes us to significant product liability risks inherent in the development, testing, manufacturing and marketing of therapeutic treatments. Product liability claims could delay or prevent completion of our development programs. If we succeed in marketing products, such claims could result in an FDA, EMA or other regulatory authority investigation of the safety and effectiveness of our products, our manufacturing processes and facilities or our marketing programs. FDA, EMA or other regulatory authority investigations could potentially lead to a recall of our products or more serious enforcement action, limitations on the approved indications for which they may be used or suspension or withdrawal of approvals. Regardless of the merits or eventual outcome, liability claims may also result in decreased demand for our products, injury to our reputation, costs to defend the related litigation, a diversion of management’s time and our resources and substantial monetary awards to trial participants or patients. We currently have product liability insurance that we believe is appropriate for our stage of development and may need to obtain higher levels prior to marketing any of our product candidates, if approved. Any insurance we have or may obtain may not provide sufficient coverage against potential liabilities. Furthermore,

 

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clinical trial and product liability insurance is becoming increasingly expensive. As a result, we may be unable to obtain sufficient insurance at a reasonable cost to protect us against losses caused by product liability claims that could have an adverse effect on our business and financial condition.

Risks Related to Employee Matters, Managing Our Growth and Other Risks Related to Our Business

Our success is highly dependent on our ability to recruit, attract, hire and retain highly skilled executive officers and employees. If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.

To succeed, we must recruit, retain, manage and motivate qualified clinical, scientific, technical and management personnel, and we face significant competition for experienced personnel. We are highly dependent on the principal members of our management and scientific and medical staff. If we do not succeed in attracting and retaining qualified personnel, particularly at the management level, it could adversely affect our ability to execute our business plan and harm our operating results. In particular, the loss of one or more of our executive officers could be detrimental to us if we cannot recruit suitable replacements in a timely manner. The competition for qualified personnel in the biotechnology field is intense and as a result, we may be unable to continue to attract and retain qualified personnel necessary for the future success of our business. We could in the future have difficulty attracting experienced personnel to our company and may be required to expend significant financial resources in our employee recruitment and retention efforts.

Many of the other biotechnology companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer operating history in the industry than we do. They also may provide more diverse opportunities and better prospects for career advancement. Some of these characteristics may be more appealing to high-quality candidates than what we have to offer. If we are unable to continue to attract and retain high-quality personnel, the rate and success at which we can discover, develop and commercialize our product candidates will be limited and the potential for successfully growing our business will be harmed.

In order to successfully implement our plans and strategies, we will need to grow the size of our organization, and we may experience difficulties in managing this growth.

As of June 30, 2021, we had 25 full-time employees, including 15 employees engaged in research and development. In order to successfully implement our development and commercialization plans and strategies, and as we transition into operating as a U.S. public company, we expect to need additional managerial, operational, sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members of management, including:

 

   

identifying, recruiting, integrating, maintaining and motivating additional employees;

 

   

managing our internal development efforts effectively, including the clinical, FDA, EMA and other comparable regulatory agencies’ review process for DYN101 and any other future product candidates, while complying with any contractual obligations to contractors and other third parties we may have; and

 

   

improving our operational, financial and management controls, reporting systems and procedures.

Our future financial performance and our ability to successfully develop and, if approved, commercialize, DYN101 and any other future product candidates will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.

We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services, including key aspects of clinical development and manufacturing. We cannot assure you that the services of independent organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality or

 

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accuracy of the services provided by third party service providers is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain marketing approval of DYN101 and any other future product candidates or otherwise advance our business. We cannot assure you that we will be able to manage our existing third party service providers or find other competent outside contractors and consultants on economically reasonable terms, or at all.

If we are not able to effectively expand our organization by hiring new employees and/or engaging additional third party service providers, we may not be able to successfully implement the tasks necessary to further develop and commercialize DYN101 and any other future product candidates and, accordingly, may not achieve our research, development and commercialization goals.

Failure to comply with privacy and data protection laws and regulations could lead to government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business.

We and our collaborators may be subject to federal, state, and foreign data protection laws and regulations (i.e., laws and regulations that address data privacy and security). In the United States, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our collaborators. In addition, we may obtain health information from third parties (including research institutions from which we obtain clinical trial data) that are subject to privacy and security requirements under the Health Insurance Portability and Accountability Act of 1996, as amended, or HIPAA. Depending on the facts and circumstances, we could be subject to significant penalties if we violate HIPAA.

State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. For instance, the collection and use of health data in the European Economic Area, or EEA, and the United Kingdom are governed by the European Union General Data Protection Regulation, or the GDPR, which became effective in May 2018, as well as European Union and EEA member state data protection legislation. By virtue of section 3 of the European Union (Withdrawal) Act 2018, an amended version of the GDPR, known as the UK GDPR, continues to form part of the law of the United Kingdom, as amended (including by the various Data Protection, Privacy and Electronic Communications (Amendments etc) (EU Exit) Regulations). These laws impose strict obligations on the ability to process personal data, including health-related information of data subjects in the EEA and the United Kingdom, including in relation to use, collection, analysis, and transfer (including cross-border transfer) of such personal information. In particular, the GDPR may require some or all of the following: data processing activities shall be justified by a legal basis, data subjects shall be informed of the characteristics of the processing concerning them, adequate security measures shall be implemented, contractual relationships with data processors and transfers of personal data outside of the EEA shall be formalized and performed in compliance with data protection rules, data controllers shall hold and keep up to date a record of data processing activities, data privacy impact assessments shall be performed when a risk is materialized and kept up to date where necessary, personal data breaches shall be notified to data protection authorities and, if required, to data subjects. Failure to comply with the GDPR may result in substantial fines (potentially up to the greater of €20 million or 4% of annual global revenue) and other civil, criminal or administrative penalties. The GDPR may increase our responsibility and liability in relation to personal data that we process and we may be required to put in place additional mechanisms ensuring compliance with the GDPR. This may be onerous and if our efforts to comply with GDPR or other applicable European Union laws and regulations are not successful, it could adversely affect our business in the European Union. Moreover, the United Kingdom leaving the EU could also lead to further legislative and regulatory changes. It remains unclear how the United Kingdom data protection laws or regulations will develop in the medium to longer term and how data transfer to the United Kingdom from the EU will be regulated; following the United Kingdom’s departure from the EU and the EEA, and the expiry of the transition period, companies will have to comply with the GDPR and the UK GDPR (or GDPR as incorporated into the UK national law), the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global

 

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turnover. Until July 1, 2021, transfers of personal data from the European Union member states to the United Kingdom may be performed freely. A longer term adequacy decision to permit data transfers from the EU to the UK to continue unrestricted beyond that date is currently being discussed.

Recent legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States. For example, on July 16, 2020, the Court of Justice of the European Union, or CJEU, invalidated the EU-US Privacy Shield Framework, or Privacy Shield, under which personal data could be transferred from the EEA to United States entities that had self-certified with the U.S. Department of Commerce under the Privacy Shield scheme. While the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances. Use of the standard contractual clauses as well as similar safeguards (for example binding corporate rules or certification mechanism) must now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals. In some instances, additional measures and/or contractual provisions may need to be put in place, however, the nature of these additional measures is currently uncertain. Further, the European authorities have indicated that a new set of standard contractual clauses may be put into place, which could cause even further time and effort to be spent on implementing such new terms.

Also, in certain countries, in particular France, the conduct of clinical trials is subject to compliance with specific provisions of the Act No.78-17 of 6 January 1978 on Information Technology, Data Files and Civil Liberties, as amended, and in particular Section III of Chapter III of Title II relating to the processing of personal data in the health sector. These provisions require, among others, the filing of compliance undertakings with “standard methodologies” adopted by the French Data Protection Authority (the CNIL), or, if not complying, obtaining a specific authorization from the CNIL.

In addition, the California Consumer Privacy Act, or CCPA, went into effect on January 1, 2020. The CCPA creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling personal information, as that term is very broadly defined in the CCPA. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA may increase our compliance costs and potential liability, and similar laws have been proposed at the federal level and in other states.

As we expand into other foreign countries and jurisdictions, we may be subject to additional laws and regulations that may affect how we conduct business. All of these evolving compliance and operational requirements impose significant costs, such as costs related to organizational changes, implementing additional protection technologies, training employees and engaging consultants, which are likely to increase over time. In addition, such requirements may require us to modify our data processing practices and policies, distract management or divert resources from other initiatives and projects, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Any failure or perceived failure by us or our CROs, manufacturers, contractors, consultants or collaborators, to comply with federal, state or foreign laws or regulations could result in negative publicity, diversion of management time and effort and proceedings against us by governmental entities or litigation by third parties, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, sanctions, awards, penalties or judgments, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. In many jurisdictions, enforcement actions and consequences for noncompliance are rising.

Our internal computer systems, or those of any of our CROs, manufacturers, other contractors, consultants, collaborators or potential future collaborators, may fail or suffer security or data privacy breaches or other unauthorized or improper access to, use of, or destruction of our proprietary or confidential data, employee data, or personal data, which could result in additional costs, loss of revenue, significant liabilities, harm to our brand and material disruption of our operations.

Despite the implementation of security measures, our internal computer systems, networks, and the data contained therein, as well as those of our current and any future CROs and other contractors, consultants,

 

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collaborators and third-party service providers, are vulnerable to damage from computer viruses, cybersecurity threats, inadvertent action or inaction, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failure. If such an event were to occur and cause interruptions in our operations or result in the unauthorized acquisition of or access to personally identifiable information or individually identifiable health information, it could result in a material disruption of our drug discovery and development programs and our business operations, whether due to a loss of our trade secrets or other similar disruptions. Further, to the extent our employees are working at home during the COVID-19 pandemic, additional risks may arise as a result of depending on the networking and security put into place by the employees. Some of the federal, state and foreign government requirements include obligations of companies to notify individuals of security breaches involving particular personally identifiable information, which could result from breaches experienced by us or by our vendors, contractors, or organizations with which we have formed strategic relationships. Notifications and follow-up actions related to a security breach could impact our reputation, cause us to incur significant costs (including legal expenses and remediation costs), or lose customers. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the lost data. We also rely on third parties to manufacture our product candidates, and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data, or inappropriate disclosure of confidential, proprietary or personal information, we could be exposed to litigation and governmental investigations, the further development and commercialization of our product candidates could be delayed, and we could be subject to significant fines or penalties for any noncompliance with certain state, federal and/or international privacy and security laws.

Our insurance policies may not be adequate to compensate us for the potential losses arising from any such disruption, failure or security breach. In addition, such insurance may not be available to us in the future on economically reasonable terms, or at all. Further, our insurance may not cover all claims made against us and could have high deductibles in any event, and defending a suit, regardless of its merit, could be costly and divert management attention. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could also adversely affect our reputation, business, financial condition and results of operations.

Our operations are vulnerable to interruption by flood, fire, severe weather conditions, power loss, telecommunications failure, terrorist activity and other events beyond our control, which could harm our business.

We have not undertaken a systematic analysis of the potential consequences to our business and financial results from a major tornado, flood, fire, earthquake, power loss, terrorist activity or other disasters and do not have a recovery plan for such disasters. In addition, we do not carry sufficient insurance to compensate us for actual losses from interruption of our business that may occur, and any losses or damages incurred by us could harm our business. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses.

Our international operations subject us to various risks, and our failure to manage these risks could adversely affect our results of operations.

We face significant operational risks as a result of doing business internationally, such as:

 

   

fluctuations in foreign currency exchange rates;

 

   

differing payor reimbursement regimes, governmental payors or patient self-pay systems and price controls;

 

   

potentially adverse and/or unexpected tax consequences, including penalties due to the challenge by tax authorities on our tax position;

 

   

potential changes to the accounting standards, which may influence our financial situation and results;

 

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becoming subject to the different, complex and changing laws, regulations and court systems of multiple jurisdictions and compliance with a wide variety of foreign laws, treaties and regulations;

 

   

reduced protection of, or significant difficulties in enforcing, intellectual property rights in certain countries;

 

   

difficulties in attracting and retaining qualified personnel;

 

   

restrictions imposed by local labor practices and laws on our business and operations, including unilateral cancellation or modification of contracts;

 

   

rapid changes in global government, economic and political policies and conditions, political or civil unrest or instability, terrorism or epidemics and other similar outbreaks or events, and potential failure in confidence of our suppliers or customers due to such changes or events; and

 

   

tariffs, trade protection measures, import or export licensing requirements, trade embargoes and other trade barriers.

The United Kingdom’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets, and our business, which could reduce our ADS price.

Following a national referendum and enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union and ratified a trade and cooperation agreement governing its future relationship with the European Union. The agreement, which is being applied provisionally from January 1, 2021 until it is ratified by the European Parliament and the Council of the European Union, addresses trade, economic arrangements, law enforcement, judicial cooperation and a governance framework including procedures for dispute resolution, among other things. Because the agreement merely sets forth a framework in many respects and will require complex additional bilateral negotiations between the United Kingdom and the European Union as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains about how the precise terms of the relationship between the parties will differ from the terms before withdrawal.

These developments, or the perception that any related developments could occur, have had and may continue to have a significant adverse effect on global economic conditions and the stability of global financial markets, and could significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. As a result of this uncertainty, global financial markets could experience significant volatility, which could adversely affect the market price of our common stock. Asset valuations, currency exchange rates, and credit ratings have been and may continue to be subject to increased market volatility. Lack of clarity about future United Kingdom laws and regulations as the United Kingdom determines which European Union rules and regulations to replace or replicate, including financial laws and regulations, tax and free trade agreements, intellectual property rights, data protection laws, supply chain logistics, environmental, health, and safety laws and regulations, immigration laws, and employment laws, could decrease foreign direct investment in the United Kingdom, increase costs, depress economic activity, and restrict our access to capital. In addition, currency exchange rates between the pound sterling, the euro and the U.S. dollar have already been, and may continue to be, affected by Brexit.

Additionally, since the regulatory framework for pharmaceutical products in the United Kingdom covering quality, safety and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales and distribution of pharmaceutical products is derived from European Union directives and regulations, Brexit could materially impact the future regulatory regime that applies to products and the approval of product candidates in the United Kingdom. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, may force us to restrict or delay efforts to seek regulatory approval in the United Kingdom for any product candidates we may develop, which could significantly and materially harm our business.

We may not be able to use tax loss carryforwards.

As of December 31, 2020, we had cumulative carry forward tax losses of €39.2 million in France. In France, the use of these carry forward tax losses is capped at €1 million annually, plus 50% of the fraction of profits

 

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exceeding this limit. The unutilized balance of these tax losses can be carried forward to subsequent years and set-off under the same conditions without any time limits unless our company undergoes a material change of activity (in which case outstanding tax losses would be forfeited). It is also possible that future fiscal changes could eliminate our ability to utilize the balance of any tax loses, which could adversely affect our results.

We benefit from tax credits in France that could be reduced or eliminated.

As a company active in research and development in France, we have benefited from certain research and development incentives including, for example, the French research tax credit (credit d’impôt recherche), or CIR. These tax credits can be used to offset French corporate income tax due. The excess portion beyond that used to offset corporate income tax due is generally refunded in cash at the end of a three-year fiscal period; however, as long as we are considered a small or medium-sized entity (petite ou moyenne entreprise) in France, the CIR tax credit is refundable in the fiscal year after it is generated, provided that we comply with eligibility requirements. The research and development incentives are calculated based on the amount of eligible research and development expenditures. The French CIR tax credit amounted to €1.4 million for the year ended December 31, 2020. In addition, the French tax authorities, with the assistance of the Higher Education and Research Ministry, have audited in the past, and may again audit in the future, research and development programs in respect of which a tax credit has been claimed in order to assess whether it qualifies for the tax credit regime. The tax authorities may challenge our eligibility for, or our calculation of, certain tax reductions and/or deductions in respect of our research and development activities and expenditure, or the accelerated reimbursement allowed for small- and medium-size businesses and our credits may be reduced, which would have a negative impact on our revenue and future cash flows. Should the French tax authorities be successful, even if we comply with the current requirements in terms of documentation and eligibility of its expenditure, we may be liable for additional corporate income tax, or repayment of such denied tax credits that were reimbursed, and penalties and interest related thereto, which could have a significant impact on our results of operations and future cash flows. Furthermore, if the French Parliament decides to eliminate, or more likely, reduce the scope or the rate of, the research and development incentive benefit, either of which it could decide to do at any time, our results of operations could be adversely affected.

Tax authorities may disagree with our positions and conclusions regarding certain tax positions, resulting in unanticipated costs, taxes or non-realization of expected benefits.

As a result of doing business internationally, we may take certain tax positions in various countries and a tax authority in a given jurisdiction may disagree with tax positions that we have taken, which could result in increased tax liabilities. For example, the French tax authorities, the U.S. Internal Revenue Service or another tax authority could challenge our allocation of income by tax jurisdiction and the amounts paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including amounts paid with respect to our intellectual property development. Similarly, a tax authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions. A tax authority may take the position that material income tax liabilities, interest and penalties are payable by us, in which case, we expect that we might contest such assessment. Contesting such an assessment may be lengthy and costly and if we were unsuccessful in disputing the assessment, the result could increase our anticipated effective tax rate.

We may be exposed to significant foreign exchange risk.

We incur portions of our expenses, and may in the future derive revenue, in currencies other than the euro, in particular, the U.S. dollar. As a result, we are exposed to foreign currency exchange risk as our results of operations and cash flows are subject to fluctuations in foreign currency exchange rates. We currently do not engage in hedging transactions to protect against uncertainty in future exchange rates between particular foreign currencies and the euro. Therefore, for example, an increase in the value of the euro against the U.S. dollar could be expected to have a negative impact on our revenue and earnings growth as U.S. dollar revenue and earnings, if any, would be

 

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translated into euros at a reduced value. We cannot predict the impact of foreign currency fluctuations, and foreign currency fluctuations in the future may adversely affect our financial condition, results of operations and cash flows.

A variety of risks associated with marketing our product candidates internationally could materially adversely affect our business.

We plan to seek regulatory approval of our product candidates outside of France and the United States and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countries if we obtain the necessary approvals, including:

 

   

differing regulatory requirements and reimbursement regimes in foreign countries;

 

   

unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;

 

   

economic weakness, including inflation, or political instability in particular foreign economies and markets;

 

   

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

 

   

foreign taxes, including withholding of payroll taxes;

 

   

foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;

 

   

difficulties staffing and managing foreign operations;

 

   

workforce uncertainty in countries where labor unrest is more common;

 

   

potential liability under the FCPA or comparable regulations;

 

   

challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States;

 

   

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

 

   

business interruptions resulting from geo-political actions, including war and terrorism.

These and other risks associated with our international operations may materially adversely affect our ability to attain or maintain profitable operations.

Risks Related to Our Intellectual Property

Our success depends on our ability to protect our intellectual property and our proprietary technologies.

Our commercial success depends in part on our ability to obtain and maintain patent protection and trade secret protection for our product candidates, proprietary technologies and their uses as well as our and our licensors’ ability to operate without infringing the proprietary rights of others. If we or our licensors are unable to protect our intellectual property rights or if our intellectual property rights are inadequate for our technology or our product candidates, our competitive position could be harmed. We and our licensors generally seek to protect our proprietary position by filing patent applications in the United States and abroad related to our product candidates, proprietary technologies and their uses that are important to our business. Our patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless, and until, patents issue from such applications, and then only to the extent the issued claims cover the technology. There can be no assurance that our patent applications will result in patents being issued or that issued patents will afford sufficient protection against competitors with similar technology, nor can there be any assurance that the patents if issued will not be infringed, designed around, invalidated or rendered unenforceable by third parties. Even issued patents may later be found invalid or unenforceable or may be modified or revoked in proceedings instituted by third parties before various patent offices or in courts. The degree of future protection for our and

 

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our licensors’ proprietary rights is uncertain. Only limited protection may be available and may not adequately protect our or our licensors’ rights or permit us or our licensors to gain or keep any competitive advantage. These uncertainties and/or limitations in our and our licensors’ ability to properly protect the intellectual property rights relating to our product candidates could have a material adverse effect on our financial condition and results of operations.

The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or our licensors or any of our potential future collaborators will be successful in protecting our product candidates by obtaining and defending patents. These risks and uncertainties include the following:

 

   

the USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process, the noncompliance with which can result in abandonment or lapse of a patent or patent application, and partial or complete loss of patent rights in the relevant jurisdiction;

 

   

patent applications may not result in any patents being issued;

 

   

patents may be challenged, invalidated, modified, revoked, circumvented, found to be unenforceable or otherwise may not provide any competitive advantage;

 

   

our competitors, many of whom have substantially greater resources than we or our licensors do and many of whom have made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere with or block our ability to make, use and sell our product candidates;

 

   

there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns; and

 

   

countries other than the United States may have patent laws less favorable to patentees than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop and market competing products.

The patent prosecution process is also expensive and time-consuming, and we or our licensors may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions where protection may be commercially advantageous. It is also possible that we or our licensors may not identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, in some circumstances, we do not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, directed to technology that we license, including those from our licensors. We also may require the cooperation of our licensors in order to enforce the licensed patent rights, and such cooperation may not be provided. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. We cannot be certain that patent prosecution and maintenance activities by our licensors have been or will be conducted in compliance with applicable laws and regulations, which may affect the validity and enforceability of such patents or any patents that may issue from such applications. If they fail to do so, this could cause us to lose rights in any applicable intellectual property that we in-license, and as a result our ability to develop and commercialize products or product candidates may be adversely affected and we may be unable to prevent competitors from making, using and selling competing products.

In addition, although we enter into non-disclosure and confidentiality agreements with parties who have access to patentable aspects of our research and development output, such as our employees, outside scientific collaborators, CROs, third-party manufacturers, consultants, advisors, licensors, and other third parties, any of these parties may breach such agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.

 

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If we fail to comply with our obligations in the agreements under which we license intellectual property rights from our licensors or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

We are a party to a number of license agreements under which we are granted rights to intellectual property that are essential for our business and we may enter into additional license agreements in the future. Our existing license agreements impose on us, and we expect that any future license agreements where we in-license intellectual property will impose on us, various development, regulatory and/or commercial diligence obligations, payment of milestones and/or royalties and other obligations. If we fail to comply with our obligations under these agreements, or we are subject to bankruptcy-related proceedings, the licensors may have the right to terminate the licenses. Termination of these agreements or reduction or elimination of our rights under these agreements may result in us having to negotiate new or reinstated agreements with less favorable terms, or cause us to lose our rights under these agreements, including our rights to important intellectual property or technology.

We may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, and we cannot provide any assurances that third-party patents do not exist that might be enforced against our product candidates in the absence of such a license. We may fail to obtain any of these licenses on commercially reasonable terms, if at all. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. In that event, we may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected product candidates, which could materially harm our business and the third parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation. Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues. Provisions in license agreements may be susceptible to multiple interpretations. Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including:

 

   

the scope of rights granted under the license agreement and other interpretation-related issues;

 

   

whether and the extent to which our technology and processes infringe intellectual property of the licensor that is not subject to the license agreement;

 

   

our right to sublicense patents and other rights to third parties;

 

   

our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations;

 

   

our right to transfer or assign the license; and

 

   

the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and its affiliates and sublicensees and by us and our collaborators and sublicensees.

If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may not be able to successfully develop and commercialize the affected product candidates, which would have a material adverse effect on our business.

If the scope of any patent protection we or our licensors obtain is not sufficiently broad, or if we or our licensors lose any of the patent protection we license, our ability to prevent our competitors from commercializing similar or identical product candidates would be adversely affected.

The patent position of biopharmaceutical companies generally is highly uncertain, involves complex legal, scientific and factual questions, and has been the subject of much litigation in recent years. As a result, the

 

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existence, issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued that protect our product candidates or that effectively prevent others from commercializing competitive product candidates.

Moreover, the scope of claims in a patent application can be significantly reduced before any claims in a patent is issued, and claim scope can be reinterpreted after issuance. 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 or other third parties from competing with us, or otherwise provide us with any competitive advantage. Any patents that we own or license may be challenged or circumvented by third parties or may be narrowed or invalidated as a result of challenges by third parties. Consequently, we do not know whether our product candidates will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner, which could materially adversely affect our business, financial condition, results of operations and prospects.

The issuance of a patent is not conclusive as to its inventorship, ownership, scope, validity or enforceability, and our patents may not cover our product candidates or may be challenged in the courts or patent offices in the United States and abroad. We may be subject to a third party pre-issuance submission of prior art to the USPTO, or become involved in opposition, derivation, interference, reexamination, post-grant review, or PGR, and inter partes review, or IPR, or other similar proceedings in the USPTO or foreign patent offices challenging our patent rights. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to validity of our patents, for example, we cannot be certain that there is no invalidating prior art, of which we or our licensors and the patent examiner were unaware during prosecution. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found. There is also no assurance that there is no prior art of which we or licensors are aware, but which we do not believe affects the validity or enforceability of a claim in our patents and patent applications, which may, nonetheless, ultimately be found to affect the validity or enforceability of a claim. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate or render unenforceable, our patent rights, allowing third parties to commercialize our product candidates and compete directly with us, without payment to us. Such loss of patent rights, loss of exclusivity or patent claims being narrowed, invalidated or held unenforceable could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our product candidates. Such proceedings also may result in substantial cost and require significant time from our scientists and management, even if the eventual outcome is favorable to us. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.

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

We or our licensors may fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them. Therefore, we may miss potential opportunities to strengthen our patent position. It is possible that defects of form in the preparation or filing of our in-licensed patents or patent applications may exist, or may arise in the future, for example with respect to proper priority claims, inventorship, claim scope, or requests for patent term adjustments. If we or our licensors, whether current or future, fail to establish, maintain or protect such patents and other intellectual property rights, such rights may be reduced or eliminated. If our licensors are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised. If there are material defects in the form, preparation, prosecution, or enforcement of our in-licensed patents or patent applications, such patents may be invalid and/or unenforceable, and such applications may never result in valid, enforceable patents. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.

 

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As a licensee of third parties, we rely on third parties to file and prosecute patent applications and maintain patents and otherwise protect the licensed intellectual property under some of our license agreements. We have not had and do not have primary control over these activities for certain of our patents or patent applications and other intellectual property rights. We cannot be certain that such activities by third parties have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents or other intellectual property rights. Our current or future licensors may have the right to control enforcement of our licensed patents or defense of any claims asserting the invalidity of these patents and even if we are permitted to pursue such enforcement or defense, we will require the cooperation of our licensors. We cannot be certain that our licensors will allocate sufficient resources or prioritize their or our enforcement of such patents or defense of such claims to protect our interests in the licensed patents. Even if we are not a party to these legal actions, an adverse outcome could harm our business because it might prevent us from continuing to license intellectual property that we may need to operate our business. If any of our licensors or any of our future licensors or future collaborators fail to appropriately prosecute and maintain patent protection for patents covering any of our product candidates, our ability to develop and commercialize those product candidates may be adversely affected and we may not be able to prevent competitors from making, using and selling competing products.

In addition, even where we have the right to control patent prosecution of patents and patent applications we have acquired or licensed from third parties, we may still be adversely affected or prejudiced by actions or inactions of our licensors and their counsel that took place prior to us assuming control over patent prosecution.

Our technology acquired or licensed from various third parties, including our licensors, may be subject to retained rights. Our licensors may retain certain rights under their agreements with us, including the right to use the underlying technology for use in fields other than the fields licensed to us or for use in noncommercial academic and research use, to publish general scientific findings from research related to the technology, and to make customary scientific and scholarly disclosures of information relating to the technology. It is difficult to monitor whether our licensors limit their use of the technology to these uses, and we could incur substantial expenses to enforce our rights to our licensed technology in the event of misuse.

If we are limited in our ability to utilize acquired or licensed technologies, or if we lose our rights to critical in-licensed technology, we may be unable to successfully develop, out-license, market and sell our products, which could prevent or delay new product introductions. Our business strategy depends on the successful development of licensed and acquired technologies into commercial products. Therefore, any limitations on our ability to utilize these technologies may impair our ability to develop, out-license or market and sell our product candidate.

Intellectual property rights do not necessarily address all potential threats to our competitive advantage.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business or permit us to maintain our competitive advantage. For example:

 

   

others may be able to develop products that are similar to our product candidates but that are not covered by the claims of the patents that we own or license;

 

   

we or our licensors might not have been the first to make the inventions covered by the issued patents or patent application that we own or license;

 

   

we or our licensors might not have been the first to file patent applications covering certain of our inventions;

 

   

others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

 

   

it is possible that our or our licensors’ pending patent applications will not lead to issued patents;

 

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issued patents that we own or license may be held invalid or unenforceable, as a result of legal challenges by our competitors;

 

   

our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

 

   

we may not develop additional proprietary technologies that are patentable; and

 

   

the patents of others may have an adverse effect on our business.

Should any of these events occur, it could significantly harm our business, results of operations and prospects.

Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. Claims by third parties that we infringe their proprietary rights may result in liability for damages or prevent or delay our developmental and commercialization efforts.

Our commercial success depends in part on avoiding infringement or other violation of the patents and proprietary rights of third parties. However, our research, development and commercialization activities may be subject to claims that we infringe or otherwise violate patents or other intellectual property rights owned or controlled by third parties. Other entities may have or obtain patents or proprietary rights that could limit our ability to make, use, sell, offer for sale or import our product candidates and products that may be approved in the future, or impair our competitive position. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biopharmaceutical industry, including patent infringement lawsuits, oppositions, reexaminations, IPR proceedings and PGR proceedings before the USPTO and/or foreign patent offices. Numerous third-party U.S. and foreign issued patents and pending patent applications exist in the fields in which we are developing product candidates. There may be third-party patents or patent applications with claims to composition of matter, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates.

As the biopharmaceutical industry expands and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties. Because patent applications are maintained as confidential for a certain period of time, until the relevant application is published we may be unaware of third-party patents that may be infringed by commercialization of any of our product candidates, and we cannot be certain that we were the first to file a patent application related to a product candidate or technology or the first to invent such technology. Moreover, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe. In addition, identification of third-party patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our product candidates or the use of our product candidates. After issuance, the scope of patent claims remains subject to construction as determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our product candidates. Any claims of patent infringement asserted by third parties would be time consuming and could:

 

   

result in costly litigation that may cause negative publicity;

 

   

divert the time and attention of our technical and management personnel;

 

   

cause development delays;

 

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prevent us from commercializing any of our product candidates until the asserted patent expires or is held finally invalid or unenforceable or not infringed in a court of law;

 

   

require us to develop non-infringing technology, which may not be possible on a cost-effective basis or at all;

 

   

subject us to significant liability to third parties; or

 

   

require us to enter into royalty or license agreements, which may not be available on commercially reasonable terms, or at all, or which might be non-exclusive, which could result in our competitors gaining access to the same technology.

Although no third party has asserted a claim of patent infringement against us as of the date of this prospectus, others may hold proprietary rights that could prevent our product candidates from being marketed. Although we have reviewed certain third-party patents and patent filings that we believe may be relevant to our programs, we have not conducted a freedom-to-operate search or analysis for any of our programs, and we may not be aware of patents or pending or future patent applications that, if issued, would block us from commercializing our current or future product candidates. Thus, we cannot guarantee that our product candidates, or our commercialization thereof, do not and will not infringe any third party’s intellectual property. Any patent-related legal action against us claiming damages and seeking to enjoin activities relating to our programs or processes could subject us to potential liability for damages, including treble damages and attorneys’ fees if we were determined to willfully infringe, and require us to obtain a license to manufacture, develop or market our current or future product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of management and employee resources from our business. We cannot predict whether we would prevail in any such actions or that any license required under any of these patents would be made available on commercially acceptable terms, if at all. Moreover, even if we or our future strategic collaborators were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. In addition, we cannot be certain that we could redesign our product candidates or processes to avoid infringement, if necessary. Accordingly, an adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent us from developing and commercializing our product candidates, which could harm our business, financial condition and operating results and prospects.

Parties making claims against us may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise additional funds or otherwise have a material adverse effect on our business, results of operations, financial condition and prospects.

We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful. Further, our issued patents could be found invalid or unenforceable if challenged in court.

Competitors may infringe our intellectual property rights or those of our licensors. To prevent infringement or unauthorized use, we and/or our licensors may be required to file infringement claims, which can be expensive and time-consuming. Further, our licensors may need to file infringement claims, and our licensor may elect not file such claims. In addition, in a patent infringement proceeding, a court may decide that a patent we own or license is not valid, is unenforceable and/or is not infringed. If we or any of our licensors or potential future collaborators were to initiate legal proceedings against a third party to enforce a patent directed at one of our product candidates, the defendant could counterclaim that our patent is invalid and/or unenforceable in whole or in part. In a patent litigation, defendant counterclaims alleging invalidity and/or unenforceability are

 

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commonplace. Grounds for a validity challenge include an alleged failure to meet any of several statutory requirements, including lack of novelty or written description, obviousness or non-enablement. Grounds for an unenforceability assertion could include an allegation that someone connected with prosecution of the patent intentionally withheld material information from the USPTO or made a misleading statement during prosecution.

If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on such product candidate. In addition, if the breadth or strength of protection provided by our patents and patent applications or those of our licensors is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates. Such a loss of patent protection would have a material adverse impact on our business.

Even if resolved in our favor, litigation or other legal proceedings relating to our intellectual property rights may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Damages or other remedies awarded, if any, may not be commercially meaningful. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or other legal proceedings relating to our intellectual property rights, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation or other proceedings.

Intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our common shares to decline.

During the course of any intellectual property litigation, there could be public announcements of the initiation of the litigation as well as results of hearings, rulings on motions, and other interim proceedings in the litigation. If securities analysts or investors regard these announcements as negative, the perceived value of our existing products, programs or intellectual property could be diminished. Accordingly, the market price of shares of our common stock may decline. Such announcements could also harm our reputation or the market for our future products, which could have a material adverse effect on our business.

Derivation or interference proceedings may be necessary to determine priority of inventions, and an unfavorable outcome may require us to cease using the related technology or to attempt to license rights from the prevailing party.

Derivation or interference proceedings provoked by third parties or brought by us or our licensors, or declared by the USPTO or similar proceedings in foreign patent offices may be necessary to determine the priority of inventions with respect to our or our licensors’ patents or patent applications. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our or our licensors’ defense of such proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. In addition, the uncertainties associated with such proceedings could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties or enter into development or manufacturing collaborations that would help us bring our product candidates to market.

 

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Changes in patent law could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, and could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

In September 2011, the Leahy-Smith America Invents Act, or Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. In particular, under the Leahy-Smith Act, the United States transitioned in March 2013 to a “first inventor to file” system in which, assuming that other requirements of patentability are met, the first inventor to file a patent application will be entitled to the patent regardless of whether a third party was first to invent the claimed invention. A third party that files a patent application in the USPTO after March 2013 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 such 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.

The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including PGR, IPR, and derivation proceedings. An adverse determination in any such submission or proceeding could reduce the scope or enforceability of, or invalidate, our patent rights, which could adversely affect our competitive position.

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO proceedings to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. Thus, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our or licensors’ patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our or our licensors’ ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the U.S. federal courts, the USPTO, or similar authorities in foreign jurisdictions, the laws and regulations governing patents could change in unpredictable ways that would weaken our or our licensors’ ability to obtain new patents or to enforce our existing patents and patents we might obtain in the future.

We or our licensors may be subject to claims challenging the inventorship or ownership of our or our in-licensed patents and other intellectual property.

We may also be subject to claims that former employees or other third parties have an ownership interest in our in-licensed patents or other intellectual property. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we or our licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights. Such an outcome could have a material adverse effect on our business. Even if we or our licensors are successful in defending against such claims, litigation could result in substantial costs and distraction to management and other employees.

 

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Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the term of a patent, and the protection it affords, is limited. Even if patents directed to our product candidates are obtained, once the patent term has expired, we may be open to competition from competitive products. Given the amount of time required for the development, testing and regulatory review of product candidates, patents directed to our product candidates might expire before or shortly after such candidates are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

If we or our licensors do not obtain patent term extension for our product candidates, our business may be materially harmed.

Depending upon the timing, duration and specifics of FDA marketing approval of our product candidates, one or more of our U.S. patents may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, or 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. A maximum of one patent may be extended per FDA-approved product as compensation for the patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended. Patent term extension may also be available in certain foreign countries upon regulatory approval of our product candidates. However, we or our licensors may not be granted an extension because of, for example, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we or our licensors are unable to obtain patent term extension or restoration or the term of any such extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our revenue could be reduced, possibly materially.

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

Although we have rights to issued patents and pending patent applications in the United States and certain other countries, filing, prosecuting and defending patents in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our in-licensed inventions in all countries outside the United States or from selling or importing products made using our in-licensed inventions in and into the United States or other jurisdictions. Competitors may use our in-licensed technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we or our licensors have patent protection but enforcement is not as strong as that in the United States. These products may compete with our product candidates, and our or our licensors patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of many foreign countries do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our or our licensors’ patents or marketing of competing products in violation of our proprietary rights. Proceedings to enforce our or our licensors’ patent rights in foreign jurisdictions could result in substantial costs

 

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and divert our efforts and attention from other aspects of our business, could put our or our licensors’ patents at risk of being invalidated or interpreted narrowly and our or our licensors’ patent applications at risk of not issuing and could provoke third parties to assert claims against us. We or our licensors may not prevail in any lawsuits that we or our licensors initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our or our licensors’ efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or our licensors are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.

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

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to the USPTO and various foreign patent offices at various points over the lifetime of our patents and/or applications. We have systems in place to remind us to pay these fees, and we rely on third parties to pay these fees when due. Additionally, the USPTO and various foreign patent offices require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If such an event were to occur, it could have a material adverse effect on our business.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition, we rely on the protection of our trade secrets, including unpatented know-how, technology and other proprietary information to maintain our competitive position. Although we have taken steps to protect our trade secrets and unpatented know-how, including entering into confidentiality agreements with third parties, and confidential information and inventions agreements with employees, consultants, licensors and advisors, we cannot provide any assurances that all such agreements have been duly executed, and 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. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets.

Moreover, third parties may still obtain this information or may come upon this or similar information independently, and we would have no right to prevent them from using that technology or information to compete with us. If any of these events occurs or if we otherwise lose protection for our trade secrets, the value of this information may be greatly reduced and our competitive position would be harmed. If we or our licensors do not apply for patent protection prior to such publication or if we cannot otherwise maintain the confidentiality of our proprietary technology and other confidential information, then our ability to obtain patent protection or to protect our trade secret information may be jeopardized.

 

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We may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers.

As is common in the biopharmaceutical industry, in addition to our employees, we engage the services of consultants to assist us in the development of our product candidates. Many of these consultants, and many of our employees, were previously employed at, or may have previously provided or may be currently providing consulting services to, other biopharmaceutical companies including our competitors or potential competitors. We may become subject to claims that we, our employees or a consultant inadvertently or otherwise used or disclosed trade secrets or other information proprietary to their former employers or their former or current clients. 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 affect our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to our management team and other employees.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential collaborators or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our unregistered trademarks or trade names. Over the long term, if we are unable to successfully register our trademarks and trade names and establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.

Risks Related to this Offering and Ownership of Our Ordinary Shares and ADSs

No prior public market for our ADSs exists. We do not know whether an active, liquid and orderly trading market will develop for our ADSs or what the market price of our ADSs will be and as a result it may be difficult for you to sell your ADSs.

No public market for our ADSs exists and an active trading market for our ADSs may never develop or be sustained following this offering. We will determine the initial public offering price for our ADSs through negotiations with the underwriters, and the negotiated price may not be indicative of the market price of our ADSs after this offering. The market value of our ADSs may decrease from the initial public offering price. As a result of these and other factors, you may be unable to sell your ADSs at or above the initial public offering price. The lack of an active market may also impair your ability to sell your ADSs at the time or price you wish to sell them. The lack of an active market may also reduce the fair market value of our ADSs. Furthermore, an inactive market may also impair our ability to raise capital by selling ADSs and may impair our ability to enter into strategic collaborations or acquire companies, technologies or other assets by using our ordinary shares or ADSs as consideration.

Our principal shareholders and management own a significant percentage of our shares and will be able to exert significant control over matters subject to shareholder approval.

Prior to this offering, our executive officers, directors, holders of 5% or more of our share capital and their respective affiliates beneficially owned approximately 98.5% of our ordinary shares and, upon the closing of this offering, that same group will beneficially own approximately 66.3% of our outstanding ordinary shares (including in the form of ADSs) (assuming no exercise of the underwriters’ option to purchase additional ADSs

 

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and assuming no purchase of ADSs by these persons in this offering). Therefore, even after this offering these shareholders will be able to significantly influence us through their ownership positions. These shareholders may be able to determine all matters requiring shareholder approval. For example, these shareholders may be able to control elections of directors, amendments of our organizational documents or approval of any merger, sale of assets or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our ordinary shares or ADSs that you may feel are in your best interest as one of our shareholders. The interests of this group of shareholders may not always coincide with your interests or the interests of other shareholders and they may act in a manner that advances their best interests and not necessarily those of other shareholders, including seeking a premium value for their ordinary shares or ADSs, and might affect the prevailing market price for our ADSs.

If you purchase ADSs in this offering, you will incur immediate and substantial dilution in the book value of your ADSs.

The initial public offering price of our ADSs will be substantially higher than the as adjusted net tangible book value per ADS. Therefore, if you purchase our ADSs in this offering, you will pay a price per ADS that substantially exceeds the pro forma as adjusted net tangible book value per ADS. Based on an assumed initial public offering price of $16.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, you will experience immediate dilution of $8.44 per ADS, representing the difference between our pro forma as adjusted net tangible book value per ADS, after giving effect to this offering, and the assumed initial public offering price. Further, the future exercise of any outstanding options (options de souscription et/ou d’achats d’actions) or share warrants (bons de souscription d’actions), or vesting of any free shares (actions gratuites) will cause you to experience additional dilution. In addition, after giving effect to this offering, investors purchasing ADSs in this offering will contribute 49.8% of the total amount invested by securityholders since inception but will only own 31.8% of the ordinary shares (including in the form of ADSs) outstanding after giving effect to this offering. See “Dilution.”

Sales of a substantial number of our ADSs in the public market could cause the price of our ADSs to fall.

The price of our ADSs could decline as a result of sales of a large number of our ADSs after this offering or the perception that these sales could occur. These sales, or the possibility that these sales may occur, might also make it more difficult for us to sell equity securities in the future at a time and price that we deem appropriate.

Upon the closing of this offering, 19,675,884 ordinary shares, including 6,250,000 ordinary shares represented by the ADSs issued in this offering, will be outstanding (or 20,613,384 ordinary shares, including 7,187,500 ordinary shares represented by the ADSs issued in this offering, if the underwriters exercise their option to purchase additional ADSs from us in full), based on the number of ordinary shares outstanding as of March 31, 2021.

All ADSs sold in this offering will be freely tradable without restriction or further registration under the Securities Act unless held by our “affiliates” as defined in Rule 144 under the Securities Act. The 13,425,884 ordinary shares that are not represented by the ADSs sold in this offering, or 68.2% of our outstanding ordinary shares following this offering, are currently prohibited or otherwise restricted as a result of securities law provisions, market standoff agreements entered into by certain of our securityholders with us or lock-up agreements entered into by our securityholders with the underwriters in connection with this offering. However, subject to applicable securities law restrictions, the holders of these shares will be able to be exchange their ordinary shares for ADSs, which may be sold in the public market beginning 180 days after the date of this prospectus. The representatives of the underwriters may release some or all of the ordinary shares subject to lock-up agreements at any time in their sole discretion and without notice, which would allow for earlier exchange of these shares for ADSs. In addition, ordinary shares may be issued upon the exercise or settlement, as applicable, of options (options de souscription et/ou d’achats d’actions), share warrants (bons de souscription d’actions) or free shares (actions gratuites) under our equity incentive plans or reserved for future issuance under those plans and will become available for sale in the public market to the extent permitted by the provisions of

 

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applicable vesting schedules, market stand-off agreements and/or lock-up agreements, as well as Rules 144 and 701 under the Securities Act. For more information, see “Ordinary Shares and ADSs Eligible for Future Sale.”

Upon the closing of this offering, the holders of approximately 12,998,655 ordinary shares, or 66.1% of our outstanding shares (including ordinary shares represented by ADSs) following this offering, will have rights, subject to certain conditions, to require us to file registration statements covering the sale of their ordinary shares (including in the form of ADSs) or to include their ordinary shares in registration statements that we may file for ourselves or our other securityholders. We also intend to register the offer and sale of all ordinary shares that we may issue under our equity incentive plans. Once we register the offer and sale of ordinary shares for the holders of registration rights and ordinary shares that may be issued under our equity incentive plans, these ordinary shares will be able to be exchanged for ADSs, which may be sold in the public market upon issuance, subject to applicable securities laws and the lock-up agreements described under “Underwriting.”

In addition, in the future, we may issue additional ADSs, ordinary shares, or other equity or debt securities convertible into ordinary shares, in connection with a financing, acquisition, employee arrangement or otherwise. Any such issuance could result in substantial dilution to our existing securityholders and could cause the price of our ADSs to decline.

Raising additional capital may cause dilution to our existing securityholders, restrict our operations or require us to relinquish rights to our product candidates on unfavorable terms to us.

We may seek additional capital through a variety of means, including through public or private equity, debt financings or other sources, including up-front payments and milestone payments from strategic collaborations. To the extent that we raise additional capital through the sale of equity or convertible debt or equity securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as holders of our ADSs. Such financing may result in dilution to securityholders, imposition of debt covenants, increased fixed payment obligations or other restrictions that may affect our business. If we raise additional funds through up-front payments or milestone payments pursuant to strategic collaborations with third parties, we may have to relinquish valuable rights to our product candidates, or grant licenses on terms that are not favorable to us. 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.

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

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we intend to take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including:

 

   

being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this prospectus;

 

   

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;

 

   

reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements; and

 

   

exemptions from the requirements of holding nonbinding advisory shareholder votes on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We cannot predict if investors will find our ADSs less attractive because we may rely on these exemptions. If some investors find our ADSs less attractive as a result, there may be a less active trading market for our ADSs and the price of our ADSs may be more volatile.

 

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We will remain an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; (2) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We intend to take advantage of the extended transition period for adopting new or revised accounting standards under the JOBS Act as an emerging growth company. As a result of this election, our financial statements may not be comparable to companies that comply with U.S. public company effective dates.

As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file less information with the SEC than a U.S. company. This may limit the information available to holders of ADSs.

We are a foreign private issuer, as defined in the SEC’s rules and regulations and, consequently, we are not subject to all of the disclosure requirements applicable to public companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. In addition, our officers and directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. domestic issuers and will not be required to file quarterly reports on Form 10-Q or current reports on Form 8-K under the Exchange Act. Accordingly, there will be less publicly available information concerning our company than there would be if we were not a foreign private issuer.

As a foreign private issuer, we are permitted and we expect to follow certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance standards. These practices may afford less protection to securityholders than they would enjoy if we complied fully with the corporate governance standards of Nasdaq.

As a foreign private issuer listed on Nasdaq Global Market, we will be subject to Nasdaq corporate governance standards. However, Nasdaq rules provide that foreign private issuers are permitted to follow home country corporate governance practices in lieu of Nasdaq corporate governance standards as long as notification is provided to Nasdaq of the intention to take advantage of such exemptions. We intend to rely on exemptions for foreign private issuers and follow French corporate governance practices in lieu of Nasdaq corporate governance standards, to the extent possible. Certain corporate governance practices in France, which is our home country, may differ significantly from Nasdaq corporate governance standards. For example, as a French company, neither the corporate laws of France nor our bylaws require a majority of our directors to be independent and we can include non-independent directors as members of our compensation committee, and our independent directors are not required to hold regularly scheduled meetings at which only independent directors are present.

We are also exempt from provisions set forth in Nasdaq rules which require an issuer to provide in its bylaws for a generally applicable quorum, and that such quorum may not be less than one-third of the outstanding voting stock. Consistent with French law, our bylaws provide that, at the first meeting convened, a quorum requires the presence of shareholders having at least (1) 20% of the shares entitled to vote in the case of an ordinary shareholders’ general meeting or at an extraordinary shareholders’ general meeting where shareholders are voting on a capital increase by capitalization of reserves, profits or share premium (in case of lack of quorum, no quorum is required at the second meeting convened), or (2) 25% of the shares entitled to vote in the case of any other extraordinary shareholders’ general meeting (in case of lack of quorum, it is decreased to at least 20% of the shares entitled to vote at the second meeting convened).

 

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As a foreign private issuer, we are required to comply with Rule 10A-3 of the Exchange Act, relating to audit committee composition and responsibilities. Under French law, the audit committee may only have an advisory role and appointment of our statutory auditors, in particular, must be decided by the shareholders at our annual meeting.

Therefore, our shareholders may be afforded less protection than they otherwise would have under Nasdaq corporate governance standards applicable to U.S. domestic issuers. For an overview of our corporate governance practices, see “Management—Committees of our Board of Directors.”

We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.

While we currently qualify as a foreign private issuer, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2021. In the future, we would lose our foreign private issuer status if we fail to meet the requirements necessary to maintain our foreign private issuer status as of the relevant determination date. We will remain a foreign private issuer until such time that more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (1) the majority of our executive officers or directors are U.S. citizens or residents; (2) more than 50% of our assets are located in the United States; or (3) our business is administered principally in the United States.

The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more than costs we incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive in certain respects than the forms available to a foreign private issuer. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers such as the ones described herein and exemptions from procedural requirements related to the solicitation of proxies.

Participation in this offering by our existing shareholders and/or their affiliated entities may reduce the public float for our ADSs.

To the extent our existing shareholders who are our affiliates and their affiliated entities participate in this offering, such purchases would reduce the non-affiliate public float of our ADSs, meaning the number of ADSs that are not held by officers, directors and controlling shareholders. A reduction in the public float could reduce the number of ADSs that are available to be traded at any given time, thereby adversely impacting the liquidity of our ADSs and depressing the price at which you may be able to sell ADSs purchased in this offering.

Our management team has broad discretion to use the net proceeds from this offering and its investment of these proceeds may not yield a favorable return. They may invest the net proceeds from this offering in ways with which investors disagree.

We intend to use a portion of the net proceeds from this offering, together with our existing cash, to (i) complete our ongoing Phase 1/2 clinical trial of DYN101, to commence our Phase 1/2 clinical trial of DYN101 in a pediatric population in Europe and to start the CMC activities required for future clinical studies including potential pivotal studies in both adult and pediatric populations; (ii) complete target validation for DYN201 and, if target validation is achieved, complete candidate selection; and (iii) the remaining amounts to fund the development of our future pipeline programs, as well as for working capital and other general corporate purposes. See “Use of Proceeds.” However, within the scope of our plan, and in light of the various risks to our business, including those discussed in this “Risk Factors” section and elsewhere in this prospectus, our management will have broad discretion over the use of net proceeds from this offering, and could spend the net proceeds in ways our securityholders may not agree with or that do not yield a favorable return, if at all. If we do not invest or apply the net proceeds from this offering in ways that improve our operating results, we may fail to achieve expected financial results, which could cause the price of our ADSs to decline.

 

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The rights of shareholders in companies subject to French corporate law differ in material respects from the rights of shareholders of corporations incorporated in the United States.

Our corporate affairs are governed by our bylaws and by the laws governing companies incorporated in France. The rights of shareholders and the responsibilities of members of our board of directors are in many ways different from the rights and obligations of shareholders in companies governed by the laws of U.S. jurisdictions. For example, in the performance of its duties, our board of directors is required by French law to consider the interests of our company, its shareholders, its employees and other stakeholders, rather than solely our shareholders and/or creditors. It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a holder of ADSs. See “Management—Corporate Governance Practices” and “Description of Share Capital.”

Our bylaws and French law contain provisions that may delay or discourage a takeover attempt.

Provisions contained in our bylaws and French corporate law could make it more difficult for a third-party to acquire us, even if doing so might be beneficial to our shareholders. In addition, provisions of our bylaws impose various procedural and other requirements, which could make it more difficult for shareholders to effect certain corporate actions. These provisions include the following:

 

   

under French law, a non-French resident must file a declaration for statistical purposes with the Bank of France (Banque de France) within twenty working days following the date of certain direct foreign investments in us, including any purchase of our ADSs. In particular, such filings are required in connection with investments exceeding €15 million that lead to the acquisition of at least 10% of our Company’s share capital or voting rights or cross such 10% threshold; see the section of this prospectus titled “Limitations Affecting Shareholders of a French company”;

 

   

under French law, certain investments in a French company relating to strategic sectors and activities likely to prejudice the interests of national defense, participating in the exercise of public authority or likely to prejudice public order and public security (such as research and development in biotechnologies intended to be carried out in a sensitive activity within the meaning of § I or II of Article R. 151-3 of the French Monetary and Financial code or activities relating to infrastructure, goods or services essential to guarantee the protection of public health) by individuals or entities not French, not resident in France or controlled by entities not French or not resident in France are subject to prior authorization of the Ministry of Economy pursuant to Articles L. 151-1 et seq. and R. 151-1 et seq. of the French Monetary and financial code;

 

   

a merger (i.e., in a French law context, a stock for stock exchange following which our company would be dissolved into the acquiring entity and our shareholders would become shareholders of the acquiring entity) of our company into a company incorporated in the European Union would require the approval of our board of directors as well as a two-thirds majority of the votes held by the shareholders present, represented by proxy or voting by mail at the relevant meeting;

 

   

a merger of our company into a company incorporated outside of the European Union would require 100% of our shareholders to approve it;

 

   

under French law, a cash merger is treated as a share purchase and would require the consent of each participating shareholder;

 

   

our shareholders have granted and may grant in the future our board of directors broad authorizations to increase our share capital or to issue additional ordinary shares or other securities, such as warrants, to our shareholders, the public or qualified investors, including as a possible defense following the launching of a tender offer for our shares;

 

   

our shareholders have preferential subscription rights on a pro rata basis on the issuance by us of any additional securities for cash or a set-off of cash debts, which rights may only be waived by the extraordinary general meeting (by a two-thirds majority vote) of our shareholders or on an individual basis by each shareholder;

 

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our board of directors has the right to appoint directors to fill a vacancy created by the resignation or death of a director, for the remaining duration of such director’s term of office and subject to the approval by the shareholders of such appointment at the next shareholders’ meeting, which prevents shareholders from having the sole right to fill vacancies on our board of directors;

 

   

our board of directors can be convened by our chairman, or our chief executive officer, if any, upon request made to the chairman or, when no board meeting has been held for more than two consecutive months, by directors representing at least one third of the total number of directors;

 

   

our board of directors meetings can only be regularly held if at least half of the directors attend either physically or by way of videoconference or teleconference enabling the directors’ identification and ensuring their effective participation in the board’s decisions;

 

   

our shares are nominative or bearer, if the legislation so permits, according to the shareholder’s choice;

 

   

approval of at least a majority of the votes held by shareholders present, represented by a proxy, or voting by mail at the relevant ordinary shareholders’ general meeting is required to remove directors with or without cause;

 

   

advance notice is required for nominations to the board of directors or for proposing matters to be acted upon at a shareholders’ meeting, except that a vote to remove and replace a director can be proposed at any shareholders’ meeting without notice;

 

   

our bylaws can be amended in accordance with applicable laws;

 

   

transfers of shares shall comply with applicable insider trading laws and regulations; and

 

   

pursuant to French law, our bylaws, including the sections relating to the number of directors and election and removal of a director from office, may only be modified by a resolution adopted by at least a two-third majority of the votes held of our shareholders present, represented by a proxy or voting by mail at the meeting.

Existing and potential investors in our ordinary shares or ADSs may have to request the prior authorization from the French Ministry of Economy prior to acquiring a significant ownership position in our ordinary shares or ADSs.

Under French law, investments entities resulting for non-EU or non-EEA investors crossing, directly or indirectly, alone or in concert, a 25% threshold of voting rights in a French company deemed to be a strategic industry (such as research and development in biotechnologies intended to be carried out in a sensitive activity within the meaning of § I or II of Article R. 151-3 of the French Monetary and Financial code or activities relating to infrastructure, goods or services essential to guarantee the protection of public health) may be subject to prior authorization of the French Ministry of Economy pursuant to Articles L. 151-1 et seq. and R. 151-1 et seq. of the French Monetary and financial code.

If an investment requiring the prior authorization of the French Minister of Economy is completed without such authorization having been granted, the French Minister of Economy might direct the relevant investor to nonetheless (i) submit a request for authorization, (ii) have the previous situation restored at its own expense or (iii) amend the investment. The relevant investor might also be found criminally liable and might be sanctioned with a fine which cannot exceed the greater of: (i) twice the amount of the relevant investment, (ii) 10% of the annual turnover before tax of the target company and (iii) €5 million (for an entity) or €1 million (for an individual).

Failure to comply with such measures could result in significant consequences on the applicable investor. Such measures could also delay or discourage a takeover attempt, and we cannot predict whether these measures will result in a lower or more volatile market price of our ADSs.

 

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Holders of our ADSs are not treated as shareholders of our company.

By participating in the offering you will become a holder of ADSs with underlying shares in a French public limited company (société anonyme). Holders of our ADSs are not treated as shareholders of our company, unless they withdraw the ordinary shares underlying our ADSs. The depositary, or its nominee, is the holder of the ordinary shares underlying our ADSs. Holders of ADSs therefore do not have any rights as shareholders of our company, other than the rights that they have pursuant to the deposit agreement.

You may not be able to exercise your right to vote the ordinary shares underlying your ADSs.

Holders of ADSs may exercise voting rights with respect to the ordinary shares represented by the ADSs only in accordance with the provisions of the deposit agreement. The deposit agreement provides that, upon receipt of notice of any meeting of holders of our ordinary shares, the depositary will fix a record date for the determination of ADS holders who shall be entitled to give instructions for the exercise of voting rights. Upon timely receipt of notice from us, if we so request, the depositary shall distribute to the holders as of the record date (1) the notice of the meeting or solicitation of consent or proxy sent by us and (2) a statement as to the manner in which instructions may be given by the holders.

Holders of ADSs may instruct the depositary to vote the ordinary shares underlying their ADSs. Otherwise, ADS holders will not be able to exercise their right to vote, unless they withdraw the ordinary shares underlying the ADSs they hold. However, ADS holders may not know about the meeting far enough in advance to withdraw those ordinary shares. If we ask for instructions from holders of ADSs, the depositary, upon timely notice from us, will notify them of the upcoming vote and arrange to deliver our voting materials to them. We cannot guarantee ADS holders that they will receive the voting materials in time to ensure that they can instruct the depositary to vote their ordinary shares or to withdraw their ordinary shares so that they can vote them themselves. If the depositary does not receive timely voting instructions from a holder of ADSs, it may give a proxy to a person designated by us to vote the ordinary shares underlying such holder’s ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that ADS holders may not be able to exercise their right to vote, and there may be nothing they can do if the ordinary shares underlying their ADSs are not voted as they requested.

The right as a holder of ADSs to participate in any future preferential subscription rights or to elect to receive dividends in shares may be limited, which may cause dilution to the holdings of purchasers of ADSs in this offering.

According to French law, if we issue additional securities for cash, current shareholders will have preferential subscription rights for these securities on a pro rata basis unless they waive those rights at an extraordinary meeting of our shareholders (by a two-thirds majority vote) or individually by each shareholder. However, our ADS holders in the United States will not be entitled to exercise or sell such rights unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. In addition, the deposit agreement currently provides that the depositary will not make rights available to purchasers of ADSs in this offering unless the distribution to ADS holders of both the rights and any related securities are either registered under the Securities Act or exempted from registration under the Securities Act. Further, if we offer holders of our ordinary shares the option to receive dividends in either cash or shares, under the deposit agreement the depositary may require satisfactory assurances from us that extending the offer to holders of ADSs does not require registration of any securities under the Securities Act before making the option available to holders of ADSs. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, ADS holders may be unable to participate in our rights offerings or to elect to receive dividends in shares and may experience dilution in their holdings. In addition, if the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case you will receive no value for these rights.

 

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

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

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

The deposit agreement governing our ADSs provides that holders and beneficial owners of ADSs irrevocably waive the right to a trial by jury in any legal proceeding arising out of or relating to the deposit agreement or the ADSs, including in respect of claims under U.S. federal securities laws, against us or the depositary to the fullest extent permitted by applicable law. The waiver continues to apply to claims that arise during the period when a holder holds the ADSs, even if the ADS holder subsequently withdraws the underlying ordinary shares.

However, you will not be deemed, by agreeing to the terms of the deposit agreement, to have waived our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder. In fact, you cannot waive our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder. If we or the depositary opposed a demand for jury trial relying on above-mentioned jury trial waiver, it is up to the court to determine whether such waiver was enforceable considering the facts and circumstances of that case in accordance with the applicable state and federal law.

If this jury trial waiver provision is prohibited by applicable law, an action could nevertheless proceed under the terms of the deposit agreement with a jury trial. To our knowledge, the enforceability of a jury trial waiver under the federal securities laws has not been finally adjudicated by a federal court or by the United States Supreme Court. Nonetheless, we believe that a jury trial waiver provision is generally enforceable under the laws of the State of New York, which govern the deposit agreement, by a federal or state court in the city of New York. In determining whether to enforce a jury trial waiver provision, New York courts and federal courts will consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party has knowingly waived any right to trial by jury. We believe that this is the case with respect to the deposit agreement and the ADSs. In addition, New York courts will not enforce a jury trial waiver provision in order to bar a viable setoff or counterclaim sounding in fraud or one which is based upon a creditor’s negligence in failing to liquidate collateral upon a guarantor’s demand, or in the case of an intentional tort claim (as opposed to a contract dispute), none of which we believe are applicable in the case of the deposit agreement or the ADSs. No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any provision of the federal securities laws. If you or any other holder or beneficial owner of ADSs brings a claim against us or the depositary in connection with such matters, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us and/or the depositary. If a lawsuit is brought against us and/or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different

 

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civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action, depending on, among other things, the nature of the claims, the judge or justice hearing such claims, and the venue of the hearing.

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

ADS holders have limited choice of forum, which could limit your ability to obtain a favorable judicial forum for complaints against us, the depositary or our respective directors, officers or employees.

The deposit agreement governing our ADSs provides that, (i) the deposit agreement and the ADSs will be interpreted in accordance with the laws of the State of New York, and (ii) as an owner of ADSs, you irrevocably agree that any legal action arising out of the deposit agreement and the ADSs involving us or the depositary may only be instituted in a state or federal court in the city of New York. Any person or entity purchasing or otherwise acquiring any of our ADSs, whether by transfer, sale, operation of law or otherwise, shall be deemed to have notice of and have irrevocably agreed and consented to these provisions.

To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, actions by our ADS holders to enforce any duty or liability created by the Exchange Act, the Securities Act or the respective rules and regulations thereunder must be brought in a federal court in the city of New York. Our ADS holders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.

The choice of forum provisions discussed above may increase your cost and limit your ability to bring a claim in a judicial forum (including, without limitation, claims under the Exchange Act, the Securities Act, and the respective rules and regulations thereunder) that you find favorable for disputes with us, the depositary or our and the depositary’s respective directors, officers or employees, which may discourage such lawsuits against us, the depositary and our and the depositary’s respective directors, officers or employees. However, it is possible that a court could find such choice of forum provisions to be inapplicable or unenforceable. The enforceability of similar choice of forum provisions has been challenged in legal proceedings. It is possible that a court could find this type of provisions to be inapplicable or unenforceable. A New York State court has discretion to transfer the place of trial and a United States District Court has discretion to transfer an action from one United States federal court to another.

U.S. investors may have difficulty enforcing civil liabilities against our company and directors and senior management and the experts named in this prospectus.

Certain members of our board of directors and senior management named in this prospectus are non-residents of the United States, and all or a substantial portion of our assets and the assets of such persons are located outside the United States. As a result, it may not be possible to serve process on such persons or us in the United States or to enforce judgments obtained in U.S. courts against them or us based on civil liability provisions of the securities laws of the United States. Additionally, it may be difficult to assert U.S. securities law claims in actions originally instituted outside of the United States. Foreign courts may refuse to hear a U.S.

 

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securities law claim because foreign courts may not be the most appropriate forums in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the law of the jurisdiction in which the foreign court resides, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides. In particular, there is some doubt as to whether French courts would recognize and enforce certain civil liabilities under U.S. securities laws in original actions or judgments of U.S. courts based upon these civil liability provisions. In addition, awards of punitive damages in actions brought in the United States or elsewhere may be unenforceable in France. An award for monetary damages under the U.S. securities laws would be considered punitive if it does not seek to compensate the claimant for loss or damage suffered but is intended to punish the defendant. French law provides that a shareholder, or a group of shareholders, may initiate a legal action to seek indemnification from the directors of a corporation in the corporation’s interest if it fails to bring such legal action itself. If so, any damages awarded by the court are paid to the corporation and any legal fees relating to such action may be borne by the relevant shareholder or the group of shareholders.

The enforceability of any judgment in France will depend on the particular facts of the case as well as the laws and treaties in effect at the time. The United States and France do not currently have a treaty providing for recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. See “Enforcement of Civil Liabilities.”

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ADSs.

We would be classified as a passive foreign investment company, or PFIC, for any taxable year if, after the application of certain look-through rules, either: (i) 75% or more of our gross income for such year is “passive income” (as defined in the relevant provisions of the Internal Revenue Code of 1986, as amended), or (ii) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. Based on the expected market price of our ordinary shares and ADSs following the registration and the composition of our income and assets, including goodwill, we do not expect to be treated as a PFIC for U.S. federal income tax purposes for the current taxable year or in the foreseeable future. However, this is a factual determination that must be made annually after the close of each taxable year, and the application of the PFIC rules is subject to uncertainty in several respects. For example, while we believe that governmental grants and similar payments we receive should be treated as gross income for purposes of the income test (described below), there is no guarantee that such treatment would be respected. Moreover, the value of our assets for purposes of the PFIC determination is generally determined by reference to the market price of our ordinary shares and ADSs, which could fluctuate significantly. Therefore, there can be no assurance that we will not be a PFIC for the current taxable year, or will not be classified as a PFIC in the future. Certain adverse U.S. federal income tax consequences could apply to a U.S. Holder (as defined in “Material Tax Considerations—United States Federal Income Taxation Considerations”) if we are treated as a PFIC for any taxable year during which such U.S. Holder holds our ADSs.

If a United States person is treated as owning ADSs representing at least 10% of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.

If a United States person is treated as owning (directly, indirectly or constructively) ADSs representing at least 10% of the value or voting power of our ordinary shares, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any). If our group includes one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries could be treated as controlled foreign corporations, regardless of whether we are not treated as a controlled foreign corporation. A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions. An individual that

 

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is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject you to significant monetary penalties and may prevent the statute of limitations with respect to your U.S. federal income tax return for the year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S. subsidiaries are treated as a controlled foreign corporation or whether such investor is treated as a United States shareholder with respect to any of such controlled foreign corporations or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A United States investor should consult its advisors regarding the potential application of these rules to an investment in the ADSs.

General Risk Factors

If we engage in future acquisitions or strategic collaborations, this may increase our capital requirements, dilute our securityholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks.

From time to time, we may evaluate various acquisition opportunities and strategic collaborations, including licensing or acquiring complementary products, intellectual property rights, technologies or businesses. Any potential acquisition or strategic collaboration may entail numerous risks, including:

 

   

increased operating expenses and cash requirements;

 

   

the assumption of additional indebtedness or contingent liabilities;

 

   

the issuance of our equity securities;

 

   

assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel;

 

   

the diversion of our management’s attention from our existing programs and initiatives in pursuing such a strategic merger or acquisition;

 

   

retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships;

 

   

risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and marketing approvals; and

 

   

our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.

In addition, if we undertake acquisitions or pursue collaborations in the future, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense. Moreover, we may not be able to locate suitable acquisition opportunities, and this inability could impair our ability to grow or obtain access to technology or products that may be important to the development of our business.

The price of our ADSs may be volatile, and you could lose all or part of your investment.

The trading price of our ADSs following this offering is likely to be highly volatile and subject to wide fluctuations in response to various factors, some of which we cannot control. The stock market in general, and pharmaceutical and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

 

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Broad market and industry factors may negatively affect the market price of our ADSs, regardless of our actual operating performance. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this prospectus, these factors include:

 

   

the timing and results of preclinical studies and clinical trials of our product candidates or those of our competitors;

 

   

the success of competitive products or announcements by potential competitors of their product development efforts;

 

   

regulatory actions with respect to our product candidate or our competitors’ product candidates;

 

   

actual or anticipated changes in our growth rate relative to our competitors;

 

   

regulatory or legal developments in the United States, European Union and other countries;

 

   

developments or disputes concerning patent applications, issued patents or other proprietary rights;

 

   

the recruitment or departure of key personnel;

 

   

announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments;

 

   

actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

 

   

fluctuations in the valuation of companies perceived by investors to be comparable to us;

 

   

market conditions in the pharmaceutical and biotechnology sector;

 

   

changes in the structure of healthcare payment systems;

 

   

price and volume fluctuations attributable to inconsistent trading volume levels of our ADSs;

 

   

announcement or expectation of additional financing efforts;

 

   

sales of our ADSs by us, our insiders or other holders of our ADSs;

 

   

expiration of market stand-off or lock-up agreements; and

 

   

general economic, industry and market conditions.

In addition, the trading prices of other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic. The COVID-19 pandemic continues to rapidly evolve. The extent to which the pandemic may impact our business, preclinical studies and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and adverse impact on the market price of our ADSs.

If securities or industry analysts do not publish research or reports, or if they publish adverse or misleading research or reports, regarding us, our business or our market, the price of our ADSs and trading volume could decline.

The trading market for our ADSs will be influenced by the research and reports that securities or industry analysts publish about us, our business or our market. We do not currently have and may never obtain research coverage by securities or industry analysts. If no or few securities or industry analysts commence coverage of us, the price of our ADSs would be negatively impacted. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue adverse or misleading research or reports regarding us, our business model, our intellectual property, our ADS performance or our market, or if our operating results fail to meet the expectations of analysts, the price of our ADSs would likely decline. If one or more of these analysts

cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause the price of our ADSs or trading volume to decline.

 

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The requirements of being a U.S. public company may strain our resources, result in more litigation and divert management’s attention.

As a U.S. public company following this offering, we will be subject to various reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, the listing requirements of Nasdaq and other applicable securities rules and regulations. Complying with these rules and regulations has increased and will increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company” and/or a foreign private issuer. For example, for so long as we remain a foreign private issuer, we will not be required to file with the SEC quarterly reports with respect to our business and results of operations, which are required to be made by domestic issuers pursuant to the Exchange Act.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for U.S. public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to

disclosure and governance practices. Further, being a U.S. public company and a French company will have an impact on disclosure of information and require compliance with two sets of applicable rules. This could result in uncertainty regarding compliance matters and higher costs necessitated by legal analysis of dual legal regimes, ongoing revisions to disclosure and adherence to heightened governance practices.

We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

These new rules and regulations may make it more expensive for us to obtain director and officer liability insurance and, in the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

By disclosing information in this prospectus and in future filings required of a U.S. public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If those claims are successful, our business could be seriously harmed. Even if the claims do not result in litigation or are resolved in our favor, the time and resources needed to resolve them could divert our management’s resources and seriously harm our business.

We must maintain effective internal control over financial reporting, and if we are unable to do so, the accuracy and timeliness of our financial reporting may be adversely affected, which could have a material adverse effect on our business, investor confidence and market price.

We must maintain effective internal control over financial reporting in order to accurately and timely report our results of operations and financial condition. In addition, once we are a U.S. public company, the Sarbanes-Oxley Act will require, among other things, that we assess the effectiveness of our disclosure controls and procedures annually and the effectiveness of our internal control over financial reporting at the end of each fiscal year. We anticipate being first required to issue management’s annual report on internal control over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley Act, in connection with issuing our financial statements as of and for the year ending December 31, 2022.

 

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The rules governing the standards that must be met for our management to assess our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act are complex and require significant documentation, testing and possible remediation. These stringent standards require that our audit committee be advised and regularly updated on management’s review of internal control over financial reporting. We plan to design, implement and test our internal control over financial reporting in order to comply with this obligation. This process will be time-consuming, costly and complicated. In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal controls over financial reporting beginning with our annual report following the date on which we are no longer an “emerging growth company,” which may be up to five fiscal years following the date of this offering. Our management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable to us as a U.S. public company. If we fail to staff our accounting and finance function adequately or maintain internal control over financial reporting adequate to meet the demands that will be placed upon us as a U.S. public company, including the requirements of the Sarbanes-Oxley Act, our business and reputation may be harmed and the price of our ADSs may decline. Furthermore, investor perceptions of us may be adversely affected, which could cause a decline in the market price of our ADSs.

We may be subject to securities litigation, which is expensive and could divert management attention.

The market price of our ADSs may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

We have no present intention to pay dividends on our securities in the foreseeable future and, consequently, your only opportunity to achieve a return on your investment during that time is if the price of our ADSs appreciates. In addition, French law may limit the amount of dividends we are able to distribute.

We have never declared or paid any cash dividends on our ordinary shares and we have no present intention to pay dividends in the foreseeable future. Any recommendation by our board of directors to pay dividends will depend on many factors, including our financial condition (including losses carried-forward), results of operations, legal requirements and other factors. Further, under French law, the determination of whether we have been sufficiently profitable to pay dividends is made on the basis of our statutory financial statements prepared and presented in accordance with accounting standards applicable in France. In addition, payment of dividends may subject us to additional taxes under French law. Please see the section of this prospectus titled “Material Tax Considerations” for further details on the limitations on our ability to declare and pay dividends and the taxes that may become payable by us if we elect to pay a dividend. Therefore, we may be more restricted in our ability to declare dividends than companies not based in France. If the price of our ADSs declines before we pay dividends, you will incur a loss on your investment, without the likelihood that this loss will be offset in part or at all by potential future cash dividends.

In addition, exchange rate fluctuations may affect the amount of Euros that we are able to distribute, and the amount in U.S. dollars that our securityholders receive upon the payment of cash dividends or other distributions we declare and pay in Euros, if any. These factors could harm the value of the ADSs, and, in turn, the U.S. dollar proceeds that holders receive from the sale of the ADSs.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that can involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, future revenue, timing and likelihood of success, plans and objectives of management for future operations, future results of anticipated products and prospects, plans and objectives of management are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements contained in this prospectus include, but are not limited to, statements about:

 

   

the ability of our clinical trials to demonstrate safety and efficacy of our product candidates, and other positive results;

 

   

the timing and focus of our ongoing and future preclinical studies and clinical trials, and the reporting of data from those studies and trials;

 

   

our plans relating to commercializing our product candidates, if approved, including the geographic areas of focus and sales strategy;

 

   

the size of the market opportunity for our product candidates, including our estimates of the number of patients who suffer from the diseases we are targeting;

 

   

the success of competing therapies that are or may become available;

 

   

our estimates of the number of patients that we will enroll in our clinical trials;

 

   

the beneficial characteristics, safety, efficacy and therapeutic effects of our product candidates;

 

   

the timing or likelihood of regulatory filings and approvals for our product candidates for various diseases;

 

   

our ability to obtain and maintain regulatory approval of our product candidates;

 

   

our plans relating to the further development of our product candidates, including additional indications we may pursue;

 

   

existing regulations and regulatory developments in the United States, Europe and other jurisdictions;

 

   

the potential effects and risks associated with the COVID-19 pandemic, which may adversely impact our business, preclinical studies and clinical trials;

 

   

our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;

 

   

our continued reliance on third parties to conduct additional clinical trials of our product candidates, and for the manufacture of our product candidates for preclinical studies and clinical trials;

 

   

our plans regarding, and our ability to obtain, and negotiate favorable terms of, any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates;

 

   

the need to hire additional personnel and our ability to attract and retain such personnel;

 

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

 

   

our financial performance;

 

   

the period over which we estimate our existing cash will be sufficient to fund our future operating expenses and capital expenditure requirements;

 

   

our expectations regarding the period during which we will qualify as an emerging growth company under the JOBS Act; and

 

   

our anticipated use of our existing resources and the proceeds from this offering.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this prospectus. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein until after we distribute this prospectus, whether as a result of any new information, future events or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

 

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MARKET AND INDUSTRY DATA

Certain industry data and market data included in this prospectus were obtained from independent third-party surveys, market research, publicly available information, reports of governmental agencies and industry publications and surveys. All of the market data used in this prospectus involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We believe that the information from these industry publications and surveys included in this prospectus is reliable. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

 

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USE OF PROCEEDS

We estimate that the net proceeds to us from this offering will be approximately $89.2 million (€76.0 million) (or approximately $103.2 million (€87.8 million) if the underwriters exercise in full their option to purchase additional ADSs), assuming an initial public offering price of $16.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting commissions and estimated offering expenses payable by us.

Each $1.00 increase or decrease in the assumed initial public offering price of $16.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, our net proceeds by $5.8 million (€4.9 million), after deducting the estimated underwriting commissions, assuming that the number of ADSs offered by us, as set forth on the cover of this prospectus, remains the same. An increase or decrease of 1,000,000 in the number of ADSs offered by us in this offering, as set forth on the cover page of this prospectus, would increase or decrease, as applicable, our net proceeds by approximately $14.9 million (€12.7 million), after deducting the estimated underwriting commissions, and assuming no change in the assumed initial public offering price per ADS.

We intend to use the net proceeds from this offering, together with our existing cash, as follows:

 

   

approximately $75.0 million to $85.0 million to complete our ongoing Phase 1/2 clinical trial of DYN101, to commence our Phase 1/2 clinical trial of DYN101 in a pediatric population in Europe and to start the CMC activities required for future clinical studies including potential pivotal studies in both adult and pediatric populations;

 

   

approximately $10.0 million to $14.0 million to complete target validation for DYN201 and, if target validation is achieved, complete candidate selection; and

 

   

the remaining amounts to fund the development of our future pipeline programs, as well as for working capital and other general corporate purposes.

We may also use a portion of the net proceeds to in-license, acquire or invest in additional businesses, technologies, products or assets, although currently we have no specific agreements, commitments or understandings in this regard.

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

Based on our planned use of the net proceeds of this offering and our existing cash, we estimate that such funds will be sufficient to enable us to fund our operating expenses and capital expenditure requirements through 2023. The net proceeds from this offering, together with our existing cash, will not be sufficient to fund any of our current or future product candidates through regulatory approval, and we anticipate needing to raise additional capital to complete the development of and commercialize our product candidates. We have based this estimate on assumptions that may prove to be incorrect, and we could use our available capital resources sooner than we currently expect.

Pending their use, we plan to invest the net proceeds from this offering in a variety of capital preservation investments, including short- and intermediate-term interest-bearing obligations and certificates of deposit.

 

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DIVIDEND POLICY

We have never paid or declared any cash dividends on our ordinary shares, and we do not anticipate paying any cash dividends on our ordinary shares or ADSs in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future dividend policy will be determined by our shareholders based on proposals made by our Board of Directors, and subject to French Law, and will be based upon conditions then existing, including our results of operations, financial condition, current and anticipated cash needs, contractual restrictions and other conditions.

Subject to the requirements of French law and our bylaws, dividends may only be distributed from our distributable profits, plus any amounts held in our available reserves, which are those reserves other than the legal and statutory reserves and revaluation surplus. See “Description of Share Capital—Key Provisions of Our Bylaws and French Law Affecting our Ordinary Shares—Rights, Preferences and Restrictions Attaching to Ordinary Shares” for further details on the limitations on our ability to declare and pay dividends. Any dividend we declare will be paid to the holders of ADSs, subject to the terms of the deposit agreement, to the same extent as holders of our ordinary shares, to the extent permitted by applicable law and regulations, less the fees and expenses payable under the deposit agreement. Any dividend we declare will be distributed by the depositary bank to the holders of our ADSs, subject to the terms of the deposit agreement. See “Description of American Depositary Shares—Dividends and Other Distributions.”

 

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CAPITALIZATION

The table below sets forth our cash and capitalization as of March 31, 2021:

 

   

on an actual basis;

 

   

on a pro forma basis to reflect (i) 662,451 Series A ordinary shares issued upon the conversion of the Convertible Promissory Note (as defined in Related Party Transactions—Ionis Convertible Promissory Note) on July 9, 2021 and (ii) the reclassification of all outstanding Series A, Series B and Series C ordinary shares into 12,301,660 ordinary shares upon the termination of the Shareholders Agreement, which will occur upon the effectiveness of the registration statement of which this prospectus forms a part; and

 

   

on a pro forma as adjusted basis to reflect (i) the pro forma adjustments set forth above and (ii) the issuance and sale of 6,250,000 ADSs in this offering at an assumed initial public offering price of $16.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting commissions and estimated offering expenses payable by us.

You should read this table in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus and “Use of Proceeds,” “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

     As of March 31, 2021  
     Actual      Pro Forma      Pro Forma
As Adjusted
(1)
 
     (in thousands, except share and per
ordinary share amounts)
 

Cash

   50,086      50,086      126,939  
  

 

 

    

 

 

    

 

 

 

Convertible promissory note with related party

   4,117      —        —    

Loans payable (current and noncurrent)

     2,350        2,350        2,350  

Series A, B and C ordinary shares, €0.04 nominal value; 12,354,472 shares authorized, actual; 11,639,209 shares issued and outstanding at March 31, 2021, actual; no shares authorized, pro forma and pro forma as adjusted; no shares issued and outstanding, pro forma and pro forma as adjusted

     89,529        —          —    
  

 

 

    

 

 

    

 

 

 

Shareholders’ equity (deficit):

        

Ordinary shares, €0.04 nominal value; 3,303,169 shares authorized, actual; 1,124,224 shares issued and outstanding at March 31, 2021, actual; 22,792,329 shares authorized, pro forma and pro forma as adjusted; 13,425,884 shares issued and outstanding, pro forma; 19,675,884 issued and outstanding, pro forma as adjusted

     45        537        787  

Additional paid-in capital

     7,036        100,190        175,916  

Accumulated deficit

     (50,082      (50,082      (50,082

Accumulated other comprehensive loss

     (1      (1      (1
  

 

 

    

 

 

    

 

 

 

Total shareholders’ equity (deficit)

     (43,002      50,644        126,620  
  

 

 

    

 

 

    

 

 

 

Total capitalization

   48,877      52,994      128,970  
  

 

 

    

 

 

    

 

 

 

 

(1) 

Each $1.00 (€0.85) increase or decrease in the assumed initial public offering price of $16.00 per ADS, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the pro forma as adjusted amount of each of cash, total shareholders’ equity (deficit) and total capitalization by €4.9 million, assuming that the number of ADSs offered by

 

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  us, as set forth on the cover page of this prospectus, remains the same. An increase or decrease of 1,000,000 ADSs offered by us, as set forth on the cover page of this prospectus, would increase or decrease, as applicable, the pro forma as adjusted amount of each of cash, total shareholders’ equity (deficit) and total capitalization by approximately €12.7 million, assuming that the assumed initial public offering price remains $16.00, which is the midpoint of the price range set forth on the cover page of this prospectus.

The pro forma as adjusted information above is illustrative only, and our capitalization following the closing of this offering will be adjusted based on the actual public offering price, the actual number of ADSs offered by us and other terms of this offering determined at pricing. U.S. dollar amounts have been translated into euros at a rate of $1.17 to €1.00, the noon buying rate of the Federal Reserve Bank of New York on March 31, 2021. Such U.S. dollar amounts are not necessarily indicative of the amounts of U.S. dollars that could actually have been purchased upon exchange of euros at the dates indicated.

The number of shares of our ordinary shares (including ordinary shares represented by ADS) to be outstanding after this offering, as adjusted in the table above, is based on 13,425,884 ordinary shares outstanding as of March 31, 2021 and excludes:

 

   

202,418 ordinary shares issuable upon the exercise of options (SO) outstanding as of March 31, 2021, with a weighted average exercise price of €5.97 per ordinary share;

 

   

553,563 ordinary shares issuable upon the vesting of free shares (AGA) outstanding as of March 31, 2021;

 

   

1,137,793 ordinary shares issuable upon the exercise of share warrants (BSA) outstanding as of March 31, 2021, with a weighted average exercise price of €5.20 per share; and

 

   

2,691,104 ordinary shares that we may grant after this offering pursuant to delegations of authority from our shareholders underlying options (SO), free shares (AGA), and share warrants (BSA) to our directors, executive officers, employees, consultants, board observers and advisors, including the IPO Awards (as defined in the section “Management—IPO Awards”) expected to be issued in connection with this offering, or issue under our 2021 ESPP (which will become effective in connection with this offering), based on the number of ordinary shares outstanding following this offering; however, the number of ordinary shares that we may grant underlying options (SO), free shares (AGA), and share warrants (BSA) or issue under our 2021 ESPP is subject to change as our outstanding share capital changes. See “Management—Equity Incentives”

 

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DILUTION

If you invest in our ADSs, your ownership interest will be diluted to the extent of the difference between the initial public offering price per ADS paid by purchasers in this offering and our as adjusted net tangible book value per ADS after closing of this offering. For the convenience of the reader, we have translated euros in this section into U.S. dollars at the noon buying rate of the Federal Reserve Bank of New York on March 31, 2021, which was $1.17 to €1.00.

Our historical net tangible book value (deficit) as of March 31, 2021 was €(45.0) million ($(52.9) million), corresponding to a net tangible book value of $(4.14) per ADS. Historical net tangible book value per ADS represents the amount of our total tangible assets less our total liabilities, excluding deferred offering costs, divided by the total number of our ordinary shares outstanding as of March 31, 2021, multiplied by one, which is the number of ordinary shares represented by one ADS.

After giving effect to the issuance of 662,451 Series A ordinary shares issued upon the conversion of the Convertible Promissory Note on July 9, 2021 and the reclassification of all outstanding Series A, Series B and Series C ordinary shares into shareholders’ equity (deficit) upon the termination of the Shareholders Agreement, which will occur upon the effectiveness of the registration statement of which this prospectus forms a part, our pro forma net tangible book value as of March 31, 2021 was €48.6 million ($57.1 million), corresponding to a pro forma net tangible book value of $4.25 per ADS. Pro forma net tangible book value per ADS represents the amount of our total tangible assets less our total liabilities, excluding deferred offering costs, divided by the total number of our ordinary shares outstanding as of March 31, 2021, after giving effect to the pro forma adjustments described above and multiplied by one, which is the number of ordinary shares represented by one ADS.

After giving effect to the sale by us of 6,250,000 ADSs (and the issuance of 6,250,000 ordinary shares represented by the ADSs) in this offering at an assumed initial public offering price of $16.00 per ADS, which is the midpoint of the price range set forth in the cover page of this prospectus, and after deducting the estimated underwriting commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of March 31, 2021 would have been €126.6 million ($148.7 million), representing a pro forma as adjusted net tangible book value of $7.56 per ADS. This represents an immediate increase in pro forma as adjusted net tangible book value of $3.31 per ADS to existing shareholders and an immediate dilution of $8.44 per ADS to new investors purchasing ADSs in this offering. Dilution per ADS to new investors is determined by subtracting our pro forma as adjusted net tangible book value per ADS after this offering from the assumed initial public offering price of $16.00 per ADS.

The following table illustrates this dilution to new investors purchasing ADSs in this offering.

 

Assumed initial public offering price per ADS

      $ 16.00  

Historical net tangible book value per ADS before this offering

   $ (4.14   

Increase in historical net tangible book value per ADS attributable to the pro forma adjustments described above

     8.39     
  

 

 

    

Pro forma net tangible book value per ADS before this offering

     4.25     

Pro forma increase in net tangible book value per ADS attributable to this offering

     3.31     
  

 

 

    

Pro forma as adjusted net tangible book value per ADS after this offering

        7.56  
     

 

 

 

Dilution per ADS to new investors in this offering

      $ 8.44  
     

 

 

 

If the underwriters exercise in full their option to purchase an additional 937,500 ADSs (representing 937,500 ordinary shares), our pro forma as adjusted net tangible book value after this offering would be $7.89 per

 

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ADS, representing an immediate increase in pro forma as adjusted net tangible book value of $3.64 per ADS to existing shareholders and immediate dilution of $8.11 per ADS to new investors purchasing ADSs in this offering, based on the assumed initial public offering price of $16.00 per ADS in this offering, which is the midpoint of the price range set forth in the cover page of this prospectus, and after deducting the estimated underwriting commissions and estimated offering expenses payable by us.

Each $1.00 increase or decrease in the assumed initial offering price of $16.00 per ADS, which is the midpoint of the price range set forth in the cover page of this prospectus, would increase or decrease, as applicable, the pro forma as adjusted net tangible book value after this offering by $0.29 per ADS and the dilution to new investors in this offering by $0.71 per ADS, assuming that the number ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting commissions.

An increase or decrease of 1,000,000 in the number of ADSs offered by us in this offering, as set forth on the cover page of this prospectus, would increase or decrease, as applicable, the pro forma as adjusted net tangible book value after this offering by $0.35 per ADS and the dilution to new investors participating in this offering by $0.35 per ADS, assuming no change in the assumed initial public offering price per ADS and after deducting the estimated underwriting commissions.

The following table summarizes, as of March 31, 2021, on the pro forma as adjusted basis described above, the number of ordinary shares purchased from us (including ordinary shares represented by ADSs purchased in this offering), the total consideration paid to us and the average price per ordinary share and ADS paid by existing shareholders and by new investors purchasing ADSs in this offering. The table below is based on the assumed initial public offering price of $16.00 per ADS in this offering, which is the midpoint of the price range set forth in the cover page of this prospectus, before deducting the estimated underwriting commissions and estimated offering expenses payable by us:

 

     Ordinary Shares
Purchased(1)
    Total
Consideration
    Weighted-Average
Price per
Ordinary

Share
(including those
represented by
ADSs)
 
     Number      Percent     Amount      Percent  

Existing shareholders

     13,425,884        68   $ 100,706,622        50   $ 7.50  

New investors

     6,250,000        32       100,000,000        50     $ 16.00  
  

 

 

    

 

 

   

 

 

    

 

 

   

Total

     19,675,884        100   $ 200,706,622        100  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

(1) 

Includes ordinary shares represented by ADSs.

Each $1.00 increase or decrease in the assumed initial offering price of $16.00 per ADS, which is the midpoint of the price range set forth in the cover page of this prospectus, would increase or decrease, as applicable, the total consideration paid by new investors by $6.25 million, assuming that the number of ADSs offered by us in this offering, as set forth on the cover page of this prospectus, remains the same.

An increase or decrease of 1,000,000 in the number of ADSs offered by us, as set forth on the cover page of this prospectus, would increase or decrease, as applicable, the total consideration paid by new investors by $16.0 million, assuming no change in the assumed initial public offering price of $16.00 per ADS.

The foregoing tables and calculations (other than the historical net tangible book value calculations) are based on 13,425,884 ordinary shares outstanding as of March 31, 2021, and excludes:

 

   

202,418 ordinary shares issuable upon the exercise of options (SO) outstanding as of March 31, 2021, with a weighted average exercise price of €5.97 per ordinary share;

 

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553,563 ordinary shares issuable upon the vesting of free shares (AGA) outstanding as of March 31, 2021;

 

   

1,137,793 ordinary shares issuable upon the exercise of share warrants (BSA) outstanding as of March 31, 2021, with a weighted average exercise price of €5.20 per share; and

 

   

2,691,104 ordinary shares that we may grant after this offering pursuant to delegations of authority from our shareholders underlying options (SO), free shares (AGA), and share warrants (BSA) to our directors, executive officers, employees, consultants, board observers and advisors, including the IPO Awards (as defined in the section “Management—IPO Awards”) expected to be issued in connection with this offering, or issue under our 2021 ESPP (which will become effective in connection with this offering), based on the number of ordinary shares outstanding following this offering; however, the number of ordinary shares that we may grant underlying options (SO), free shares (AGA), and share warrants (BSA) or issue under our 2021 ESPP is subject to change as our outstanding share capital changes. See “Management—Equity Incentives”

To the extent that the options (SO), free shares (AGA) or share warrants (BSA) described above are exercised or settled or we issue additional ADSs or ordinary shares in the future, there will be further dilution to investors participating in this offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

If the underwriters exercise in full their option to purchase an additional 937,500 ADSs, the following will occur:

 

   

the percentage of our ordinary shares held by existing shareholders will decrease to 65% of the total number of our ordinary shares outstanding after this offering; and

 

   

the percentage of our ordinary shares (including ordinary shares in the form of ADSs) held by new investors will increase to approximately 35% of the total number of our ordinary shares outstanding after this offering.

 

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SELECTED CONSOLIDATED FINANCIAL DATA

The following tables set forth our selected consolidated financial data for the periods indicated. We have derived the consolidated statements of operations data for the years ended December 31, 2019 and 2020 and the consolidated balance sheet data as of December 31, 2019 and 2020 from our audited consolidated financial statements included elsewhere in this prospectus. The consolidated statements of operations data for the three months ended March 31, 2020 and 2021 and the consolidated balance sheet data as of March 31, 2021 have been derived from our unaudited interim consolidated financial statements included elsewhere in this prospectus and have been prepared on a consistent basis as our audited consolidated financial statements. In our opinion, these unaudited interim consolidated financial statements contain all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of such financial data. Our historical results are not necessarily indicative of the results that should be expected for any future period and our operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or any other interim periods or any future year or period. You should read the following selected consolidated financial data together with the consolidated financial statements included elsewhere in this prospectus and the sections titled “Use of Proceeds,” “Capitalization,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We maintain our books and records in euros, and we prepare our financial statements in accordance with U.S. GAAP.

 

     Year Ended December 31,      Three Months Ended March 31,  
     2019      2020      2020      2021  
     (in thousands, except share and per ordinary share amounts)  

Consolidated Statements of Operations Data:

           

Operating expenses:

           

Research and development

   8,330      12,727      5,934      2,040  

General and administrative

     2,753        5,753        851        1,889  
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss from operations

     (11,083      (18,480      (6,785      (3,929

Interest expense

     (205      (214      (52      (68

Foreign currency gains (losses)

     (33      (17      (7      6  
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss before income tax expense

     (11,321      (18,711      (6,844      (3,991

Income tax expense

     (2      (24      (12      (2
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss

   (11,323    (18,735    (6,856    (3,993
  

 

 

    

 

 

    

 

 

    

 

 

 

Per share information:

           

Net loss per ordinary share, basic and diluted(1)

   (2.54    (2.08    (1.29    (0.31
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average ordinary shares outstanding, basic and diluted(1)

     4,449,571        9,010,367        5,301,345        12,748,603  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) 

Series A, Series B and Series C ordinary shares are included in the basic and diluted net loss per share. For details on the calculation of our basic and diluted net loss per ordinary share see Note 2 to our audited and unaudited consolidated financial statements, respectively, included elsewhere in this prospectus. The information presented in this table does not give effect to the issuance of 662,451 Series A ordinary shares issued upon the conversion of the Convertible Promissory Note (as defined in Related Party Transactions—Ionis Convertible Promissory Note) on July 9, 2021.

 

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     As of December 31,      As of
March 31,
 
     2019     2020      2021  
     (in thousands)  

Consolidated Balance Sheet Data:

       

Cash

   7,344     54,012      50,086  

Working capital(1)

     9,458       54,191        50,295  

Total assets

     11,839       60,504        56,107  

Convertible promissory note with related party

     3,874       4,068        4,117  

Loans payable (current and noncurrent)

     850       2,350        2,350  

Series A, B and C ordinary shares

     28,140       89,529        89,529  

Total shareholders’ deficit

     (23,192     (39,734      (43,002

 

(1) 

Working capital is calculated as current assets minus current liabilities.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with the “Selected Consolidated Financial Data” section of this prospectus and our consolidated financial statements and related notes appearing elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this prospectus, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical-stage company focused on developing and commercializing novel therapies to transform the lives of patients with rare diseases who have limited or no treatment options. We are initially focused on developing treatments for neuromuscular diseases, beginning with myotubular and centronuclear myopathies, or CNM, a group of devastating rare genetic disorders with shortened life expectancy and significant morbidity. Our lead product candidate, DYN101, is an antisense oligonucleotide, or ASO, designed to be a disease-modifying medicine for treatment of the majority of CNM patients across multiple mutations in both adult and pediatric populations. We are conducting a Phase 1/2 clinical trial in Europe of DYN101, which is called UNITE-CNM, and we intend to expand this trial to sites in the United States in the second half of 2021. We expect to report interim pharmacokinetic, or PK, and safety data from this trial in the second half of 2022 and expect to report final data in 2023. DYN101 has been granted orphan drug designation by the U.S. Food and Drug Administration, or FDA, and European Medicines Agency, or EMA, and rare pediatric disease designation by the FDA. In addition, we are currently preparing to conduct a Phase 1/2 clinical trial of DYN101 called DyNaMic in a pediatric population in Europe, which may be expanded to the United States. Following interim data from the UNITE-CNM Phase 1/2 trial in adults, and subject to regulatory authorization, we expect to commence this pediatric clinical trial in the second half of 2022 in Europe. Our second program, DYN201, is a discovery-stage program focused on developing a treatment for a group of rare inherited neurodegenerative disorders called hereditary spastic paraplegias, or HSP.

Since our inception, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, acquiring and developing product and technology rights, and conducting research and development in our clinical trials. We have incurred recurring losses and negative cash flows from operations and have funded our operations primarily through the sale and issuance of our Series A, Series B and Series C ordinary shares, research credits and subsidies afforded to us under French law, and loans from Bpifrance in connection with our research and development efforts. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates. We expect to continue to incur significant expenses and increasing operating losses in connection with ongoing development activities related to our portfolio of programs as we advance the clinical development of DYN101; advance the continued research and development of DYN201; perform research activities as we seek to discover and develop additional programs and product candidates; carry out maintenance, expansion enforcement, defense, and protection of our intellectual property portfolio; and hire additional research and development, clinical and commercial personnel. In addition, we have several development, regulatory and commercial milestone payment obligations under our licensing arrangements.

Our net loss was €11.3 million and €18.7 million for the years ended December 31, 2019 and 2020, respectively, and €4.0 million for the three months ended March 31, 2021. As of March 31, 2021, we had €50.1 million in cash and an accumulated deficit of €50.1 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance our programs through all stages of development and clinical trials and, ultimately, seek regulatory approval. In addition, if we obtain marketing approval for any of our existing or future product candidates, we expect to incur significant commercialization

 

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expenses related to product manufacturing, marketing, sales and distribution. Furthermore, upon the closing of this offering, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company.

As a result, we will need to raise substantial additional capital to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we plan to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all. If we are unable to secure adequate additional funding as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more product candidates or delay our pursuit of potential in-licenses or acquisitions.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

We expect our existing cash, together with the net proceeds from this offering, will enable us to fund our operating expenses and capital expenditure requirements through 2023. See “Use of Proceeds.”

Impact of the COVID-19 Pandemic

In December 2019, the coronavirus disease, COVID-19, was identified in Wuhan, China. Since then, COVID-19 has spread globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic and travel bans and government stay at home orders have caused widespread disruption in business operations and economic activity. We continue to monitor how the COVID-19 pandemic is affecting our employees, business, development programs and ongoing clinical trial for DYN101. In response to the spread of COVID-19, we closed our executive offices for a period of time in compliance with the requirements of the French government, with our administrative employees continuing their work outside of our offices, and limited the number of staff in any given research and development laboratory, among other precautionary measures taken. We have not furloughed any of our staff and have not elected to participate in any of the other COVID-19 related government assistance schemes that have been implemented globally.

To date, disruptions caused by the COVID-19 pandemic have included delays of our UNITE-CNM Phase 1/2 trial for DYN101 due to difficulties enrolling and retaining patients and initiating new trial sites, as well as delays in our research-stage development programs due to limited operations at our laboratory facilities. The COVID-19 pandemic has also impacted and may continue to impact personnel at our third-party manufacturing facilities or the availability or cost of materials, which would disrupt our supply chain, and it may affect our ability to timely complete our ongoing UNITE-CNM Phase 1/2 trial and delay the initiation of any future preclinical studies or clinical trials, disrupt regulatory activities or have other adverse effects on our business and operations. For example, we have experienced delays in receiving supplies of raw materials for future clinical development due to the impact of COVID-19 on our suppliers’ ability to timely manufacture these materials.

As a result, we expect that the COVID-19 pandemic will continue to impact our business, results of operations, clinical and research-stage development timelines and financial condition. At this time, there is significant uncertainty relating to the trajectory of the COVID-19 pandemic and impact of related responses. For example, governments in Europe including France are experiencing several rounds of shutdowns. The impact of COVID-19 on our future results will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States, Europe and other countries, business

 

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closures or business disruptions, the continued impact on financial markets and the global economy, and the effectiveness of the global response to contain and treat the disease.

Licensing Agreements and Strategic Collaborations

Ionis Research Collaboration and License Agreement

In October 2016, we entered into a research collaboration and license agreement, or the Ionis License Agreement, with Ionis Pharmaceuticals, Inc., or Ionis. Under the Ionis License Agreement, we agreed to a research collaboration with Ionis to discover and develop ASO drugs to treat CNM and other neuromuscular diseases by knocking down the Dynamin 2, or DNM2, gene. Ionis granted us an option to obtain an exclusive license to develop and commercialize such DNM2 ASO drugs to treat CNM and other neuromuscular diseases, or the Option. The research collaboration completed in 2017 and Ionis identified several DNM2 ASOs, including DYN101, our lead product candidate. We exercised the Option in November 2017 and amended the Ionis License Agreement in April 2018.

We are solely responsible for, and are required to use commercially reasonable efforts to, research, develop, manufacture and commercialize the Ionis Licensed Products, at our own costs. We are also responsible for supplying all active pharmaceutical ingredients and finished drug product for our exploitation of the Ionis Licensed Products. In addition, we agreed to certain specific performance milestones, or Performance Milestones, and the associated timeline by which each such Performance Milestone must be achieved.

In partial consideration of the rights granted by Ionis to us under the Ionis License Agreement, we issued Ionis securities in February 2018, June 2018 and March 2020. In connection with our exercise of the Option, we paid Ionis a license fee of €4.2 million ($5.0 million using an exchange rate of 1.18) in the form of equity. Additionally, we paid Ionis a milestone payment of €4.5 million ($5.0 million at an exchange rate of 1.12) in the form of equity in connection with the initiation of our Phase 1/2 clinical trial for DYN101.

As of March 31, 2021, we are required to pay Ionis additional milestone payments of up to €25.1 million ($29.5 million) and €94.5 million ($111.0 million) upon the achievement of development and regulatory milestones, respectively. Development milestones are primarily based on the initiation of clinical trial phases and regulatory milestones are primarily based on the achievement of initial application filings and subsequent approvals from regulatory agencies. In addition, the Company is obligated to pay Ionis up to €51.1 million ($60.0 million) in commercial milestones based on certain annual net product sales thresholds, subject to potential increase if we undergo a change of control transaction before a specified event for a specific indication. Of such total milestone payments, those specifically related to our initial indication focused on CNM are up to €10.6 million ($12.5 million) and €46.8 million ($55.0 million) upon the achievement of development and regulatory milestones, respectively, and up to €51.1 million ($60.0 million) in commercial milestones. We are also obligated to pay Ionis tiered royalties on net sales of the Ionis Licensed Products by us or our affiliates at rates ranging from a low double digit to mid-teen percentage, on a country-by-country and product-by-product basis. Our obligation to pay Ionis the full royalty as mentioned above will continue, on a country-by-country and product-by-product basis, from the first commercial sale of such product in such country until the latest of (a) expiration of the last valid claim in the licensed patent rights in such country covering such product, (b) the expiration of data exclusivity in such country for such product, or (c) 10 years after the first commercial sale of such product in such country, or the Full Royalty Period. For each year after the Full Royalty Period, the royalty rate will be reduced on a year-by-year basis based on the reduction in annual net sales compared to the highest annual net sales during the Full Royalty Period. Our obligation to pay Ionis such reduced royalties will end when annual net sales drop to a low double-digit percentage of the highest annual net sales during the Full Royalty Period, for two consecutive years. Royalties we owe Ionis are subject to certain conditions and customary reductions. If, in connection with an Ionis Licensed Product, a regulatory authority grants us credits, reduced fees, priority review or any other incentives, and we transfer such incentive to a third party for consideration, we are obligated to share with Ionis a portion of such consideration, up to a low double-digit percentage, depending

 

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on Ionis’ holding in our share capital on a fully diluted basis. If we grant a sublicense or option to a third party to practice the patent rights licensed to us under the Ionis License Agreement to commercialize an Ionis Licensed Product, we are required to share with Ionis a portion of all consideration we receive from such sublicense, ranging from a low double-digit to mid-double-digit percentage, depending on the development stage for the indication that is subject to the applicable sublicense.

Either party may terminate the Ionis License Agreement for the uncured material breach of the other party or in the case of insolvency. We may terminate the Ionis License Agreement for convenience on a specified notice period.

See “Business—Licensing Agreements and Strategic Collaborations—Ionis Research Collaboration and License Agreement” for more information.

Conectus Exclusive Patent Sublicense Agreement

In October 2016, we entered into an exclusive patent sublicense agreement, or the Conectus Sublicense Agreement, with Satt Conectus Alsace, or Conectus, a company created by the French National Institute of Health and Medical Research, the National Center for Scientific Research, or CNRS, and the University of Strasbourg, or collectively, the Establishments, dedicated to the Establishments’ technology transfer. Conectus obtained from CNRS an exclusive license to exploit certain technology regarding a new therapeutic strategy for the treatment of CNM and other neuromuscular disorders, or the CNRS Technology. We are required to use reasonable commercial efforts to develop, manufacture, sell, use and otherwise commercially exploit at least one Conectus Licensed Product.

As partial consideration of the rights granted by Conectus to us, we paid Conectus an upfront payment in the form of equity. We are required to pay Conectus, on a country-by-country and product-by-product basis, (i) tiered royalties in the low single-digit percentages on net sales of the Conectus Therapeutic Products by us or our affiliates, and (ii) royalties in a low single-digit percentage on net sales of the Conectus Diagnostic Products by us or our affiliates, subject to certain customary reductions. We are also obligated to pay Conectus milestone payments upon the achievement of certain development and regulatory milestone events of up to €1.5 million and €5.7 million in developmental and regulatory milestone payments, respectively. If we sublicense to a third party rights over the patent rights within the Conectus Licensed Technology or the Conectus Licensed Products, we are required to share with Conectus a portion of all consideration we receive from such sublicense, ranging from a low single-digit to low double-digit percentage, depending on whether the product subject to the applicable sublicense is a Conectus Therapeutic Product or a Conectus Diagnostic Product and, if it is a Conectus Therapeutic Product, the development stage of such Conectus Therapeutic Product. Such sharing of sublicense consideration is in lieu of any royalties or milestone payments for the product or patent rights subject to such sublicense. Notwithstanding the foregoing, if the manufacture, use or commercialization of a Conectus Licensed Product is covered by patent rights within the Conectus Licensed Technology but not patent rights within the CNRS Technology, then the payments described above when due will be reduced by a certain percentage.

Either party may terminate the Conectus Sublicense Agreement for the uncured material breach of the other party. Conectus may terminate the Conectus Sublicense Agreement if we challenge any of the licensed patents, in the case of our insolvency, or in specified circumstances if we undergo a change of control transaction. We may terminate the Conectus Sublicense Agreement for convenience on a specified notice period.

See “Business—Licensing Agreements and Strategic Collaborations—Conectus Exclusive Patent Sublicense Agreement” for more information.

Research Collaboration and License Agreement with Paris Brain and Spine Institute

In June 2018 (and subsequently amended in June 2019), we entered into a research collaboration agreement, or the Paris Brain and Spine Institute Research Collaboration Agreement, with the Institut Du Cerveau et de la Moelle Epiniere, or the Paris Brain and Spine Institute, to discover and develop a new treatment approach for

 

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hereditary spastic paraplegia, or HSP, type 11. In addition, the Paris Brain and Spine Institute granted us an option to obtain an exclusive license to develop and commercialize our DYN201 program. We incurred €0.7 million to fund certain research activities and as consideration of the rights granted to us under the Paris Brain and Spine Institute Research Collaboration Agreement, which expired in December 2020.

In August 2019, we exercised our option under the Paris Brain and Spine Institute Research Collaboration Agreement and entered into an exclusive license agreement with the Paris Brain and Spine Institute, or the Paris Brain and Spine Institute License Agreement. The Paris Brain and Spine Institute granted us an exclusive, worldwide, and sublicensable license to further develop and commercialize our second program, DYN201, for the treatment of HSP. We are required to use commercially reasonable efforts to diligently develop the Paris Brain and Spine Institute licensed products and, after obtaining market authorization for a Paris Brain and Spine Institute licensed product, commercialize such product as soon as practical. We paid an upfront fee of €47,000 upon entering into the licensing arrangement. We are also obligated to pay the Paris Brain and Spine Institute up to €1.8 million and €6.3 million in developmental and regulatory milestone payments, respectively. In addition, we are required to pay the Paris Brain and Spine Institute tiered royalties in the low single-digit percentages on net sales of the Paris Brain and Spine Institute licensed products made by us or our affiliates. If we grant a sublicense or option to a third party to practice the technology licensed to us under the Paris Brain and Spine Institute License Agreement, we are required to share with the Paris Brain and Spine Institute a portion of all consideration we receive in connection with such sublicense, ranging from a mid-single-digit to a mid-teen percentage, depending on the development stage for the applicable product with the most advanced development status.

The Paris Brain and Spine Institute License Agreement will remain in effect, on a country-by-country and product-by-product basis, until the expiration of royalty obligations with respect to a given Paris Brain and Spine Institute licensed product in the applicable country. Royalties are payable, on a country-by-country and product-by-product basis, from the first commercial sale of such product in such country until the later of (a) the expiration of the last valid claim of the licensed patents covering such product in such country; and (b) the tenth anniversary of the first commercial sale of such product in such country.

Either party may terminate the Paris Brain and Spine Institute License Agreement (i) for the uncured material breach of the other party; or (ii) for insolvency related events involving the other party. In addition, we may terminate the Paris Brain and Spine Institute License Agreement for convenience subject to a specified notice period.

See “Business—Licensing Agreements and Strategic Collaborations—Research Collaboration and License Agreement with Paris Brain and Spine Institute” for more information.

Components of Results of Operations

Revenues

To date, we have not generated any revenue from the sale of products. Our ability to generate product revenue and to become profitable will depend upon our ability to successfully develop, obtain regulatory approval and commercialize DYN101 and any of our future product candidates. Because of the numerous risks and uncertainties associated with product development and regulatory approval, we are unable to predict the amount or timing of product revenue.

Research and Development Expense

Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our clinical and preclinical programs, net of reimbursements. We expense research and development costs as incurred. These expenses include:

 

   

expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval;

 

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milestone payments pursuant to our license agreements;

 

   

personnel expenses, including salaries, benefits and share-based compensation expense for employees engaged in research and development functions;

 

   

costs of funding research performed by third parties, including pursuant to agreements with CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials;

 

   

expenses incurred under agreements with contract manufacturing organizations, or CMOs, including manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical study and clinical trial materials;

 

   

fees paid to consultants who assist with research and development activities;

 

   

expenses related to regulatory activities, including filing fees paid to regulatory agencies; and

 

   

allocated expenses for facility costs, including rent, utilities, depreciation and maintenance.

Research and development activities are central to our business model. Product candidates in later stages of clinical development will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to increase significantly over the next several years as we increase personnel costs, including share-based compensation, conduct our clinical trials for DYN101 and conduct other clinical trials for future product candidates and prepare regulatory filings for any of our product candidates.

The successful development of our current or future product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of DYN101 or our future product candidates, or when, if ever, material net cash inflows may commence from our product candidates. This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of clinical trials, which vary significantly over the life of a project as a result of many factors, including:

 

   

delays in regulators or institutional review boards authorizing us or our investigators to commence our clinical trials, or in our ability to negotiate agreements with clinical trial sites or CROs;

 

   

our ability to secure adequate supply of our product candidates for our trials;

 

   

the number of clinical sites included in the trials;

 

   

the ability and the length of time required to enroll suitable patients;

 

   

the number of patients that ultimately participate in the trials;

 

   

the number of doses patients receive;

 

   

any side effects associated with our product candidates;

 

   

the duration of patient follow-up;

 

   

the results of our clinical trials;

 

   

significant and changing government regulations; and

 

   

launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others.

Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals. We may never succeed in achieving regulatory approval for our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of our product candidates. A change in the outcome of any of these variables with respect to the development of a

 

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product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA, EMA or other comparable regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development. Product commercialization will take several years, and we expect to spend a significant amount in development costs.

Research Tax Incentives and Grants

We participate in the Crédit d’Impôt Recherche, or CIR (Research Tax Credit), program which is granted to companies by the French tax authorities in order to encourage them to conduct technical and scientific research. We expect to continue to benefit from this program after we are a public company for as long as we are considered a small or medium-sized entity (petite ou moyenne entreprise) in France. We incur expenditures that meet the required criteria and receive a tax credit that is reimbursed in cash. We estimate the amount of the cash refund we expect to receive under this program and record such amounts as reductions to our research and development expense.

In addition, we receive various grants to subsidize our research and development efforts. Grants are also recognized as a reduction to our research and development expenses when we determine it is probable that we have met the conditions attached to the grant and the grant will be received. For grants received in advance, we defer recognition until such conditions have been met.

General and Administrative Expense

General and administrative expense consists primarily of personnel expenses, including salaries, benefits and share-based compensation expense, for employees in executive, finance, accounting, business development and human resource functions. General and administrative expense also includes corporate facility costs, including rent, utilities, depreciation and maintenance, not otherwise included in research and development expense, as well as legal fees related to intellectual property and corporate matters and fees for accounting and consulting services.

We expect that our general and administrative expense will increase in the future to support our continued research and development activities, potential commercialization efforts and increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses. Additionally, we anticipate increased costs associated with being a public company, including expenses related to services associated with maintaining compliance with the requirements of Nasdaq and the SEC, insurance and investor relations costs. If any of our current or future product candidates obtains regulatory approval, we expect that we would incur significantly increased expenses associated with building a sales and marketing team.

Interest Expense

Interest expense consists of interest on proceeds received under loans with Bpifrance and non-cash interest associated with the convertible promissory note issued in connection with our Ionis License Agreement with Ionis.

Foreign Currency Gains (Losses)

Foreign currency gains (losses) consist primarily of exchange rate fluctuations on transactions denominated in a currency other than the European Dollar.

 

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Income Tax Expenses

Since inception, we have incurred significant net losses. As of December 31, 2020, we had net operating loss carryforwards, or NOLs, of €39.2 million. We have provided a valuation allowance against the full amount of the deferred tax assets since, in the opinion of management, based upon our earnings history, it is more likely than not that the benefits will not be realized. There were no material changes in our tax position, and we remained in a full valuation allowance position as of March 31, 2021.

Utilization of our NOLs may be subject to a substantial annual limitation. We have recorded a valuation allowance on substantially all of our deferred tax assets, including our deferred tax assets related to our net operating loss carryforwards.

Results of Operations

Comparison of the Three Months Ended March 31, 2020 and 2021

The following table sets forth our results of operations for the three months ended March 31, 2020 and 2021 (in thousands):

 

     Three Months Ended March 31,  
             2020                      2021          

Operating expenses:

     

Research and development

   5,934      2,040  

General and administrative

     851        1,889  
  

 

 

    

 

 

 

Loss from operations

     (6,785      (3,929

Interest expense

     (52      (68

Foreign currency gains (losses)

     (7      6  
  

 

 

    

 

 

 

Loss before income tax expense

     (6,844      (3,991

Income tax expense

     (12      (2
  

 

 

    

 

 

 

Net loss

   (6,856    (3,993
  

 

 

    

 

 

 

Research and Development Expense

The following table summarizes our research and development expenses for the three months ended March 31, 2020 and 2021 (in thousands):

 

     Three Months Ended March 31,         
             2020                      2021              Change  

Personnel expenses

   285      617      332  

Milestone payments

     4,553        —          (4,553

Preclinical and clinical development expenses

     1,574        1,702        128  

Research tax credits and grant reimbursements

     (496      (314      182  

Other expenses

     18        35        17  
  

 

 

    

 

 

    

 

 

 
   5,934      2,040      (3,894
  

 

 

    

 

 

    

 

 

 

Research and development expenses for the three months ended March 31, 2020 were €5.9 million, compared to €2.0 million for the three months ended March 31, 2021. The decrease of €3.9 million was primarily due to the recognition of a €4.5 million milestone payment to Ionis upon initiating our Phase 1/2 clinical trial of DYN101 in March 2020. This decrease was partially offset by a €0.3 million increase in our personnel costs, which increased from €0.3 million for the three months ended March 31, 2020 to €0.6 million for the three months ended March 31, 2021. This increase was attributable to an increase in our research and development employee headcount and higher share-based compensation.

 

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General and Administrative Expense

The following table summarizes our general and administrative expenses for the three months ended March 31, 2020 and 2021 (in thousands):

 

     Three Months Ended March 31,         
             2020                      2021              Change  

Personnel expenses

   489      894      405  

Facilities and supplies

     24        44        20  

Legal and professional fees

     211        859        648  

Other expenses

     127        92        (35
  

 

 

    

 

 

    

 

 

 
   851      1,889      1,038  
  

 

 

    

 

 

    

 

 

 

General and administrative expenses for the three months ended March 31, 2020 were €0.9 million, compared to €1.9 million for the three months ended March 31, 2021. The increase of €1.0 million was attributable to a €0.4 million increase in personnel expenses due to increases in our executive and operational headcount and higher share-based compensation, and a €0.6 million increase in legal and professional fees in support of our patent portfolio and expanding infrastructure in preparation to operate as a public company.

Interest Expense

We recognized €52,000 and €68,000 in interest expense for the three months ended March 31, 2020 and 2021, respectively, which was attributable to the outstanding principal balance associated with our convertible promissory note issued to Ionis in connection with the Ionis License Agreement and the principal balance associated with borrowings under our debt arrangements with Bpifrance.

Foreign Currency Gains (Losses)

We recognized €7,000 in foreign currency losses and €6,000 in foreign currency gains for the three months ended March 31, 2020 and 2021, respectively, which was attributable to the fluctuation of the transactions we entered into and settled that are denominated in currencies other than our functional currency, which is the Euro.

Income Tax Expense

We recorded income tax expense of €12,000 and €2,000 for the three months ended March 31, 2020 and 2021, respectively, which is attributable to our foreign subsidiaries in the United States and the Netherlands.

Comparison of Years Ended December 31, 2019 and 2020

The following table sets forth our results of operations for the years ended December 31, 2019 and 2020 and (in thousands):

 

     Year Ended December 31,  
     2019      2020  

Operating expenses:

     

Research and development

   8,330      12,727  

General and administrative

     2,753        5,753  
  

 

 

    

 

 

 

Loss from operations

     (11,083      (18,480

Interest expense

     (205      (214

Foreign currency losses

     (33      (17
  

 

 

    

 

 

 

Loss before income tax expense

     (11,321      (18,711

Income tax expense

     (2      (24
  

 

 

    

 

 

 

Net loss

   (11,323    (18,735
  

 

 

    

 

 

 

 

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Research and Development Expense

The following table summarizes our research and development expenses for the years ended December 31, 2019 and 2020 (in thousands):

 

     Year Ended December 31,         
             2019                      2020              Change  

Personnel expenses

   921      1,577      656  

Milestone payments

     —          4,620        4,620  

Preclinical and clinical development expenses

     9,615        7,993        (1,622

Research tax credits and grant reimbursements

     (2,243      (1,588      655  

Other expenses

     37        125        88  
  

 

 

    

 

 

    

 

 

 
   8,330      12,727      4,397  
  

 

 

    

 

 

    

 

 

 

Research and development expenses for the year ended December 31, 2019 were €8.3 million, compared to €12.7 million for the year ended December 31, 2020. The increase of €4.4 million was primarily due to the recognition of a €4.5 million milestone payment to Ionis upon initiating our Phase 1/2 clinical trial of DYN101 in March 2020. Our personnel costs increased by €0.7 million to €1.6 million for the year ended December 31, 2020, compared to €0.9 million for the year ended December 31, 2019, which was attributable to the increase in our research and development employee headcount. These increases were primarily offset by a €1.6 million decrease in preclinical and clinical development expenses. This decrease was attributable to the COVID-19 pandemic beginning in March 2020, which resulted in delays in patient recruitment and initiating new trial sites for our Phase 1/2 clinical trial for DYN101 and delays in our overall research and development efforts.

General and Administrative Expense

The following table summarizes our general and administrative expenses for the years ended December 31, 2019 and 2020 (in thousands):

 

     Year Ended December 31,         
             2019                      2020              Change  

Personnel expenses

   1,073      2,878      1,805  

Facilities and supplies

     146        141        (5

Legal and professional fees

     935        2,365        1,430  

Other expenses

     599        369        230  
  

 

 

    

 

 

    

 

 

 
   2,753      5,753      3,000  
  

 

 

    

 

 

    

 

 

 

General and administrative expenses for the year ended December 31, 2019 were €2.8 million, compared to €5.8 million for the year ended December 31, 2020. The increase of €3.0 million was attributable to €1.8 million in personnel expenses due to increases in our executive and operational headcount and €1.4 million in legal and professional fees in support of our patent portfolio and expanding infrastructure in preparation to operate as a public company.

Interest Expense

We recognized €0.2 million in interest expense for each of the years ended December 31, 2019 and 2020, which was primarily attributable to the outstanding principal balance associated with our convertible promissory note issued to Ionis in connection with the Ionis License Agreement and the principal balance associated with borrowings under our debt arrangements with Bpifrance.

 

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Foreign Currency Losses

We recognized €33,000 and €17,000 in foreign currency losses for the years ended December 31, 2019 and 2020, respectively, which was attributable to the fluctuation of the transactions we entered into and settled that are denominated in currencies other than our functional currency, which is the Euro.

Income Tax Expense

We recorded income tax expense of €2,000 and €24,000 for the years ended December 31, 2019 and 2020. As of December 31, 2020, we had net operating loss carryforwards of €39.2 million which carry forward indefinitely.

Liquidity and Capital Resources

Sources of Liquidity

As of March 31, 2021, we had cash of €50.1 million. We have primarily financed our operations since our inception through the sale of our ordinary shares. Since October 2017, we sold ordinary shares, including Series A, Series B and Series C ordinary shares, raising aggregate net proceeds of €85.8 million.

We have also financed our operations through the receipt of research tax credits and other governmental grants. In addition, we have financed our operations through €2.0 million in loans and €0.4 million in grants from Bpifrance since our inception. We have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years.

Cash Flows

The following table shows a summary of our cash flows for the periods indicated (in thousands):

 

     Year Ended
December 31,
     Three Months Ended
March 31,
 
     2019      2020      2020      2021  

Net cash (used in) provided by:

           

Operating activities

   (12,108    (11,513    (2,090    (3,732

Investing activities

     (309      (200      (2      (47

Financing activities

     10,040        58,387        18        (150

Effects of exchange rate changes on cash

     —          (6      2        3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in cash

   (2,377    46,668      (2,072    (3,926
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating Activities

During the three months ended March 31, 2021, we used €3.7 million of net cash in operating activities. Cash used in operating activities reflected our net loss of €4.0 million and a change of €0.5 million in our operating assets, that were offset by €0.8 million of non-cash charges related to depreciation expense, share-based compensation and non-cash interest on our convertible promissory note.

During the three months ended March 31, 2020, we used €2.1 million of net cash in operating activities. Cash used in operating activities reflected our net loss of €6.9 million that was offset by a €4.5 million non-cash milestone payment to Ionis, which was recorded as in-process research and development expense, and €0.2 million of other non-cash charges related to depreciation expense, share-based compensation and non-cash interest on our convertible promissory note.

 

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During the year ended December 31, 2020, we used €11.5 million of net cash in operating activities. Cash used in operating activities reflected our net loss of €18.7 million that was offset by a €4.5 million non-cash milestone payment to Ionis, which was recorded as in-process research and development expense, €1.8 million of other non-cash charges related to depreciation expense, share-based compensation and non-cash interest on our convertible promissory note, and a change of €1.0 million in our operating assets.

During the year ended December 31, 2019, we used €12.1 million of net cash in operating activities. Cash used in operating activities reflected our net loss of €11.3 million and a €1.5 million change in our operating assets and liabilities. These activities were offset by non-cash charges of €0.7 million.

Investing Activities

For the three months ended March 31, 2020 and 2021 and the years ended December 31, 2019 and 2020, we used cash in investing activities of €2,000, €47,000, €0.3 million and €0.2 million, respectively, for the purchase of property and equipment.

Financing Activities

During the three months ended March 31, 2021, we used €0.2 million of net cash in financing activities, primarily attributable to €0.3 million of cash paid for financing costs associated with the initial public offering, offset by the receipt of €0.2 million of proceeds upon the issuance of share warrants (bons de souscription d’actions), or BSAs, associated with our share-based compensation arrangements.

During the three months ended March 31, 2020, financing activities provided €18,000 in net cash proceeds, primarily attributable to the receipt of €23,000 of proceeds upon the issuance of BSAs.

During the year ended December 31, 2020, financing activities provided €58.4 million in net cash proceeds, primarily attributable to the sale of Series C ordinary shares for net proceeds of €56.9 million. In addition, we received net proceeds of €1.4 million from our debt arrangement with Bpifrance and received €0.6 million in proceeds upon the issuance of BSAs.

During the year ended December 31, 2019, financing activities provided €10.0 million in net cash proceeds, primarily attributable to the sale of Series B ordinary shares for net proceeds of €10.0 million. In addition, we received €49,000 in proceeds upon the issuance of BSAs.

Indebtedness

Convertible Promissory Note with Related Party

In 2017 and as partial consideration for the Ionis License Agreement, we issued a convertible promissory note with a notional value of €3.5 million to Ionis that bore interest at 5.0% compounded annually. All outstanding principal and interest was due, if not converted, at the earlier of (i) the sale of our Company, (ii) the termination of the Ionis License Agreement, and (iii) five years from original issuance of the promissory note. The promissory note was able to be repaid prior to maturity, at our option and without penalty. Any outstanding principal and accrued interest was due on demand in the event of default which was defined as our failure to make payment or upon dissolution. In the event we entered into a sublicense agreement, 25%-50% of the proceeds received from the sublicensing agreement would be used for partial repayment of any outstanding principal and accrued interest. On July 9, 2021, Ionis elected to convert the outstanding principal and accrued interest into 662,451 shares of our Series A ordinary shares at a conversion price of €6.30 per share.

 

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Loans Payable

In 2018, we entered into a debt arrangement with Bpifrance to finance the development of our platform technology, borrowing an aggregate of €0.5 million. The borrowings bear interest at 4.07% annually. Beginning March 2022 and through December 31, 2026, the Company is obligated to make quarterly principal repayments of €25,000 plus interest, with quarterly interest-only payments required in the interim.

In December 2020, the Company entered into an additional debt arrangement with Bpifrance to provide funding for our research and development activities and for general corporate purposes, borrowing an aggregate of €1.5 million. The borrowings bear interest at 3.57% annually. Beginning March 2024 and through December 31, 2028, the Company is obligated to make quarterly principal repayments of €75,000 plus interest, with quarterly interest-only payments required in the interim.

In addition to the debt facility above, Bpifrance has provided us with two interest free loans in connection with a government sponsored innovation aid program. As of December 31, 2020, we have received €350,000 in funding and will be eligible to receive an additional €150,000 of additional funding upon completion of research and development activities related to DYN101. We are obligated to make quarterly repayments that escalate from €25,000 to €63,000 per quarter beginning in September 2021 until they mature in June 2024.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue or initiate clinical trials of, and seek marketing approval for any of our current and future product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Furthermore, following the completion of this offering, we expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

We anticipate that our expenses will increase substantially as we:

 

   

advance the clinical development of DYN101, including our ongoing and future Phase 1/2 clinical trials;

 

   

advance the continued research and development of DYN201;

 

   

seek to discover and develop additional clinical and preclinical product candidates;

 

   

scale up our clinical and regulatory capabilities;

 

   

adapt our regulatory compliance efforts to incorporate requirements applicable to marketed products;

 

   

establish a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize any product candidates for which we may obtain regulatory approval;

 

   

maintain, expand and protect our intellectual property portfolio;

 

   

hire additional internal or external clinical, manufacturing and scientific personnel or consultants;

 

   

add operational, financial and management information systems and personnel, including personnel to support our product development efforts; and

 

   

incur additional legal, accounting and other expenses in operating as a public company.

We expect our existing cash, together with the net proceeds from this offering, will enable us to fund our operating expenses and capital expenditure requirements through 2023. See “Use of Proceeds.”

 

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Because of the numerous risks and uncertainties associated research, development and commercialization of product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including:

 

   

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

 

   

the scope, prioritization and number of our research and development programs;

 

   

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

 

   

our ability to establish and maintain collaborations on favorable terms, if at all;

 

   

the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under collaboration agreements, if any;

 

   

the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;

 

   

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

 

   

the costs of securing manufacturing arrangements for commercial production; and

 

   

the costs of establishing or contracting for sales and marketing capabilities if we obtain regulatory approvals to market our product candidates.

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of product candidates that we do not expect to be commercially available for the next couple of years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as an ordinary shareholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

 

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Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments at December 31, 2020, which have not materially changed as of March 31, 2021:

 

     Less
than
1 Year
     1 to 3
Years
     3 to 5
Years
     More than
5 Years
     Total  
     (in thousands)  

Operating leases(1)

   84      178      182      245      689  

Loans payable(2)

     109        568        993        1,055        2,725  

Convertible promissory note with related party(3)

     —          4,506        —          —          4,506  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   193      5,252      1,175      1,300      7,920  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Reflects obligations pursuant to our office lease in Illkirch-Graffenstaden, France.

(2)

Reflects principal and interest payments pursuant to our loan arrangements with Bpifrance.

(3)

Reflects principal and paid-in-kind interest payments pursuant to our convertible promissory note issued to Ionis in February 2018. The table above assumes cash settlement at the contractual maturity date in February 2023. On July 9, 2021, Ionis elected to convert this note into Series A ordinary shares.

The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. Our contracts with CMOs, CROs and other third parties for the manufacture of our product candidates and to support clinical trials and preclinical research studies and testing are generally cancelable by us upon prior notice. Payments due upon cancellation consisting only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation are not included in the preceding table as the amount and timing of such payments are not known.

The contractual obligations table does not include any potential milestone or royalty payments that we may be required to make under the Ionis License Agreement with Ionis, under the Conectus Sublicense Agreement with Conectus, or under the Paris Brain and Spine Institute License Agreement with Paris Brain and Spine Institute. We excluded these milestone and royalty payments given that the timing of any such payments cannot be reasonably estimated at this time. We may be subject to aggregate milestone payments of up to (i) €25.1 million ($29.5 million) and €94.5 million ($111.0 million) (using an exchange rate of $1.17 to €1.00, the noon buying rate of the Federal Reserve Bank of New York on March 31, 2021) upon the achievement of development and regulatory milestones, respectively, and up to €51.1 million ($60.0 million) (using an exchange rate of $1.17 to €1.00, the noon buying rate of the Federal Reserve Bank of New York on March 31, 2021) in commercial milestones, under the Ionis License Agreement, (ii) up to €1.5 million and €5.7 million in developmental and regulatory milestone payments, respectively, under the Conectus Sublicense Agreement, and (iii) up to €1.8 million and €6.3 million in developmental and regulatory milestone payments, respectively, under the Paris Brain and Spine Institute License Agreement.

Critical Accounting Policies

Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses and share-based compensation. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be

 

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reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to our audited consolidated financial statements included elsewhere in this prospectus, we believe the following accounting policies are the most critical to the judgments and estimates used in the preparation of our financial statements.

Research and Development Accruals

Research and development expenses consist primarily of costs incurred in connection with the development of our product candidates. We expense research and development costs as incurred.

We accrue expenses for preclinical studies and clinical trial activities performed by third parties based upon estimates of the proportion of work completed over the term of the individual trial and patient enrollment rates in accordance with agreements with CROs and clinical trial sites. We determine the estimates by reviewing contracts, vendor agreements and purchase orders, and through discussions with our internal clinical personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services. However, actual costs and timing of clinical trials are highly uncertain, subject to risks and may change depending upon a number of factors, including our clinical development plan.

We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known at that time. If the actual timing of the performance of services or the level of effort varies from the estimate, we will adjust the accrual accordingly. Nonrefundable advance payments for goods and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as expense in the period that the related goods are consumed or services are performed.

Milestone payments within our licensing and collaboration arrangements are recognized when achievement of the milestone is deemed probable to occur. To the extent products are commercialized and future economic benefit has been established, commercial milestones that become probable are capitalized and amortized over the estimated remaining useful life of the intellectual property. In addition, we accrue royalty expense and sublicense nonroyalty payments, as applicable, for the amount it is obligated to pay, with adjustments as sales are made.

Share-Based Compensation

We measure compensation expense for all share-based awards based on the estimated fair value of the award on the grant date. We use the Black-Scholes option pricing model to value our BSA and stock option awards. We recognize compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period of the award. We have not issued awards where vesting is subject to a market or performance condition.

The Black-Scholes option-pricing model requires the use of subjective assumptions that include the expected stock price volatility and the fair value of the underlying ordinary shares on the date of grant. See Note 8 to our audited consolidated financial statements and Note 8 to our unaudited interim consolidated financial statements included elsewhere in this prospectus for information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our BSAs and stock options granted during the years ended December 31, 2019 and 2020 and for the three months ended March 31, 2020 and 2021.

Estimating the Fair Value of Ordinary Shares

We are required to estimate the fair value of our ordinary shares underlying our share-based awards. Because our ordinary shares are not currently publicly traded, the fair value of the ordinary share has been

 

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estimated on each grant date by our board of directors, with input from management, considering our most recently available third-party valuation of ordinary shares.

Our board of directors considered various objective and subjective factors to estimate the estimated fair value of our ordinary shares, including:

 

   

the estimated value of all classes of securities outstanding;

 

   

the anticipated capital structure that will directly impact the value of the currently outstanding securities;

 

   

our results of operations and financial position;

 

   

the status of our research and development efforts;

 

   

the composition of, and changes to, our management team and board of directors;

 

   

the lack of liquidity of our ordinary share as a private company;

 

   

our stage of development and business strategy and the material risks related to our business and industry;

 

   

external market conditions affecting the life sciences and biotechnology industry sectors;

 

   

European and global economic conditions;

 

   

the likelihood of achieving a liquidity event for the holders of our ordinary shares, such as an initial public offering, or IPO, or a sale of our company, given prevailing market conditions; and

 

   

the market value and volatility of comparable companies.

In estimating the fair value of our ordinary shares, our board of directors considered the subjective factors discussed above in conjunction with the most recent valuations of our ordinary shares that were prepared by an independent third-party. The independent valuation prepared as of July 19, 2018 was utilized by our board of directors when estimating the fair value of our ordinary shares for the awards granted from September 27, 2018 through June 2019. The independent valuation prepared as of June 30, 2020 was utilized by our board of directors when estimating the fair value of our ordinary shares for the awards granted from March 2020 through June 2020. The independent valuation prepared as of November 18, 2020 was utilized by our board of directors when estimating the fair value of our ordinary shares for the awards granted from November 2020 through March 2021. These third-party valuations resulted in a valuation of our ordinary shares of €4.46, €6.98, and €8.47 per share as of July 19, 2018, June 30, 2020, and November 18, 2020, respectively.

Following the closing of this offering, the fair value of our ordinary shares will be the closing price of our ordinary shares on the Nasdaq Global Market as reported on the date of the grant.

Recent Accounting Pronouncements

See Note 2 to our consolidated financial statements included elsewhere in this prospectus for a description of recent accounting pronouncements applicable to our consolidated financial statements.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We do not engage in off-balance sheet financing arrangements. In addition, we do not engage in trading activities involving non-exchange traded contracts. We therefore believe that we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

 

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Qualitative and Quantitative Disclosures About Market Risk

We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. Our interest-earning assets consist of cash. Interest income earned on these assets was de minimis for the years ended December 31, 2019 and 2020 and for the three months ended March 31, 2020 and 2021.

JOBS Act Transition Period

In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are electing to utilize the extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for emerging growth companies.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an emerging growth company, we may rely on certain of these exemptions, including without limitation, (1) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (2) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an emerging growth company until the earlier to occur of (a) the last day of the fiscal year (i) following the fifth anniversary of the completion of this offering, (ii) in which we have total annual gross revenues of at least $1.07 billion or (iii) in which we are deemed to be a “large accelerated filer” under the rules of the U.S. Securities and Exchange Commission, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

 

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BUSINESS

Overview

We are a clinical-stage company focused on developing and commercializing novel therapies to transform the lives of patients with rare diseases who have limited or no treatment options. We are initially focused on developing treatments for neuromuscular diseases, beginning with myotubular and centronuclear myopathies, or CNM, a group of devastating rare genetic disorders with shortened life expectancy and significant morbidity. Our lead product candidate, DYN101, is an antisense oligonucleotide, or ASO, designed to be a disease-modifying medicine for treatment of the majority of CNM patients across multiple mutations in both adult and pediatric populations. We are conducting a Phase 1/2 clinical trial in Europe of DYN101, which is called UNITE-CNM, and we intend to expand this trial to sites in the United States in the second half of 2021. We expect to report interim pharmacokinetic, or PK, and safety data from this trial in the second half of 2022 and expect to report final data in 2023. In addition, we are currently preparing to conduct a Phase 1/2 clinical trial of DYN101 called DyNaMic in a pediatric population in Europe, which may be expanded to the United States. Following interim data from the UNITE-CNM Phase 1/2 trial in adults, and subject to regulatory authorization, we expect to commence this pediatric clinical trial in the second half of 2022 in Europe. DYN101 has been granted orphan drug designation by the U.S. Food and Drug Administration, or FDA, and European Medicines Agency, or EMA, and rare pediatric disease designation by the FDA.

We leverage our team’s core strength in translational research and development to identify what we believe to be the most suitable target and modality to address a particular rare disease, aiming to mitigate challenges faced by others in the development of therapeutics. We select diseases with high unmet need that correspond to patient populations with genetic mutations whom we believe can be treated by altering the expression of a specific gene. We aim to match the target with the most suitable technical modality. In our DYN101 program, we identified dynamin 2, or DNM2, protein, which when elevated is toxic in muscle cells, as the principal disease-causing mechanism in CNM. We selected ASOs as a treatment modality based on their advantageous properties that we believe make them well suited to target DNM2 protein expression and our previous experience with this technology in our preclinical studies. Based on our observations in animal models, combined with clinical observations from other ASOs, we believe that ASOs will reach sufficient levels in patients’ muscles to have a significant impact on the daily lives of CNM patients. We believe this feature, along with the several other advantageous features of ASOs, makes antisense technology the ideal modality for treating CNM.

Leveraging our relationships in the industry, we formed a strategic collaboration with Ionis Pharmaceuticals, Inc., or Ionis, a world leader in the discovery and development of ASOs. Our initial research collaboration and license agreement with Ionis provides us access to its state-of-the-art ASO technology, which underpins our lead product candidate, DYN101.

Patients are at the core of what we do. We are developing DYN101 to treat both adult and pediatric patients with CNM, or approximately 72% of the estimated 4,000 to 5,000 CNM patient population in the United States, European Union, Japan and Australia. We are strengthening and growing our relationships with patient advocacy groups, key opinion leaders and practitioners, to establish Dynacure as a patient-focused leader in the treatment of rare neuromuscular disorders.

The Dynacure Team

We have assembled an international, seasoned management and scientific research and development team with extensive experience in identifying, developing and commercializing novel therapies for rare diseases. We are led by our Chief Executive Officer, Stephane van Rooijen, M.D., MBA, who has a deep understanding of rare disease drug development and commercialization from leading roles at companies such as Genzyme and Viropharma. Belinda Cowling, Ph.D., our cofounder and Chief Scientific Officer, has nearly 20 years of experience in neuromuscular disease research and has published more than 35 publications in peer-reviewed journals, including the proof-of-concept studies for DYN101. Leen Thielemans, Ph.D., our Chief Development Officer, and Chris Freitag, M.D., our Chief Medical Officer, have more than 40 years of combined experience, from drug discovery through late-stage clinical development, at small biotechnology and large pharmaceutical companies. Our Chief Operating Officer, Frédéric Legros, Ph.D., has an extensive track record in corporate and business development, and our Chief Financial Officer, Dave Garrett, has over 15 years of experience in finance

 

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functions in life sciences companies. In addition, Brett Monia, the Chief Executive Officer of Ionis, has been a member of our board of directors since our inception in 2016, supporting our development strategy.

We are supported by a syndicate of leading international life sciences investors, including Andera Partners, Bpifrance, Eurazeo Investment Manager (f/k/a Idinvest Partners), Kurma Partners, Perceptive Advisors, Pontifax, Sphera and Tekla Capital Management. Since our inception, we have raised €85.8 million through private financings with these investors.

Dynacure’s Initial Focus – Treatment of Myotubular and Centronuclear Myopathies (CNM)

We are initially focused on developing treatments for rare neuromuscular diseases, beginning with CNM. CNM is a group of rare and severe neuromuscular diseases that result from genetic mutations. People with CNM begin experiencing muscle weakness at any time from birth to early adulthood, and many patients die in the first 18 months of life. Those who survive longer require intense medical management and nearly uninterrupted support, including permanent ventilation, brace with head support and feeding tubes. The muscle weakness slowly worsens over time and can lead to delayed development of motor skills in childhood, such as crawling or walking, muscle pain during exercise and difficulty walking, with wheelchair use in the most severe cases. Unlike in other muscular dystrophies, affected muscles in CNM patients do not become fibrotic. Instead, muscle tissue remains but is not well structured and, therefore, does not function correctly. There is currently no FDA- or EMA-approved therapeutic treatment for CNM. An AAV-based gene therapy, focusing on a small pediatric population in a subset of CNM patients, is in clinical development by Audentes Therapeutics; however, serious adverse events in this clinical trial, including patient deaths, have sparked safety concerns.

There are three classical forms of CNM. The most severe form of CNM is X-linked myotubular myopathy, or XLCNM, caused by mutations in the MTM1 gene, which accounts for approximately 57% of CNM patients. Mutations in the DNM2 gene result in autosomal dominant CNM, or ADCNM (approximately 11% of CNM patients), and mutations in the BIN1 gene result in autosomal recessive CNM, or ARCNM (approximately 4% of CNM patients).

Our cofounder and Chief Scientific Officer, Belinda Cowling, Ph.D. conducted the foundational research that identified the central role that the DNM2 protein plays in disease pathogenesis in several forms of CNM and that the down regulation of the expression of DNM2 protein could provide a novel therapeutic approach. The DNM2 protein is an enzyme present in all cells of the body that is involved in cellular membrane remodeling. Cellular membranes are dynamic structures that are constantly being remodeled to exert biological functions. We have demonstrated that DNM2 protein when elevated is toxic to muscle cells and is the principal cause of disease in all three classical forms of CNM, which make up approximately 72% of the CNM patient population in the United States, European Union, Japan and Australia. By targeting DNM2 protein expression with our lead product candidate, DYN101, we are potentially able to address the majority of CNM patients.

We selected ASOs as our initial modality due to their unique advantages that we believe make them well suited for a disease-modifying treatment for CNM.

These advantages include:

 

   

Validated technology with several antisense medicines approved by the FDA or comparable regulatory authorities, including for a neuromuscular disease.

 

   

Precise specificity by targeting a single strand of ribonucleic acid, or RNA, without permanently changing the patient’s genome.

 

   

Broad tissue distribution allowing the targeting of diseases affecting various tissue types, including muscle, and potential use without the need for vehicles or conjugates to help with targeted tissue delivery.

 

   

Ability for dose titration, allowing for dose-dependent and reversible control of level and duration of protein expression, with a long half-life in the range of weeks to months, which could allow for weekly, monthly or even less frequent dosing depending on the disease and target tissue.

 

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Low immunogenicity that allows for a potentially broader addressable patient population and repeat dosing compared to other therapeutic approaches, such as gene therapies.

 

   

Well-established and scalable manufacturing processes, which could make ASOs more cost effective to produce than other therapeutic approaches, such as gene therapies.

Leveraging our relationships in the industry to identify a strategic collaborator, in October 2016, we entered into a research collaboration and license agreement with Ionis, a world leader in the discovery and development of ASOs. We have an exclusive, worldwide, royalty-bearing license agreement with Ionis to research, develop, manufacture and commercialize our lead product candidate, DYN101, an ASO for the treatment of CNM.

We are conducting our UNITE-CNM Phase 1/2 clinical trial of DYN101 in Europe and we intend to expand this trial to sites in the United States in the second half of 2021. We expect to report interim PK and safety data from the low- and mid-dose cohorts from this trial in the second half of 2022 and expect to report final data in 2023. We believe that DYN101, if approved, could provide the first disease-modifying treatment for the majority of patients suffering from CNM.

Our Pipeline

The following table summarizes our current pipeline of wholly-owned programs with an initial focus on treating rare neuromuscular diseases.

LOGO

 

*

In June 2021, our IND to expand our ongoing Phase 1/2 clinical trial of DYN101 to sites in the United States was accepted by the FDA.

DYN101

We are developing our lead product candidate, DYN101, an ASO designed to reduce expression of the DNM2 protein, for the treatment of CNM. In preclinical studies of ASOs targeting DNM2 protein expression, we observed that a reduction in DNM2 protein reversed disease features, improved muscle mass and muscle force and extended lifespan in mouse models of the most severe forms of CNM. Our preclinical studies also indicated sufficient skeletal muscle uptake to translate into a reduction of DNM2 protein of up to 50%. In these preclinical studies, we observed that a reduction of DNM2 protein of 15% to 50% produced a therapeutic effect in multiple relevant mouse models of CNM.

We are conducting our UNITE-CNM Phase 1/2 clinical trial, dosing intravenously (IV) once per week, in Europe for the treatment of patients aged 16 or older with XLCNM and ADCNM, the two most common forms of CNM, which together comprise approximately 68% of the estimated 4,000 to 5,000 CNM patient population

 

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in the United States, European Union, Japan and Australia. We intend to expand this trial to sites in the United States in the second half of 2021. We expect to report interim PK and safety data from the low- and mid-dose cohorts from this trial in the second half of 2022 and expect to report final data in 2023. We also plan to initiate a Phase 1/2 clinical trial of DYN101 in pediatric patients in Europe, which may be expanded to the United States. Following interim data from the UNITE-CNM Phase 1/2 trial in adults, and subject to regulatory authorization, we expect to commence this pediatric clinical trial in the second half of 2022 in Europe. We believe that DYN101, if approved, could provide the first disease-modifying treatment for the majority of patients suffering from CNM. Patents covering DYN101 expire in 2039, exclusive of possible patent term extensions or adjustments.

DYN201

Our second program, DYN201, is a discovery-stage program to develop a potential treatment for a group of rare inherited neurodegenerative disorders called hereditary spastic paraplegias, or HSP. HSP affects approximately five out of every 100,000 people worldwide and is characterized by debilitating and severe progressive weakness and spasticity and can be associated with mild to severe cognitive defects. There are currently no disease-modifying therapies for any form of HSP. We are conducting initial target-validation studies and expect to report on these studies in 2021. If target validation is achieved, we will proceed to candidate selection.

Our Strategy

Our vision is to become a global leader in rare inherited disorders by developing and