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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the quarterly period ended September 30, 2022.
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the transition period from                       to                     .
Commission File Number
001-35342
LUMOS PHARMA, INC.
(Exact name of Registrant as specified in Its Charter)
Delaware
42-1491350
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
4200 Marathon Blvd #200
AustinTexas 78756
(512) 215-2630
(Address, including zip code, and telephone number, including area code, of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockLUMOThe Nasdaq Stock Market

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
Accelerated filer o
Non-accelerated filer 
Smaller reporting company 
Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes     No ☒
As of November 4, 2022, there were 8,376,206 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.


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Lumos Pharma, Inc.
FORM 10-Q
Table of Contents
Page
Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)
ITEM 3.



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Forward-Looking Statements
This quarterly report on Form 10‑Q for the quarter ended September 30, 2022 (this “Quarterly Report”) contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements involve risks and uncertainties and reflect our current views with respect to, among other things, future events and our financial performance. When used in this report, the words “believe,” “may,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “indicate,” “seek,” “should,” “would,” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements contain these identifying words. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date of this Quarterly Report, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to those summarized below:
that the final results of our LUM-201 Trials may be materially different than the interim results of such trials that we announced on November 14, 2022;
the extent to which the novel strain of coronavirus, SARS-CoV-2, which causes COVID-19 (“COVID-19”) and any associated downturn, governmental regulations or restrictions may impact our business, including our research, clinical trials, manufacturing and financial condition;
the extent to which the military conflict between Russia and Ukraine and any associated economic downturn, governmental regulations or restrictions may impact our business, including impacts to our research, clinical trials, manufacturing and financial condition;
a weakened macroeconomic environment, including high inflation rates, and its impact on our business, including impacts to our operating costs and financial condition;
the development plan for our product candidate, the growth hormone secretagogue ibutamoren (“LUM-201”);
our expectations regarding the potential benefits, activity, effectiveness and safety of our product candidates;
the development plan for our existing pipeline and potential partnership and out-licensing opportunities;
the timing of planned preclinical studies and clinical trials and availability of clinical data from such clinical trials;
the timing of and our ability to obtain regulatory approvals for our product candidates;
the clinical utility of our product candidates;
our plans to leverage our existing technologies to discover and develop additional product candidates;
our intellectual property position;
our ability to enter into strategic collaborations, licensing or other arrangements;
our dependence on collaborators for developing, obtaining regulatory approval for and commercializing product candidates in the collaboration;
our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;
plans to develop and commercialize our product candidates;
our ability to obtain additional funds for our operations;
the rate and degree of market acceptance of any approved product candidates;
the commercialization of any approved product candidates;
the implementation of our business model and strategic plans for our business, technologies and product candidates;
our reliance on third parties to conduct our preclinical studies or any future clinical trials;
our ability to attract and retain qualified key management and technical personnel;
the amount and timing of share repurchases, if any;
our reliance on third-party supply and manufacturing partners to supply the materials and components for, and manufacture, our research and development, preclinical and clinical trial product supplies; and
3

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developments relating to our competitors or our industry.
For additional information regarding known material factors that could cause our actual results to differ from our projected results, please read (1) Part I, Item 1A. “Risk Factors” in the annual report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Annual Report”); (2) Part II, “Item 1A. Risk Factors” in this Quarterly Report; (3) our reports and registration statements filed from time to time with the Securities and Exchange Commission (the “SEC”), and (4) other public announcements we make from time to time. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements

Lumos Pharma, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)

September 30,December 31,
20222021
(unaudited)
Assets
Current assets:
Cash and cash equivalents$73,666 $94,809 
Prepaid expenses and other current assets4,998 4,740 
Income tax receivable168 128 
Total current assets$78,832 $99,677 
Non-current assets:
Property and equipment, net65 79 
Right-of-use asset312 556 
Total non-current assets377 635 
Total assets$79,209 $100,312 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$710 $612 
Accrued expenses4,479 4,166 
Current portion of lease liability294 352 
Total current liabilities$5,483 $5,130 
Long-term liabilities:
Royalty obligation payable to Iowa Economic Development Authority6,000 6,000 
Lease liability
19 205 
Total long-term liabilities6,019 6,205 
Total liabilities$11,502 $11,335 
Commitments and contingencies
Stockholders' equity:
Undesignated preferred stock, $0.01 par value: Authorized shares - 5,000,000 at September 30, 2022 and December 31, 2021; issued and outstanding shares - 0 at September 30, 2022 and December 31, 2021
  
Common stock, $0.01 par value: Authorized shares - 75,000,000 at September 30, 2022 and December 31, 2021; issued shares - 8,391,011 and 8,366,819 at September 30, 2022 and December 31, 2021, respectively, and outstanding shares - 8,375,271 and 8,357,391 at September 30, 2022 and December 31, 2021, respectively
83 83 
Treasury stock, at cost, 15,740 and 9,428 shares at September 30, 2022 and December 31, 2021, respectively
(170)(114)
Additional paid-in capital187,030 185,429 
Accumulated deficit(119,236)(96,421)
Total stockholders' equity $67,707 $88,977 
Total liabilities and stockholders' equity$79,209 $100,312 
See accompanying notes to condensed consolidated financial statements.

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Lumos Pharma, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenues:
Royalty revenue$497 $ $1,011 $ 
Licensing and collaboration revenue    10 
Total revenues497  1,011 10 
Operating expenses:
Research and development4,129 4,112 12,995 12,885 
General and administrative3,918 3,385 11,221 11,903 
Total operating expenses8,047 7,497 24,216 24,788 
Loss from operations(7,550)(7,497)(23,205)(24,778)
Other income and expense:
Other income, net 7 7 19 19 
Interest income292 2 371 7 
Interest expense   (37)
Other income (expense), net299 9 390 (11)
Net loss $(7,251)$(7,488)$(22,815)$(24,789)
Net loss per share:
Basic and diluted $(0.86)$(0.90)$(2.73)$(2.97)
Weighted average number of common shares outstanding:
Basic and diluted 8,388,029 8,357,391 8,371,449 8,333,017 
See accompanying notes to condensed consolidated financial statements.






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Lumos Pharma, Inc.
Condensed Consolidated Statement of Changes in Stockholders' Equity
(In thousands, except share data)
(unaudited)
Common StockTreasury Stock
Additional
Paid-in
Capital
Accumulated Deficit
Total
Stockholders' Equity
SharesAmountSharesAmount
Balance at December 31, 20208,305,269 $83  $ $182,480 $(65,991)$116,572 
Share-based compensation— — — — 1,049 — 1,049 
Exercise of stock options20,362 — — — 26 — 26 
Stock issued upon vesting of restricted stock units9,939 — — — — — — 
Shares surrendered for tax withholding on vested awards(3,377)— 3.377 (44)— — (44)
Net loss— — — — — (8,631)(8,631)
Balance at March 31, 20218,332,193 83 3,377 (44)183,555 (74,622)108,972 
Share-based compensation— — — — 846 — 846 
Exercise of stock options6,560 — — — 38 — 38 
Sale of shares under stock purchase plan695 — — — 6 — 6 
Stock issued upon vesting of restricted stock units23,994 — — — — —  
Shares surrendered for tax withholding on vested awards(6,051)— 6,051 (70)— — (70)
Net loss— — — — — (8,670)(8,670)
Balance at June 30, 20218,357,391 83 9,428 (114)184,445 (83,292)101,122 
Share-based compensation — — — — 490 — 490 
Net loss— — — — — (7,488)(7,488)
Balance at September 30, 20218,357,391 $83 9,428 $(114)$184,935 $(90,780)$94,124 
Balance at December 31, 20218,357,391 $83 9,428 $(114)$185,429 $(96,421)$88,977 
Share-based compensation— — — — 565 — 565 
Stock issued upon vesting of restricted stock units1,702 — — — — —  
Shares surrendered for tax withholding on vested awards(468)— 468 (5)— — (5)
Net loss— — — — — (7,720)(7,720)
Balance at March 31, 20228,358,625 83 9,896 (119)185,994 (104,141)81,817 
Share-based compensation— — — — 575 — 575 
Exercise of stock options1,962 — — — 3 — 3 
Sale of shares under stock purchase plan4,175 — — — 27 — 27 
Stock issued upon vesting of restricted stock units16,257 — — — — —  
Shares surrendered for tax withholding on vested awards(3,452)— 3,452 (32)— — (32)
Net loss— — — — — (7,844)(7,844)
Balance at June 30, 20228,377,567 83 13,348 (151)186,599 (111,985)74,546 
Share-based compensation— — — — 593 — 593 
Exercise of stock options 14,391 — — — 35 — 35 
Stock issued upon vesting of restricted stock units7,812 — — — — —  
Shares surrendered for tax withholding on vested awards(2,392)— 2,392 (19)— — (19)
Repurchases of common stock (22,107)— — — (197)— (197)
Net loss — — — — — (7,251)(7,251)
Balance at September 30, 20228,375,271 $83 15,740 $(170)$187,030 $(119,236)$67,707 
7


Lumos Pharma, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Nine Months Ended September 30,
20222021
Cash Flows From Operating Activities
Net loss$(22,815)$(24,789)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation1,733 2,385 
Depreciation and amortization14 260 
Amortization of ROU asset and change in operating lease liability (69)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets(93)(1,334)
Other receivables(48)148 
Accounts payable and accrued expenses412 (438)
Net cash used in operating activities(20,797)(23,837)
Cash Flows From Investing Activities
Final installment from sale of priority review voucher 26,000 
Net cash provided by investing activities 26,000 
Cash Flows From Financing Activities
Sales of shares under stock purchase plan27 6 
Exercise of stock options38 64 
Payment for tax withholding on vested awards(56)(114)
Repurchases of common stock (197) 
Costs of common stock offering under Controlled Equity OfferingSM
(158)(148)
Net cash used in financing activities(346)(192)
Net increase (decrease) in cash and cash equivalents(21,143)1,971 
Cash and cash equivalents at beginning of period94,809 98,679 
Cash and cash equivalents at end of period$73,666 $100,650 
See accompanying notes to condensed consolidated financial statements.


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Lumos Pharma, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)

1. Description of Business
Organization and Nature of Operations
Lumos Pharma, Inc. is a clinical-stage biopharmaceutical company. References in this Quarterly Report to “us,” “we,” “our,” the “Company,” or “Lumos” are to Lumos Pharma, Inc. and its wholly-owned subsidiaries. With our principal executive offices located in Austin, Texas and additional executive and administrative offices located in Ames, Iowa, we are engaged in advancing our clinical program and focused on identifying, acquiring, developing, and commercializing novel products and new therapies for people with rare diseases on a global level, for which there is currently a significant unmet need for safe and effective therapies. Our common stock is listed on the Nasdaq Global Market (“Nasdaq”) and trades under the ticker symbol “LUMO.”
The Company entered into a business combination (the “Merger”) between the Company, formerly known as NewLink Genetics Corporation (“NewLink”), Cyclone Merger Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of NewLink, and Lumos Pharma, Inc., which has since been renamed “Lumos Pharma Sub, Inc.” (“Private Lumos”). The Merger closed on March 18, 2020, and Merger Sub merged with and into Private Lumos, with Private Lumos surviving as a wholly-owned subsidiary of the Company. Immediately prior to the closing of the Merger, the shares of NewLink common stock were adjusted with a reverse split ratio of 1‑for‑9. Under the terms of the Merger, Private Lumos stockholders received an aggregate of 4,146,398 shares of NewLink common stock (after giving effect to the reverse split) for each share of outstanding common stock, Series A Preferred Stock and Series B Preferred Stock of Private Lumos converted at an exchange ratio of 0.1308319305, 0.0873621142 and 0.1996348626, respectively. Immediately following the reverse stock split and the completion of the Merger, there were 8,292,803 shares of the Company’s common stock outstanding, of which approximately 50% was held by each of Private Lumos and NewLink security holders. The Merger was accounted for as a reverse asset acquisition.
After the consummation of the Merger, the combined company has focused its efforts on the development of Private Lumos’ sole product candidate, secretagogue ibutamoren (“LUM-201”), a potential oral therapy for idiopathic pediatric growth hormone deficiency (“PGHD”) and other rare endocrine disorders.
Liquidity and Risks
The Company has historically devoted substantially all of its efforts toward research and development and has never earned revenue from commercial sales of its products. Management expects to continue to incur additional substantial losses in the foreseeable future as a result of the Company’s research and development activities. However, the Company believes that its existing cash and cash equivalents of approximately $73.7 million as of September 30, 2022 will be sufficient to allow the Company to fund its operations into the second quarter of 2024 which is inclusive of the primary read out of its Phase 2 clinical trial of LUM-201 in PGHD (“OraGrowtH210 Trial) and OraGrowtH212 Trial, each of which is expected to occur in the second half of 2023. If available liquidity becomes insufficient to meet the Company’s obligations as they come due, our future operations will be reliant on additional equity or financing arrangements. There can be no assurances that, in the event that the Company requires additional financing, such financing will be available on terms which are favorable to the Company, or at all. If the Company is unable to raise additional funding to meet its working capital needs in the future, it will be forced to delay or reduce the scope of its research programs and/or limit or cease its operations.
The pandemic caused by an outbreak of a novel strain of coronavirus, SARS-CoV-2, which causes COVID-19 (“COVID-19”), has resulted, and is likely to continue to result, in significant national and global economic disruption and may continue to adversely affect the Company’s operations. COVID-19 restrictions resulted in a slower pace of site initiation and patient enrollment in our clinical trials that has led to a delay in the 6-month primary outcome data read out of our OraGrowtH210 Trial. While we have experienced delays to our clinical trials, we have not incurred impairment of any assets as a result of COVID-19. The extent to which these events may further impact the Company’s business, clinical development, regulatory efforts, and the value of its common stock, will depend on future developments, which are highly uncertain and cannot be predicted at this time. The duration and intensity of these impacts and resulting disruption to the Company’s operations is uncertain, and the Company will continue to evaluate the impact that these events could have on the operations, financial position, and the results of operations and cash flows.
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Lumos Pharma, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The military conflict between Russia and Ukraine (the “Conflict”), has resulted, and may continue to result, in significant national and global economic disruption and may continue to adversely affect the Company’s operations. The Company was in the process of initiating clinical sites in Russia and Ukraine; however, due to the Conflict and the resulting uncertainty in the region, the Company is unable to enroll patients in Russia or Ukraine. The Company closed all of its clinical sites in Russia and is in the process of closing the sites in Ukraine. No patients had been randomized to treatment in the clinical trial at any of the Company's nine sites in Ukraine and Russia. Given the encouraging screening and enrollment trajectory at the Company's other clinical sites, the Company continues to anticipate the six-month primary outcome data on all 80 subjects in the second half of 2023. The ongoing Conflict may, however, adversely impact the Company's business in the future, and it remains too early to evaluate all the potential effects of this Conflict.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of Lumos and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). All significant intercompany accounts and transactions are eliminated in consolidation.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and accompanying notes thereto included in the Company’s 2021 Annual Report filed on Form 10-K with the SEC on March 11, 2022.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. Significant management estimates that affect the reported amounts of assets and liabilities include stock-based compensation, accruals for clinical trials and deferred tax assets. While we believe that the estimates and assumptions used in preparation of our condensed consolidated financial statements based on our knowledge of current events and actions that we may undertake in the future are appropriate, actual results could differ from those estimates, and any such differences may be material.
As of September 30, 2022, the Company’s significant accounting policies are consistent with those discussed in Note 2 - Summary of Significant Accounting Policies and Recent Accounting Pronouncements of its consolidated financial statements included in the Company’s 2021 Annual Report filed on Form 10-K with the SEC on March 11, 2022.
3. License and Asset Purchase Agreements
License and LUM-201 Asset Purchase Agreements
In July 2018, the Company entered into an asset purchase agreement (the “APA”) with Ammonnett Pharma LLC ( “Ammonett”) and acquired substantially all of the assets related to LUM-201, which Ammonett licensed from Merck in October 2013 (the “Lumos Merck Agreement”).
The Lumos Merck Agreement, which grants Lumos (as successor in interest to Ammonett) worldwide, exclusive, sublicensable (subject to Merck’s consent in the United States, major European countries and Japan, such consent not to be unreasonably withheld) rights under specified patents and know-how to develop, manufacture and commercialize LUM-201 for any and all indications, excluding Autism Spectrum Disorders as defined in the Fifth Edition of the Diagnostic and Statistical Manual of Mental Disorders.
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Lumos Pharma, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
On August 12, 2020, we entered into Amendment No. 1 to the Lumos Merck Agreement with Merck (the “Lumos Merck Agreement Amendment”). Pursuant to the Lumos Merck Agreement Amendment, we obtained from Merck a worldwide, non-exclusive, sublicensable (subject to Merck’s consent in the United States, specified major European countries and Japan, such consent not to be unreasonably withheld) license under the specified patents and know-how that are the subject of our exclusive license to develop, manufacture and commercialize LUM-201 for diagnostic purposes, excluding Autism Spectrum Disorders.
Under the APA, the Company paid Ammonett an upfront fee of $3.5 million in 2018. The Company may also incur development milestone payments totaling up to $17.0 million for achievement of specified milestones on the first indication that Lumos pursues, and up to $14.0 million for achievements of specified milestones on the second indication that Lumos pursues, sales milestone payments totaling up to $55.0 million on worldwide product sales, and royalty payments based on worldwide product sales, as discussed below.
Under the Lumos Merck Agreement, Lumos will be required to pay Merck substantial development milestone payments for achievement of specified milestones relating to each of the first and second indications. Total potential development milestone payments are required of up to $14.0 million for the first indication that Lumos pursues and up to $8.5 million for the second indication that Lumos pursues. Tiered sales milestone payments totaling up to $80.0 million are required on worldwide net product sales up to $1.0 billion, and substantial royalty payments based on product sales are required if product sales are achieved.
If product sales are ever achieved, Lumos is required to make royalty payments under both the APA and the Lumos Merck Agreement collectively of 10% to 12% of total annual product net sales, subject to standard reductions for generic erosion. The royalty obligations under the Lumos Merck Agreement are on a product-by-product and country-by-country basis and will last until the later of expiration of the last licensed patent covering the product in such country and expiration of regulatory exclusivity for such product in such country. The royalty obligations under the APA are on a product-by-product and country-by-country basis for the duration of the royalty obligations under the Merck License and thereafter until the expiration of the last patent assigned to Lumos under the APA covering such product in such country.
The Lumos Merck Agreement shall continue in force until the expiration of royalty obligations on a country-by-country and product-by-product basis, or unless terminated by Lumos at will by submitting 180 days’ advance written notice to Merck or by either party for the other party’s uncured material breach or specified bankruptcy events. Upon expiry of the royalty obligations the Lumos Merck Agreement converts to a fully paid-up, perpetual non-exclusive license.
If the Lumos Merck Agreement is terminated, and upon Merck’s written request, Lumos is obligated to use reasonable and diligent efforts to assign to Merck any sublicenses previously granted by Lumos.
License and PRV Asset Purchase Agreements
In November 2014, NewLink entered into a worldwide license and collaboration agreement (the “NewLink Merck Agreement”), with Merck, to develop and potentially commercialize its Ebola vaccine rVSV∆G-ZEBOV that it licensed from the Public Health Agency of Canada (“PHAC”). rVSV∆G-ZEBOV was also eligible to receive a priority review voucher (“PRV”) if approval was granted by the U.S. Food and Drug Administration (the “FDA”), with the Company entitled to 60% and Merck entitled to the remaining 40% of the PRV value obtained through sale, transfer or other disposition of the PRV. On December 20, 2019, Merck announced that the FDA approved its application for ERVEBO® (Ebola Zaire Vaccine, Live) for the prevention of disease caused by Zaire Ebola virus in individuals 18 years of age and older and grant of the PRV.
On July 27, 2020, Lumos and Merck entered into the asset purchase agreement (the “PRV Asset Purchase Agreement”), whereby Lumos and Merck each agreed that Merck would purchase the PRV from the Company. Merck agreed to pay the Company an aggregate of $60 million in two installments. The $35.7 million liability, representing the portion of the PRV value to which Merck was entitled, was also extinguished through the PRV Asset Purchase Agreement. The first installment of $34.0 million was received by the Company during the three months ended September 30, 2020 and the second installment of $26.0 million was received on January 11, 2021.
Under the NewLink Merck Agreement, as amended, the Company has earned and has the potential to continue to earn royalties on sales of the vaccine in certain countries. However, we believe that the market for the vaccine will be limited primarily to areas in the developing world that are excluded from royalty payment or where the vaccine is donated or sold at low or no margin, and therefore we do not expect to receive material royalty payments from Merck in the foreseeable future.
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Lumos Pharma, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
For each of the three months ended September 30, 2022 and 2021, the Company recognized revenues of $0, and recognized $0 and $10,000 for the nine months ended September 30, 2022 and 2021, respectively, in each case, for work the Company performed in relation to ERVEBO®, as a subcontractor of Merck. For the three months ended September 30, 2022 and 2021, the Company recognized revenues of $0.5 million and $0, respectively, and recognized $1.0 million and $0, respectively, for the nine months ended September 30, 2022 and 2021, for royalties related to royalty-bearing commercial sales of the vaccine.
Additionally, per the terms of the licensing agreement with the PHAC, the Company has an obligation to pay a royalty fee to the PHAC for any royalty amounts earned. For the three months ended September 30, 2022 and 2021, the Company incurred royalty expense of $0.3 million and $0, respectively, for royalties related to royalty-bearing commercial sales of the vaccine. For the nine months ended September 30, 2022 and 2021, the Company incurred royalty expense of $0.7 million and $0, respectively, for royalties related to royalty-bearing commercial sales of the vaccine. Royalty expense is included within general and administrative expenses in the consolidated statements of operations for the three and nine months ended September 30, 2022.
4. Accrued Expenses
Accrued expenses are comprised of the following (in thousands):
September 30, 2022December 31, 2021
Compensation and related benefits$2,590 $2,812 
Clinical and contract manufacturing expenses1,628 508 
Other 261846 
Total accrued expenses$4,479 $4,166 
5. Stock-Based Compensation and Employee Benefit Plans
Stock Options and Performance Stock Options
In 2012, Private Lumos adopted the 2012 Equity Incentive Plan (“2012 Plan”), and in 2016 it adopted the 2016 Stock Plan (“2016 Plan” and together with the 2012 Plan, the “Plans”). In connection with the Merger, all outstanding options under the Plans were assumed and such assumed options may be exercised to purchase common stock of the Company after the Merger. Subsequent to the Merger, the Plans were terminated as to future awards.
In connection with the Merger, the Company assumed NewLink’s 2009 Equity Incentive Plan which was effective since July 2009 and was subsequently amended on May 9, 2019 (the “2019 Plan”). The 2019 Plan has a 10 year term from the board of directors (Board) adoption date of March 22, 2019 and on January 1 of each year through January 1, 2029, in accordance with an “evergreen provision”, a number of shares of common stock in an amount equal to 3% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year or such lesser amount of shares (or no shares) approved by the Board, will be added to the shares reserved under the 2019 Plan. The 2019 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards and stock appreciation rights to officers, employees, members of the Board, advisors, and consultants to the Company. As of September 30, 2022, we had 426,437 shares available for grant under the 2019 Plan.
2010 Non-Employee Directors' Stock Award Plan
In connection with the Merger, the Company assumed NewLink’s 2010 Non-Employee Directors’ Stock Award Plan (the Directors’ Plan) which was effective on November 10, 2011. As of September 30, 2022, 5,624 shares remain available for grant under the Directors' Plan.
2010 Employee Stock Purchase Plan
In connection with the Merger, the Company assumed NewLink’s 2010 Employee Stock Purchase Plan, as amended (the 2010 Purchase Plan), which was effective on November 10, 2011. On July 22, 2021, the Board approved an amendment and
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Lumos Pharma, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
restatement of the 2010 Purchase Plan (the “A&R ESPP”) and established a special offering period under the A&R ESPP beginning September 1, 2021 and lasting until June 30, 2022, subject to restart provisions as described within the A&R ESPP. The special offering period under the A&R ESPP was fully contingent upon stockholder approval of the A&R ESPP at the 2022 Annual Meeting of Stockholders. The A&R ESPP provides for an increase in the number of shares reserved for issuance under the A&R ESPP by 60,000 shares. On May 4, 2022, at the 2022 Annual Meeting of Stockholders, the A&R ESPP was approved. As of September 30, 2022, 58,325 shares remained available for issuance under the 2010 Purchase Plan.
Share-Based Compensation Expense
Stock-based compensation expenses included in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 were (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Research and development$174 $120 $488 $675 
General and administrative419 370 1,245 1,710 
Total $593 $490 $1,733 $2,385 
As of September 30, 2022, we had unrecognized compensation cost of $4.9 million and the weighted-average period over which it is expected to be recognized is 2.6 years.
6. Long-Term Debt and Conversion to Royalty Obligation
In March 2005, NewLink entered into a $6.0 million forgivable loan agreement with the Iowa Department of Economic Development (the “IDED”). Under the agreement, in the absence of default, there were no principal or interest payments due until the completion date for the project. This loan was converted into a royalty obligation under the terms of a settlement agreement entered into on March 26, 2012 (the “IEDA Agreement”), with the Iowa Economic Development Authority (the “IEDA”), as successor in interest to the IDED. As no payments are expected in the next 12 months, the entire royalty obligation of $6.0 million, which we assumed in connection with the Merger, is classified as a long-term liability as of September 30, 2022.
7. Income Taxes
For each of the three and nine months ended September 30, 2022 and 2021, the Company recorded no income tax benefit. The income tax amount for each of the three and nine months ended September 30, 2022 and 2021 differs from the amount that would be expected after applying the statutory U.S. federal income tax rate primarily due to an increase in the valuation allowance.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Due to the uncertainty of the Company’s ability to realize the benefit of the deferred tax assets, the net deferred tax assets are fully offset by a valuation allowance at September 30, 2022.
Based on Section 382 ownership change analyses through March 18, 2020, as a result of the Merger, both historical NewLink and Private Lumos experienced Section 382 ownership changes on March 18, 2020. These ownership changes limit our ability to utilize federal net operating loss carryforwards and certain other tax attributes that accrued prior to the respective ownership changes of us and our subsidiaries and may continue to limit our ability to utilize such attributes in the future. Based on subsequent analyses, we did not experience a Section 382 ownership change from March 19, 2020 through December 31, 2021.
8. Net Loss per Share of Common Stock
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Lumos Pharma, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Basic loss per share is based upon the weighted-average number of shares of common stock outstanding during the period, without consideration of common stock equivalents. Diluted loss per share is based upon the weighted-average number of common shares outstanding during the period plus additional weighted-average potentially dilutive common stock equivalents during the period when the effect is dilutive.
The following table presents the computation of basic and diluted loss per share of common stock (in thousands, except share and per share data) and the number of unexercised stock options and restricted stock units, which are common stock equivalents, that have been excluded from the diluted net loss calculation as their effect would have been anti-dilutive for all periods presented.
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net loss$(7,251)$(7,488)$(22,815)$(24,789)
Weighted-average shares outstanding - Basic and diluted8,388,029 8,357,391 8,371,449 8,333,017 
Net loss per share - Basic and diluted$(0.86)$(0.90)$(2.73)$(2.97)
Anti-dilutive stock options 1,450,114 1,222,980 1,450,114 1,222,980 
Anti-dilutive restricted stock units69,794 81,015 69,794 81,015 
Total anti-dilutive common stock equivalents excluded
1,519,908 1,303,995 1,519,908 1,303,995 

9. Severance Charges
On February 4, 2021, Eugene P. Kennedy, M.D, notified the Company that he would be resigning from his position as the Company's Chief Medical Officer effective March 6, 2021. As per the terms of Dr. Kennedy's employment agreement relating to change in control benefits, the Company paid approximately $0.7 million in severance expenses recognized during the three months ended March 31, 2021 and accelerated vesting of all non-vested equity awards. For the three months ended March 31, 2021, the Company recognized additional stock compensation expense of approximately $0.7 million due to accelerated vesting of all non-vested equity awards held by Dr. Kennedy.
On April 16, 2021, Carl W. Langren notified the Company that he would be retiring from his position as the Company's Chief Financial Officer effective June 30, 2021. Mr. Langren's resignation in connection with his retirement was effective June 30, 2021. As per the terms of Mr. Langren's employment agreement relating to change in control benefits, the Company paid approximately $0.9 million as severance, accelerated vesting of all non-vested equity awards and extended the exercise period on any vested equity awards to twenty-four months from the separation date. For the three months ended June 30, 2021, we recognized additional stock compensation expense of approximately $0.4 million due to accelerated vesting of all non-vested equity awards held by Mr. Langren. Final payment of accrued severance compensation of $0.9 million was paid in the fourth quarter of 2021. No severance-related expense was recognized during the three and nine months ended September 30, 2022.




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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this quarterly report on Form 10‑Q for the quarter ended September 30, 2022 (this “Quarterly Report”). This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, such statements are subject to the “safe harbor” created by those sections and involve risks and uncertainties. Forward-looking statements are based on our management’s beliefs and assumptions and on information available to our management as of the date hereof. As a result of many factors, such as those set forth under “Item 1A. Risk Factors” included in our 2021 Annual Report and Part II, “Item 1A. Risk Factors” in this Quarterly Report, our actual results may differ materially from those anticipated in these forward-looking statements, accordingly, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Such factors may be amplified by the COVID-19 pandemic and its potential impact on our business and the global economy.
Overview
Lumos Pharma, Inc. is a clinical-stage biopharmaceutical company. References in this Quarterly Report to “us,” “we,” “our,” the Company,” or “Lumos” are to Lumos Pharma, Inc. and its wholly-owned subsidiaries. With our principal executive offices located in Austin, Texas and additional executive and administrative offices located in Ames, Iowa, we are engaged in advancing our clinical program and focused on identifying, acquiring, developing, and commercializing novel products and new therapies for people with rare diseases on a global level, for which there is currently a significant unmet need for safe and effective therapies. Our common stock is listed on the Nasdaq Global Market (“Nasdaq”) and trades under the ticker symbol “LUMO.”
We have focused our efforts on the development of our sole product candidate, growth hormone secretagogue ibutamoren (“LUM-201”), a potential oral therapy for idiopathic pediatric growth hormone deficiency (“PGHD”) and other rare endocrine disorders.
PGHD is a rare endocrine disorder occurring in approximately one in 3,500 persons aged birth to 17 years. Causes of PGHD can be congenital (children are born with the condition), acquired (brain tumor, head injuries or other causes), iatrogenic (induced by medical treatment) or idiopathic (of unknown cause). Children with untreated PGHD will have significant growth failure, potential adult heights significantly less than five feet, and may have abnormal body composition with decreased bone mineralization, decreased lean body mass, and increased fat mass.
The main therapeutic goal in PGHD is to restore growth, enabling short children to achieve normal height and prevent complications that could involve metabolic abnormalities, cognitive deficits and reduced quality of life. The current standard of care for PGHD is limited to daily subcutaneous injections of rhGH with a treatment cycle lasting up to an average of seven years. Poor compliance with daily rhGH injections during treatment can result in an adverse impact on growth. In April 2021, the FDA approved a new treatment, Skytrofa, a once-weekly injection that would reduce the number of injections over the course of treatment for a patient, however, based on primary market research, we believe that many providers and patients will have a preference for an orally administered treatment, when available.
On March 18, 2020, we closed the business combination (the “Merger”) among the Company, formerly known as NewLink Genetics Corporation (“NewLink”), Cyclone Merger Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of NewLink, and Lumos Pharma, Inc., (Private Lumos) which has since been renamed “Lumos Pharma Sub, Inc.” whereby Merger Sub merged with and into Private Lumos, with Private Lumos surviving as a wholly-owned subsidiary of the Company. Immediately prior to the closing of the Merger, the shares of NewLink common stock were adjusted with a reverse split ratio of 1‑for‑9. Under the terms of the Merger, Private Lumos stockholders received an aggregate of 4,146,398 shares of NewLink common stock (after giving effect to the reverse split). Immediately following the reverse stock split and the completion of the Merger, there were 8,292,803 shares of our common stock outstanding, of which approximately 50% was held by each of Private Lumos and NewLink security holders. The Merger was accounted for as a reverse asset acquisition.
LUM-201 Growth Hormone Secretagogue
Our pipeline is focused on the development of an orally administered small molecule, LUM-201, which is a growth hormone (“GH”) secretagogue, also called ibutamoren, for rare endocrine disorders where injectable recombinant human growth hormone (“rhGH”) is currently approved. LUM-201 is a tablet formulation that will be administered once daily.
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Lumos acquired LUM-201 from Ammonett Pharma LLC (“Ammonett”) in July 2018. LUM-201 received an Orphan Drug Designation (“ODD”) in the United States and the European Union for Growth Hormone Deficiency (“GHD”) in 2017. The United States patent “Detecting and Treating Growth Hormone Deficiency” has been issued with an expiration in 2036. Related patents have been issued in the European Union (where validations are ongoing), Australia, Israel, Japan, South Korea, Hong Kong, and Ukraine with related patent applications pending in multiple other jurisdictions. If approved, LUM-201 has the potential to become the first approved oral GH secretagogue to treat rare endocrine disorders associated with GH deficiencies, starting with PGHD, providing an alternative to the current standard regimen of recombinant growth hormone product injections. A secretagogue is a substance that stimulates the secretion or release of another substance. LUM-201 stimulates the release of GH and is referred to as a GH secretagogue.
LUM-201 stimulates GH via the GH secretagogue receptor (GHSR1a), also known as the ghrelin receptor, and also suppresses the release of somatostatin, thus providing a differentiated mechanism of action to treat some rare endocrine disorders (involving a deficiency of GH) by increasing the amplitude of endogenous, pulsatile GH secretion. LUM-201’s stimulatory effect is regulated by both circulating levels of GH and its down-stream mediator insulin-like growth factor which at supraphysiological levels feedback or negatively regulate additional release of GH from the pituitary, hence protecting against hyperstimulation of GH release. LUM-201 has been observed to stimulate endogenous GH secretion in patients who have a functional but reduced hypothalamic pituitary GH axis. The PGHD patient population consists of patients diagnosed with organic PGHD (a more severe GH deficiency) and idiopathic PGHD (a less severe or moderate GH deficiency). We believe that patients with idiopathic PGHD (i.e., those who have a functional but reduced hypothalamic pituitary GH axis) are expected to respond to LUM-201 and represent approximately 60% of PGHD patients.
During the fourth quarter of 2020, we launched our OraGrowtH210 Trial (as defined below) program to study the effects of LUM-201 in PGHD and initiated our Phase 2 clinical trial (“OraGrowtH210 Trial” or the “Phase 2 Trial”) with the opening of the initial sites participating in this study. The OraGrowtH210 Trial is a global multi-site randomized study evaluating orally administered LUM-201 at three dose levels (0.8, 1.6 and 3.2 mg/kg/day) against a standard dose of daily injectable rhGH in approximately 80 subjects diagnosed with idiopathic PGHD.
The primary endpoint of the study is preliminary validation of our predictive enrichment marker (“PEM”) patient selection strategy as evidenced by the percentage of selected patients who grow in response to LUM-201. The primary efficacy endpoint is annualized height velocity. Secondary endpoints include selection of a pediatric dose of LUM-201 for future studies including Phase 3 and determination of the degree of repeatability of the PEM selection process in PEM positive patients screened for participation in OraGrowtH210.
The OraGrowtH210 Trial currently has sites enrolling in the United States, Australia, New Zealand, Poland, and Israel. We were in process of initiating clinical sites in Russia and Ukraine; however, due to the Conflict and the resulting uncertainty in the region, we are unable to enroll patients in Russia or Ukraine. We have closed all of our clinical sites in Russia and are in the process of closing the sites in Ukraine. No patients had been randomized to treatment in the clinical trial at any of our nine sites in Ukraine and Russia. Given the encouraging screening and enrollment trajectory at our other clinical sites, we continue to anticipate the 6-month primary outcome data on all 80 subjects in the second half of 2023. In the event the Ukraine-Russia conflict were to affect other countries in the region, this could adversely impact our business in the future, and it remains too early to evaluate all the potential effects of this conflict.
A second concurrent trial of LUM-201 in PGHD exploring the effects of the novel mechanism of action of LUM-201 in amplifying the pulsatile secretion of growth hormone (the “OraGrowtH212 Trial”) was initiated in the second quarter of 2021. The OraGrowtH212 Trial in PGHD will run in parallel with the OraGrowtH210 Trial. The OraGrowtH212 Trial is a single site, open-label trial evaluating the pharmacokinetic and pharmacodynamic (“PK/PD”) effects of LUM-201 in up to 24 PGHD subjects at two different dose levels, 1.6 and 3.2 mg/kg/day. The objective of the OraGrowtH212 Trial is to confirm prior clinical data illustrating the increased pulsatile release of endogenous growth hormone unique to LUM-201 and its potential for this mechanism of action to contribute to efficacy in PGHD. Our OraGrowtH212 Trial is being conducted at a single specialized pediatric center with the capacity to conduct the more frequent sample acquisition and monitoring required for this type of clinical trial. Data from the OraGrowtH212 Trial may be supportive in future regulatory filings; however, this trial is not required for regulatory approval of LUM-201. The primary endpoint for this trial is six months of PK/PD and height velocity data in up to 24 subjects and is anticipated in the second half of 2023.
In response to the FDA's request in a letter dated July 16, 2021, we announced in July 2021 that the FDA had restricted treatment with LUM-201 to no more than 12 months. At that time, we extended the treatment period from six months to 12 months for both our OraGrowtH210 and OraGrowtH212 Trials to gather additional efficacy data for LUM-201 in PGHD prior to starting our originally planned long-term extension trial (the “OraGrowtH211 trial”). As announced on May 10, 2022, after review of preliminary safety and efficacy data from both the OraGrowtH210 and OraGrowtH212 Trials, the FDA has removed the partial hold and will now permit treatment with LUM-201 beyond 12 months. As a result, the OraGrowtH210 Trial has been
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extended to 24 months to allow subjects to continue LUM-201 therapy uninterrupted. Additionally, during the second quarter of 2022, the protocol for the OraGrowtH212 Trial was amended to allow treatment until subjects reach a bone age of 14 for females and 16 for males, reflecting near-adult height.
The extension of the treatment period will not impact the primary outcome data read out for the OraGrowtH210 or OraGrowtH212 trials, which will be based on the annualized data from the first six months of treatment. We continue to review the timing of the start of the long-term extension study in context of the OraGrowtH210 Trial extension and will initiate the extension study when appropriate. We do not anticipate these protocol changes, on a stand-alone basis, will extend the time to the initiation of our Phase 3 clinical trial.
During the first quarter of 2022, we initiated our OraGrowtH213 Trial (the “OraGrowtH213 Trial,” and together with the OraGrowtH210 Trial, the OraGrowtH211 Trial, and the OraGrowtH212 Trial, the “OraGrowtH Trials”), an open-label, multi-center, Phase 2 study evaluating the growth effects and safety of LUM-201 following 12 months of daily rhGH in up to 20 idiopathic PGHD subjects who have completed the OraGrowtH210 Trial. Subjects will be administered LUM-201 at a dose level of 3.2 mg/kg/day for up to 12 months.
On November 14, 2022, we announced that our interim analyses for our OraGrowtH210 and OraGrowtH212 Trials had met expectations. The interim analysis for OraGrowtH210 was performed after 41 patients, randomized into four treatment arms of approximately 10 patients, completed six months of treatment. The six-month annualized height velocity (AHV) on 1.6 mg/kg/day LUM-201 met our expectations for growth. The mean (median) AHV at six months is shown below for each of the four treatment arms:
7.26 (7.71) cm/year in the 0.8 mg/kg arm (n=11)
8.57 (8.61) cm/year in the 1.6 mg/kg arm (n=10)
7.77 (8.11) cm/year in the 3.2 mg/kg arm (n=10)
11.05 (10.48) cm/year in the rhGH arm (n=10)
The mean AHV of 8.6 cm/year at six months observed in the 1.6mg/kg dose arm was in line with our expectations for 8.3 cm/year AHV, which was observed after 12 months of recombinant growth hormone (rhGH) treatment in a moderate naïve-to-treatment PGHD patient population derived from the large 20-year Phase 4 Eli Lilly GeNeSIS database.1 This was also comparable to the first-year height velocity observed for similar moderate PGHD subjects treated with rhGH in three other large historical databases.2,3,4
This unexpected growth was likely due both to the presence of two of the youngest subjects in the rhGH cohort known to show a robust growth response (15.6 and 12.7 cm/yr) and to other imbalances in several baseline characteristics also documented as predictors of greater growth response to rhGH.1,3,5 The higher than anticipated AHV seen in this moderate PGHD population treated in the rhGH control arm was inconsistent with multiple historical trials in similarly characterized populations, which predicted growth in the 8.3-8.6 cm / year range.1-4 Baseline characteristics other than age which are predictive of greater growth on therapy include: height (shorter stature), lower height and IGF-1 standard deviation scores (SDS), greater distance from mid-parental height (MPH), and higher body mass index standard deviation score (BMI SDS). Additionally, there was an outlier in the rhGH arm whose AHV was 15.6 cm. The imbalanced baseline parameters of the 1.6 mg/kg LUM-201 arm compared to the rhGH arm are shown in the table below.
1 Blum et al JES 2021
2 Lechuga-Sancho et al JPEM 2009
3 Ranke et al JCEM 2010
4 Bright et al JES 2021
5 Yang et.al. Nature Sci Rep 2019
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Imbalances in Five Baseline Parameters are Predictive of Higher Growth in the rhGH Arm:
Baseline metrics
1.6 mg LUM-201 Mean (SD)
 N=10
rhGH
Mean (SD)
N=10
Age in months99.3 (28.3)90.3 (26.7)
Height in cm114.6 (9.6)111.6 (11.9)
Height SDS-2.35 (0.62)-2.29 (0.43)
IGF-1 SDS -1.17 (0.72) -1.37 (0.48)
MPH in cm166.98 (7.15)168.78 (8.85)
BMI SDS-0.35 (0.79)+0.31 (1.05)
We believe the imbalance in age will even out as enrollment progresses since age is a stratification factor. Two of the three subjects under five years are in the rhGH cohort and are growth outliers. To date, older subjects are being randomized to the rhGH treatment arm based on age stratification which would predict a slower growth response to rhGH treatment. With higher enrollment, we believe the imbalance of predictors favoring faster growth in response to rhGH treatment in the control arm is likely to resolve, resulting in greater balance across all cohorts.
We announced on November 14, 2022, that our OraGrowtH210 Trial is approximately 80 percent enrolled and that we continue to anticipate primary data readout with all 80 patients after six months on treatment in the second half of 2023. At the time of the announcement, we had information on the baseline characteristics of approximately 75 percent of the subjects enrolled in the trial, or a total of 58 subjects. The baseline characteristics as shown below represent a better balance between the cohorts, which we expect will result in diminishing the effect of outliers as the trial reaches full enrollment.
LUM-201 0.8 mg
LUM-201 1.6 mg
LUM-201 3.2 mg
rhGH
Mean (SD)
Mean (SD)
Mean (SD)
Mean (SD)
N=14
N=15
N=14
N=15
Age (months)
99.1 (28.3)
98.4 (28.6)
92.9 (22.6)
94.1 (23.7)
Height (cm)
115.1 (12.5)
114.6 (11.2)
112.4 (9.2)
113.4 (10.6)
Height SDS
-2.32 (0.3)
 -2.31 (0.5)
-2.32 (0.4)
-2.25 (0.4)
Max Height SDS
-1.76
-1.66
-1.57
-1.73
IGF-1 SDS
-1.43 (0.67)
-1.30 (0.67)
-1.35 (0.57)
-1.32 (0.46)
Max IGF-1 SDS
-0.3
-0.3
-0.6
-0.7
MPH (cm)
165.5 (7.1)
164.3 (7.2)
166.1 (7.0)
168.5 (7.9)
MPH SDS
1.43 (0.66)
1.70 (0.54)
1.92 (0.73)
1.75 (0.63)
BA Delay (yrs)
1.89 (1.02)
1.91 (0.53)
2.20 (0.86)
1.68 (0.9)
BMI SDS1
 -0.47 (1.09)
-0.38 (0.91)
-0.55 (0.79)
 +0.14 (1.08)
OraGrowtH210 Interim Analysis Highlights at Nine and Twelve Months
The nine and twelve-month interim data available for a subset of the subjects demonstrated the durability of the growth response for LUM-201 at these later treatment intervals, albeit with a smaller number of patients. The decline in the AHV rate for the rhGH arm was more pronounced over time (11.05 cm/yr at six months to 9.93 cm/yr at 12 months) compared to the LUM-201 1.6 mg/kg arm (8.57 cm/yr at six months to 8.14 cm/yr at 12 months).
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LUM-201 Demonstrates Durable Growth Rates Out to Twelve Months:
OraGrowtH210 AHV (mean)6 months9 months12 months
cm/yearncm/yearncm/yearn
0.8 mg/kg/day LUM-2017.26116.1756.744
1.6 mg/kg/day LUM-2018.57108.4868.144
3.2 mg/kg/day LUM-2017.77106.8066.943
34 μg/kg/day rhGH11.051010.4679.934

OraGrowtH212 Interim Analysis Highlights
The OraGrowtH212 Trial is a single site, open-label trial evaluating the pharmacokinetic (PK) and pharmacodynamic (PD) effects of oral LUM-201 in up to 24 treatment-naïve PGHD subjects at two dose levels, 1.6 and 3.2 mg/kg/day. Every subject in the OraGrowtH212 Trial was PEM-positive and, therefore, enriched for responsiveness to LUM-201.
The interim analysis of the OraGrowtH212 Trial was performed after ten subjects randomized to one of two LUM-201 treatment arms had completed six months of treatment. The AHV for each arm was comparable to that observed in the OraGrowtH210 Trial. The data also demonstrate the growth is durable out to 12 months, albeit in a more limited number of subjects. This separate study also supports the narrowing of the AHV difference between LUM-201 and rhGH seen in the OraGrowtH210 Trial as subjects approach 12 months on treatment.
LUM-201 in GraGrowtH212 Demonstrates Comparable Growth Rates to OraGrowtH210:
OraGrowtH2126 months9 months12 months
cm/yearNcm/yearncm/yearn
1.6 mg/kg/day LUM-2017.1456.8547.212
3.2 mg/kg/day LUM-2018.6058.0047.783

OraGrowtH210 and OraGrowtH212 Combined Post-Hoc Analysis
In an effort to determine an optimal dose for a Phase 3 trial, a post-hoc analysis was conducted, combining growth data from OraGrowtH210 and OraGrowtH212 Trials to increase the sample size. This analysis demonstrated comparable mean AHVs at six, nine, twelve months between the two higher doses of LUM-201. While there are some baseline characteristic differences between studies, all subjects enrolled to date are PEM-positive and are, therefore, representative of the broader moderate PGHD population. This post-hoc analysis of the combined 1.6 mg/kg and 3.2 mg/kg cohorts from both trials confirmed very similar growth rates between the top two LUM-201 doses and supports the selection of 1.6 mg/kg as an optimal dose for the Phase 3 trial. Based on historical research, we expected a smaller dose-response between 1.6 mg/kg and 3.2 mg/kg compared to 0.8 to 1.6 mg/kg based on the previously generated PK/PD data in normal healthy volunteers that showed a PD plateau at 2.8 mg/kg.6
OraGrowtH210 + OraGrowtH2126 months9 months12 months
cm/yearNcm/yearncm/yearn
1.6 mg/kg/day LUM-2018.09157.83107.836
3.2 mg/kg/day LUM-2018.05157.28107.366
6 Merck 001 study
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Safety & Tolerability Highlights
We believe LUM-201 will demonstrate a favorable safety profile as data from both OraGrowtH trials to date show comparable safety and tolerability to the rhGH subjects in the trials. There were no treatment-related Serious Adverse Events (SAEs), no drop-outs due to SAE’s and no meaningful safety signals observed in either laboratory values, adverse event data, or in electrocardiogram values. The safety data for the OraGrowtH212 Trial is consistent with the data in the OraGrowtH210 Trial.
The graphic below depicts the clinical development plan for LUM-201.
https://cdn.kscope.io/de6a99d96d94b33903ecca31bc6dd02b-nlnk-20220930_g2.jpg
Potential expansion of LUM-201 into additional indications
In May 2022, we announced a clinical collaboration with Massachusetts General Hospital (“MGH”) to evaluate oral LUM-201 in nonalcoholic fatty liver disease (“NAFLD”) in an investigator-initiated trial. This trial will evaluate a dose of 25 mg/day of LUM-201 in 10 men and women with NAFLD. Enrollment in the trial has begun and the first subject has been dosed. GH is a critical stimulator of lipolysis, and preclinical data suggest that amplifying GH secretion has the potential to reduce hepatic steatosis and prevent NAFLD progression. Enhancing the natural pulsatile release of GH has been shown clinically in short-term studies to be more efficacious in inducing lipolysis than continuous infusions of GH. The primary endpoints will be to determine the changes in intrahepatic lipid content, hepatic inflammation and fibrosis with GH augmentation as measured by H-MRS and Perspectum’s LiverMultiScan®. Biopsies will be conducted on a subset of subjects to obtain additional information at the genetic and cellular level in this indication.
We approved an unsolicited grant application for this study and will supply LUM-201 for this pilot trial. Lumos has a pending application for a method-of-use patent for LUM-201 in NAFLD and retains intellectual property rights for LUM-201 in this indication.
We continue to explore our development path to expand into additional indications for LUM-201. We are actively reviewing the mechanism of action of LUM-201 in a subset of affected patients in other potential indications, including Prader Willi Syndrome, Idiopathic Short Stature, Children Born Small for Gestational Age, and Turners Syndrome, and are working towards developing the clinical plans for additional targeted indications. Timing for the initiation of these plans will be dependent on the outcome of data developed and identification of the most efficacious dose in the OraGrowtH210 Trial and the timing of such data.
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Ebola Vaccine
In November 2014, NewLink entered into the NewLink Merck Agreement with Merck to develop and potentially commercialize its Ebola vaccine rVSV∆G-ZEBOV that it licensed from PHAC. rVSV∆G-ZEBOV was also eligible to receive a PRV if approval was granted by the FDA, with the Company entitled to 60% of the PRV value obtained through sale, transfer or other disposition of the PRV. On December 20, 2019, Merck announced that the FDA approved its application for ERVEBO® (Ebola Zaire Vaccine, Live) for the prevention of disease caused by Zaire Ebola virus in individuals 18 years of age and older. Pursuant to the asset purchase agreement, Merck agreed, among other things, to pay us for the PRV in two installments. As required by the agreement, Merck paid us $34.0 million at the closing during the three months ended September 30, 2020 and $26.0 million on January 11, 2021.
We have received and have the potential to continue to earn royalties on sales of the vaccine in certain countries. However, we believe that the market for the vaccine will be limited primarily to areas in the developing world that are excluded from royalty payment or where the vaccine is donated or sold at low or no margin and, therefore, we do not expect to receive material royalty payments from Merck in the foreseeable future.
Oncology Candidates
We have small-molecule product candidates, which we acquired from NewLink in the merger. These product candidates, indoximod, NLG802 (a prodrug of indoximod) and NLG919 (a direct IDO1 enzymatic inhibitor) are indoleamine-2, 3-dioxygenase pathway inhibitors. We also had an additional small molecule product candidate, NLG207, which is a nanoparticle-drug conjugate consisting of a cyclodextrin-based polymer backbone linked to camptothecin, a topoisomerase 1 inhibitor, which was out-licensed to Ellipses Pharma Limited, effective December 17, 2019.
Two U.S. patents covering both the salt and prodrug formulations of indoximod were issued in the United States on August 15, 2017 and February 19, 2019, respectively, providing exclusivity until at least 2036. We are continuing to pursue international patent coverage for these formulations in some countries. We may explore the potential for further development and licensing opportunities for these product candidates; however, we currently do not have any active program for these acquired small molecule product candidates.
Financial Overview
Revenue
We have no products approved for commercial sale and have not generated any revenue from product sales. In the future, we may generate revenue from product sales, royalties on product sales, or license fees, milestones, or other upfront payments if we enter into any collaborations or license agreements. We expect that our future revenue will fluctuate from quarter to quarter for many reasons, including the uncertain timing and amount of any such payments and sales.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred to advance our product candidate, LUM-201. Our research and development expenses include internal personnel expenditures along with external research and development expenses incurred under arrangements with third parties, such as contract research and manufacturing organizations, consultants, and our scientific advisors.
We expense research and development costs as incurred. Nonrefundable advance payments for goods and services that will be used in future research and development activities are capitalized as an asset and expensed when the service has been performed or when the goods have been received. We expect our research and development expenses to increase for the foreseeable future as we continue to conduct our clinical trial programs for our product candidates develop our pipeline and pursue regulatory approval of our product candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of professional fees for legal, auditing, tax and business consulting services, personnel expenses and travel costs. We expect that over the long term our general and administrative expenses will increase as we expand our operating activities; however, in the shorter term such expenses may fluctuate up or down from period to period.
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Critical Accounting Policies and Significant Judgments and Estimates
We have prepared our condensed consolidated financial statements in accordance with U.S. GAAP, which requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, expenses. On an ongoing basis, we evaluate these estimates and judgments. We based our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results could, therefore, differ materially from these estimates under different assumptions or conditions.
Management believes there have been no material changes to the critical accounting policies from those discussed in Note 2 - Summary of Significant Accounting Policies and Recent Accounting Pronouncements of our consolidated financial statements included in our 2021 Annual Report.
COVID-19
The pandemic caused by an outbreak of COVID-19 has resulted, and is likely to continue to result, in significant national and global economic disruption and may continue to adversely affect our operations. We are actively monitoring the potential impact of COVID-19, if any, on the carrying value of certain assets and our continued operations. To date, we have experienced delays related to the progress of our clinical trials as clinical sites adapt their procedures to caring for patients during a pandemic; however, we have not incurred impairment of any assets as a result of COVID-19. The extent to which these events may impact our business, clinical development, regulatory efforts, and the value of our common stock, will depend on future developments, which are highly uncertain and cannot be predicted at this time. The duration and intensity of these impacts and resulting disruption to our operations is uncertain and we will continue to evaluate the impact that these events could have on our operations, financial position, and results of operations and cash flows during fiscal year 2022.
Results of Operations
Comparison of the Three Months Ended September 30, 2022 and 2021:
Three Months Ended September 30,
20222021Change in $Change in %
(in thousands)(in thousands)
Revenues:
Royalty revenue$497 $— 497 100 %
Licensing and collaboration revenue — — — (100)%
Total revenues497 — 
Operating expenses:
 Research and development4,129 4,112 17 — %
General and administrative3,918 3,385 533 16 %
Total operating expenses8,047 7,497 
Other income, net299 290 (3222)%
Net loss $(7,251)$(7,488)
Revenues. Royalty revenues increased by $0.5 million for the three months ended September 30, 2022 compared to the same period in 2021 due to royalties earned related to sales of ERVEBO®.
Research and Development Expenses. Research and development expenses increased by $17,000 for the three months ended September 30, 2022 compared to the same period in 2021 primarily due to increases of $0.3 million in personnel-related expenses and $0.1 million in consulting expenses, offset by a decrease of $0.4 million in clinical trial and contract manufacturing expenses.
General and Administrative Expenses. General and administrative expenses increased by $0.5 million for the three months ended September 30, 2022 compared to the same period in 2021 primarily due to increases of $0.3 million in royalty expenses,
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$0.2 million in consulting expenses and $0.1 million in travel-related expenses, offset by a decrease of $0.1 million in other miscellaneous expenses.
Other Income, net. Other income, net increased by $0.3 million for the three months ended September 30, 2022 compared to the same period in 2021 primarily due to an increase in interest income.
Comparison of the Nine Months Ended September 30, 2022 and 2021:
Nine Months Ended September 30,
20222021Change in $Change in %
(in thousands)(in thousands)
Revenues:
Royalty revenue$1,011 $— 1,011 100 %
Licensing and collaboration revenue— 10 (10)(100)%
Total revenues1,011 10 
Operating expenses:
 Research and development12,995 12,885 110 %
General and administrative11,221 11,903 (682)(6)%
Total operating expenses24,216 24,788 
Other income (expense), net390 (11)401 (3645)%
Net loss $(22,815)$(24,789)
Revenues. Royalty revenues increased by $1.0 million for the nine months ended September 30, 2022 compared to the same period in 2021 due to royalties earned related to sales of ERVEBO®. Licensing and collaboration revenues decreased by $10,000 for the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to the wind down of work we performed in relation to ERVEBO® as a subcontractor of Merck.
Research and Development Expenses. Research and development expenses increased by $0.1 million for the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to increases of $0.2 million in consulting expenses, $0.1 million in personnel-related expenses and $0.1 million in other miscellaneous expenses, offset by decreases of $0.2 million in stock compensation expenses and $0.1 million in operating expenses for supplies, depreciation and rent.
General and Administrative Expenses. General and administrative expenses decreased by $0.7 million for the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to decreases of $0.6 million in personnel-related expenses recorded as a result of severance expense incurred in the second quarter of 2021, $0.5 million in stock compensation expenses, $0.4 million in consulting expenses and $0.1 million in depreciation, offset by increases of $0.7 million in royalty expenses and $0.2 million in travel expenses.
Other Income, net. Other income, net increased by $0.4 million for the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to an increase in interest income.
Liquidity and Capital Resources
We have historically devoted all our efforts toward research and development and have never earned revenue from commercial sales of our products. We expect to continue to incur additional substantial losses in the foreseeable future as a result of our research and development programs and from general and administrative costs associated with our operations. However, we believe that our existing cash and cash equivalents of approximately $73.7 million as of September 30, 2022 will be sufficient to support operations into the second quarter of 2024, inclusive of the primary read out of the OraGrowtH210 and OraGrowtH212 Trials for patients with idiopathic (moderate) PGHD and for at least 12 months from the filing date of this Quarterly Report.
We may seek to sell additional equity or debt securities or obtain a credit facility from time to time if our available cash and cash equivalents are insufficient to satisfy our liquidity requirements or if we develop additional opportunities to do so. The
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sale of additional equity and debt securities may result in additional ownership dilution to our stockholders. If we raise additional funds through the issuance of debt securities or preferred stock, these securities could have rights senior to those of our common stock and could contain covenants that would restrict our operations. We may require additional capital beyond our currently forecasted amounts. Any such required additional capital may not be available on reasonable terms, if at all. If we are unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned research and development activities, which could harm our business.
Because of the numerous risks and uncertainties associated with the research and development of our product candidates, we are unable to estimate the exact amounts of our working capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
the scope, progress, results, and costs of clinical trials for our product candidates, and discovery and development activities related to new product candidates;
the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates;
the cost of commercialization activities if any of our product candidates are approved for sale, including marketing, sales, facilities, and distribution costs;
the cost of manufacturing our product candidates and any products we commercialize;
our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements;
whether, and to what extent, we are required to repay our outstanding government provided loans;
the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;
changes in domestic and global business or macro-economic conditions, including continued adverse impacts from the COVID-19 pandemic or the conflict in Ukraine, resulting labor shortages, supply chain disruptions, and inflation; and
the timing, receipt and amount of sales of, or royalties on, our future products, if any.
On December 30, 2020, we entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as agent (the “Agent”), pursuant to which we may offer and sell from time to time through the Agent up to $50.0 million of shares of our common stock (the “Shares”). The offering and sale of up to $17.8 million of shares of Common Stock under the Sales Agreement was registered under the Securities Act pursuant to a shelf registration statement on Form S-3, which was declared effective by the SEC on August 26, 2022. Under the Sales Agreement, the Agent may sell the Shares by any method permitted by law and deemed to be an “at-the-market” offering as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through the Nasdaq, on any other existing trading market for the Shares, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices and/or any other method permitted by law. We will notify the Agent of the number of Shares to be issued, the time period during which sales are requested to be made, any limitation on the number of Shares that may be sold in any one day and any minimum price below which sales may not be made. We intend to use the net proceeds from this offering for working capital and general corporate purposes, which include, but are not limited to, expanding clinical development opportunities for our product candidate into potential additional indications, and general and administrative expenses. We may also use a portion of the net proceeds to invest in future strategic transactions to expand and diversify our product pipeline through the acquisition or licensing of product candidates or technologies that are complementary to our own. We will pay the Agent a commission of up to 3.0% of the gross sales price of the Shares sold through it under the Sales Agreement. In addition, we have agreed to reimburse certain expenses incurred by the Agent in connection with the offering. The Sales Agreement may be terminated by the Agent or by us at any time upon notice to the other party, as set forth in the Sales Agreement, or by the Agent at any time in certain circumstances, including the occurrence of a material and adverse change in our business or financial condition that makes it impractical or inadvisable to market the shares or to enforce contracts for the sale of the Shares. As of September 30, 2022, no shares have been issued under the Sales Agreement.
On August 16, 2022, we announced that our board of directors had authorized a share repurchase program, under which we may purchase up to $3.0 million shares of our outstanding common stock. In the third quarter of 2022, we purchased an aggregate of 22,107 shares at an average price per share of $8.67. All such purchases were made through open-market transactions.
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So long as our public float is less than $75 million, we will be subject to the restrictions set forth in General Instruction I.B.6 to Form S-3, which limit our ability to conduct primary offerings under a Form S-3 registration statement, including with respect to issuances under our at-the-market program under the Sales Agreement. Under such limitations, we may not sell, during any 12-month period, securities on Form S-3 having an aggregate market value of more than one-third of our public float. As of November 10, 2022, our public float calculated in accordance with General Instruction I.B.6 of Form S-3 was $65.5 million.
Cash Flows
The following table sets forth the primary sources and uses of cash for each of the periods set forth below (in thousands):
Nine Months Ended September 30,
20222021
Net cash used in operating activities$(20,797)$(23,837)
Net cash provided by investing activities— 26,000 
Net cash used in financing activities(346)(192)
Net increase (decrease) in cash and equivalents$(21,143)$1,971 
For the nine months ended September 30, 2022 and 2021, our operating activities used cash of $20.8 million and $23.8 million, respectively. The decrease was primarily due to decreases of $2.0 million in losses from operations and $1.9 million in the change in working capital, offset by decreases in adjustments to reconcile net loss to net cash used in operating activities, including a $0.7 million decrease in stock compensation expenses and a $0.2 million decrease in depreciation and amortization.
For the nine months ended September 30, 2022 and 2021, our investing activities used cash of $0 and provided cash of $26.0 million, respectively. The decrease resulted from $26.0 million in cash received towards the final installment from sale of the PRV during the nine months ended September 30, 2021.
For the nine months ended September 30, 2022 and 2021, our financing activities used net cash of $0.3 million and $0.2 million, respectively. The increase was primarily due to $0.2 million in cash paid for common stock repurchases during the third quarter of 2022, partially offset by a decrease in cash paid for tax withholding on vested equity awards during the nine months ended September 30, 2022.
ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk related to changes in interest rates. As of September 30, 2022 and December 31, 2021, we had cash and cash equivalents of $73.7 million and $94.8 million, respectively, consisting primarily of money market funds. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of United States interest rates. For much of 2021, interest rates remained at relatively low levels on a historical basis and the Federal Reserve maintained the federal funds target range at 0.0% to 0.25%. However, throughout 2022 the Federal Reserve has increased rates to a target range of 3.00% to 3.25% and has indicated that, in light of increasing signs of inflation, it foresees further increases in interest rates throughout the year and into 2023 and 2024. Due to the short-term duration of our investment portfolio and the low-risk profile of our investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our portfolio.

ITEM 4.    CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our principal executive officer and principal financial officer have concluded, based on an evaluation of our disclosure controls and procedures (as defined in the Exchange Act, Rules 13a-15(e) or 15d-15(e)) as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15 that, as of September 30, 2022, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
In connection with the evaluation of our internal control over financial reporting that occurred during the quarter ended September 30, 2022, which is required under the Exchange Act by paragraph (d) of Exchange Rules 13a-15 or 15d-15 (as defined in paragraph (f) of Rule 13a-15), management determined that there was no change that materially affected or is reasonably likely to materially affect internal control over financial reporting.
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PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS
In the ordinary course of business, the Company may be subject from time to time to various proceedings, lawsuits, disputes, or claims. The Company's practice is to investigate these claims as they arise. Although claims are inherently unpredictable, the Company is currently not aware of any pending matters that, if determined adversely to the Company, would individually or taken together, have a material adverse effect on its business, financial position, results of operations, or cash flows.
Item 1A. RISK FACTORS
SUMMARY OF RISK FACTORS
Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Quarterly Report and our other filings with the SEC before making an investment decision regarding our common stock.
Risks Related to our Financial Condition and Capital Requirements
We have a limited operating history and have incurred significant losses since our inception, and we anticipate that we will continue to incur substantial and increasing losses for the foreseeable future. We have only one product candidate and no commercial sales, which, together with our limited operating history, makes it difficult to evaluate our business and assess our future viability.
We currently have no source of product revenue and may never become profitable.
We will need additional funds to support our operations, and such funding may not be available to us on acceptable terms, or at all, which would force us to delay, reduce or suspend our research and development programs and other operations or commercialization efforts. Raising additional capital may subject us to unfavorable terms, cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our product candidates and technologies.
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance.
Our ability to use our net operating loss carryforwards and certain other tax attributes is limited by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”).
Risks Related to the Development and Commercialization of our Product Candidate
Interim, preliminary or topline data from our clinical trials, including the interim data from our LUM-201 Trials that we announced on November 14, 2022, 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.
Our success depends heavily on the successful development, regulatory approval and commercialization of our only product candidate, LUM-201.
The analysis that supports our basis for pursuing development of LUM-201 for PGHD is derived from data from three clinical trials conducted by Merck in the 1990s, and a post-hoc analysis of one of the trials. Various issues relating to such trials and analysis could materially adversely impact our LUM-201 clinical trial design and our future development plans.
Because the results of preclinical testing or earlier clinical trials are not necessarily predictive of future results, LUM-201 may not have favorable results in later clinical trials or receive regulatory approval.
If we make changes to any of our product candidates, additional clinical trials may be required resulting in additional costs and delays.
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.
Risks Related to the Operation of our Business
Our future success depends on our ability to retain our chief executive officer, president and other key members of our management team and to attract, retain and motivate qualified personnel.
We expect to expand our development, regulatory and sales and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
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Business disruptions could seriously harm our clinical trials, future revenue and financial condition and increase our costs and expenses.
If we obtain approval to commercialize LUM-201 outside the United States, we will be subject to additional risks.
Our internal computer systems, or those of our contract research organizations (“CROs”) or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our drug development programs.
Risks Related to our Intellectual Property
Our ability to successfully commercialize our technology and products may be materially adversely affected if we are unable to obtain and maintain effective intellectual property rights for our technologies and product candidates, or if the scope of the intellectual property protection is not sufficiently broad.
We do not have composition of matter patent protection with respect to LUM-201.
We may become involved in legal proceedings to protect or enforce our intellectual property rights, which could be expensive, time-consuming and unsuccessful.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.
If we are unable to protect the confidentiality of its trade secrets, the value of our technology could be materially adversely affected, harming our business and competitive position.
Risks Related to Government Regulation
The regulatory approval process is expensive, time consuming and uncertain and may prevent us or our collaboration partners from obtaining approvals for the commercialization of our product candidates.
Even if we receive regulatory approval for a product candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.
Failure to obtain regulatory approvals in foreign jurisdictions will prevent us from marketing our products internationally.
Healthcare reform measures could hinder or prevent our product candidates’ commercial success.
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, government price reporting, and health information privacy and security 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. If we fail to comply with healthcare regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected.
Risks Related to Ownership of Our Common Stock
The trading price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in price in response to various factors, many of which are beyond our control
Our principal stockholders and management own a significant percentage of our stock and will be able to exercise significant influence over matters subject to stockholder approval.
Our amended and restated bylaws (“Bylaws”) designate the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and exclusive forum.
We do not anticipate that we will pay any cash dividends in the foreseeable future.
Provisions in our certificate of incorporation, our Bylaws or Delaware law might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.

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RISK FACTORS
Investing in our common stock involves significant risks, some of which are described below. In evaluating our business, investors should carefully consider the following risk factors. These risk factors contain, in addition to historical information, forward-looking statements that involve substantial risks and uncertainties. Our actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below. The order in which the following risks are presented is not intended to reflect the magnitude of the risks described. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and prospects. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.
Risks Related to our Financial Condition and Capital Requirements
We have a limited operating history and have incurred significant losses since our inception, and we anticipate that we will continue to incur substantial and increasing losses for the foreseeable future. We have only one product candidate and no commercial sales, which, together with our limited operating history, makes it difficult to evaluate our business and assess our future viability.
We are a clinical-stage biopharmaceutical company with a limited operating history. We do not have any products approved for sale, and we are currently focused on developing our product candidate, LUM-201. Evaluating our performance, viability or future success will be more difficult than if we had a longer operating history or approved products on the market. We continue to incur significant research and development and general and administrative expenses related to our operations. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval or become commercially viable. We have incurred significant operating losses in each year since our inception and expect to incur substantial and increasing losses for the foreseeable future. As of September 30, 2022, we had an accumulated deficit of $119.2 million
To date, we have devoted substantially all of our efforts to research and development, including clinical trials, but have not completed development of any product candidate. We anticipate that our expenses will increase substantially as we:
continue the research and development of our product candidate, LUM-201, and any future product candidates;
pursue clinical trials of LUM-201, including our OraGrowtH Trials;
seek to in-license additional product candidates and incur any future costs to develop these product candidates;
seek regulatory approvals for LUM-201 and any future product candidates that successfully complete clinical trials;
establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize LUM-201 or any future product candidates if they obtain regulatory approval, including process improvements in order to manufacture LUM-201 or any future product candidates at commercial scale; and
enhance operational, financial and information management systems and hire more personnel, including personnel to support development of LUM-201 and any future product candidates and, if a product candidate is approved, its commercialization efforts.
To be profitable in the future, we must succeed in developing and eventually commercializing LUM-201 as well as other products with significant market potential. This will require us to be successful in a range of activities, including advancing LUM-201 and any future product candidates, completing clinical trials of these product candidates, obtaining regulatory approval for these product candidates and manufacturing, marketing and selling those products for which we may obtain regulatory approval. We are only in the preliminary stages of some of these activities. We may not succeed in these activities and may never generate revenue that is sufficient to be profitable in the future. Even if we are profitable, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to achieve sustained profitability would depress our value and could impair our ability to raise capital, expand our business, diversify our product candidates, market our product candidates, if approved, or continue our operations.
We currently have no source of product revenue and may never become profitable.
To date, we have not generated any revenues from commercial product sales. Even if we are able to successfully achieve regulatory approval for LUM-201 or any future product candidates, we do not know when any of these products will generate revenue from product sales. Our ability to generate revenue from product sales and achieve profitability will depend upon our
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ability, alone or with any future collaborators, to successfully commercialize products, including LUM-201 or any product candidates that we may develop, in-license or acquire in the future. Our ability to generate revenue from product sales from LUM-201 or any future product candidates also depends on a number of additional factors, including our or any future collaborators’ ability to:
complete development activities, including our OraGrowtH Trials, and a Phase 3 clinical trial of LUM-201, successfully and on a timely basis;
demonstrate the safety and efficacy of LUM-201 to the satisfaction of the FDA and obtain regulatory approval for LUM-201 and future product candidates, if any, for which there is a commercial market;
complete and submit applications to, and obtain regulatory approval from, foreign regulatory authorities;
set a commercially viable price for our products;
establish and maintain supply and manufacturing relationships with reliable third parties, and ensure adequate and legally compliant manufacturing of bulk drug substances and drug products to maintain that supply;
develop a commercial organization capable of sales, marketing and distribution of any products for which we obtain marketing approval in markets where we intend to commercialize independently;
find suitable distribution partners to help us market, sell and distribute our approved products in other markets;
obtain coverage and adequate reimbursement from third-party payors, including government and private payors;
achieve market acceptance of our approved products, if any;
establish, maintain and protect our intellectual property rights and avoid third-party patent interference or patent infringement claims; and
attract, hire and retain qualified personnel.
In addition, because of the numerous risks and uncertainties associated with pharmaceutical product development, including that LUM-201 or any future product candidates may not advance through development or achieve the endpoints of applicable clinical trials, 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. In addition, our expenses could increase beyond expectations if we decide to or are required by the FDA or foreign regulatory authorities to perform studies or trials in addition to those that we currently anticipate. Even if we are able to complete the development and regulatory process for LUM-201 or any future product candidates, we anticipate incurring significant costs associated with commercializing these products.
Even if we are able to generate revenues from the sale of LUM-201 or any future product candidates that may be approved, we may not become profitable and may need to obtain additional funding to continue operations. 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 shut down our operations.
We will need additional funds to support our operations, and such funding may not be available to us on acceptable terms, or at all, which would force us to delay, reduce or suspend our research and development programs and other operations or commercialization efforts. Raising additional capital may subject us to unfavorable terms, cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our product candidates and technologies.
The completion of the development and the potential commercialization of LUM-201 and any future product candidates, should they receive approval, will require substantial funds. Our future financing requirements will depend on many factors, some of which are beyond our control, including the following:
the rate of progress and cost of our clinical trials;
the timing of, and costs involved in, seeking and obtaining approvals from the FDA and other regulatory authorities;
the extent of any required post-marketing approval commitments to applicable regulatory authorities;
developing an efficient, cost-effective, and scalable manufacturing process for LUM-201 and any future product candidates, including establishing and maintaining commercially viable supply and manufacturing relationships with third parties to obtain finished products that are appropriately packaged for sale;
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the costs of commercialization activities if LUM-201 or any future product candidate is approved, including product sales, marketing, manufacturing and distribution;
the degree and rate of market acceptance of any products launched by us or future partners;
a continued acceptable safety profile following any marketing approval;
the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
our ability to enter into additional collaboration, licensing, commercialization or other arrangements and the terms and timing of such arrangements;
the emergence of competing technologies or other adverse market developments; and
the costs of attracting, hiring and retaining qualified personnel.
We do not have any material committed external source of funds or other support for our planned development efforts. Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. Additional financing may not be available to us when we need it or such additional financing may not be available on favorable terms. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to LUM-201 or any potential future product candidates, technologies, future revenue streams or research programs, or grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect its stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or suspend one or more of our clinical trials or research and development programs or our commercialization efforts.
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance.
Our quarterly and annual operating results may fluctuate significantly in the future, which makes it difficult for us to predict our future operating results. From time to time, we may enter into collaboration agreements with other companies that include development funding and significant upfront and milestone payments and/or royalties. Accordingly, our revenue may depend on development funding and the achievement of development and clinical milestones under any potential future collaboration and license agreements and sales of its product candidates, if approved. These upfront and milestone payments may vary significantly from period to period and any such variance could cause a significant fluctuation in our operating results from one period to the next. In addition, we estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model and recognize the cost as an expense over the employee’s requisite service period. As the variables that we use as a basis for valuing these awards change over time, the magnitude of the expense that we must recognize may vary significantly. Furthermore, our operating results may fluctuate due to a variety of other factors, many of which are outside of our control and may be difficult to predict, including the following:
the timing and cost of, and level of investment in, research and development activities relating to LUM-201 and any future product candidates, which will change from time to time;
our ability to enroll patients in clinical trials and the timing of enrollment;
the cost of manufacturing LUM-201 and any future product candidates, which may vary depending on FDA guidelines and requirements, the quantity of production and the terms of our agreements with manufacturers;
expenditures that we will or may incur to acquire or develop additional product candidates and technologies;
the timing and outcomes of clinical trials for LUM-201 and any future product candidates or competing product candidates;
changes in the competitive landscape of our industry, including consolidation among our competitors or partners;
any delays in regulatory review or approval of LUM-201 or any of our future product candidates;
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the level of demand for LUM-201 and any future product candidates, should they receive approval, which may fluctuate significantly and be difficult to predict;
the risk/benefit profile, cost and reimbursement policies with respect to our products candidates, if approved, and existing and potential future drugs that compete with our product candidates;
competition from existing and potential future drugs that compete with LUM-201 or any of our future product candidates;
our ability to commercialize LUM-201 or any future product candidate inside and outside of the United States, either independently or working with third parties;
our ability to establish and maintain collaborations, licensing or other arrangements;
our ability to adequately support future growth;
potential unforeseen business disruptions that increase our costs or expenses;
future accounting pronouncements or changes in our accounting policies; and
the changing and volatile global economic environment.
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. Investors should not rely on our past results as an indication of its future performance.
Our ability to use our net operating loss carryforwards and certain other tax attributes is limited by Sections 382 and 383 of the Code.
Sections 382 and 383 of the Code limit a corporation’s ability to utilize its net operating loss carryforwards and certain other tax attributes (including research credits) to offset any future taxable income or tax if the corporation experiences a cumulative ownership change of more than 50% over any rolling three-year period. State net operating loss carryforwards (and certain other tax attributes) may be similarly limited. A Section 382 ownership change can, therefore, result in significantly greater tax liabilities than a corporation would incur in the absence of such a change, and any increased liabilities could adversely affect the corporation’s business, results of operations, financial condition and cash flow.
Based on Section 382 ownership change analyses through March 18, 2020, as a result of the Merger, both historical NewLink and Private Lumos experienced Section 382 ownership changes on March 18, 2020.
These ownership changes limited our ability to utilize federal net operating loss carryforwards and certain other tax attributes that accrued prior to the respective ownership changes of us and our subsidiaries and may continue to limit our ability to utilize such attributes in the future.
Based on subsequent analyses, we did not experience a Section 382 ownership change from March 19, 2020 through December 31, 2021. Additional ownership changes may occur in the future as a result of events over which we will have little or no control, including purchases and sales of our equity by our 5% stockholders, the emergence of new 5% stockholders, additional equity offerings or redemptions of our stock or certain changes in the ownership of any of our 5% stockholders.
Accounting pronouncements may impact our reported results of operations and financial position.
Accounting principles generally accepted in the U.S. (“U.S. GAAP”) and related implementation guidelines and interpretations can be highly complex and involve subjective judgments. Changes in these rules or their interpretation, the adoption of new pronouncements or the application of existing pronouncements to changes in our business could significantly alter our reported financial statements and results of operations.
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We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to meet compliance obligations.
As a public company, we incur significant legal, accounting and other expenses to comply with reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as well as rules subsequently implemented by the SEC and Nasdaq. Meeting the requirements of these rules and regulations entails significant legal and financial compliance costs, makes some activities more difficult, time-consuming or costly and may also place undue strain on our personnel, systems and resources. Our management and other personnel devote a substantial amount of time to these compliance requirements. In addition, these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified people to serve on our Board, our Board committees or as executive officers.
Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our ability to produce accurate financial statements and on our stock price.
Pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to publish a report by our management on our internal control over financial reporting. To achieve compliance with Section 404, we have engaged in a process to document and evaluate our internal control over financial reporting, which has been both costly and challenging. To maintain compliance on an ongoing basis, we will need to dedicate internal resources, engage outside consultants and adopt a detailed work plan. Despite our effort, there is a risk that we will not be able to conclude that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
Changes in our effective income tax rate could adversely affect our results of operations in the future.
Our effective income tax rate, as well as our relative domestic and international tax liabilities, will depend in part on the allocation of any future income among different jurisdictions. In addition, various factors may have favorable or unfavorable effects on our effective income tax rate in individual jurisdictions or in the aggregate. These factors include whether tax authorities agree with our interpretations of existing tax laws, any required accounting for stock options and other share-based compensation, changes in tax laws and rates (including the recently enacted U.S. federal income tax law changes), our future levels of research and development spending, changes in accounting standards, changes in the mix of any future earnings in the various tax jurisdictions in which we may operate, the outcome of any examinations by the U.S. Internal Revenue Service or other tax authorities, the accuracy of our estimates for unrecognized tax benefits and realization of deferred tax assets and changes in overall levels of pre-tax earnings. For example, the current administration has proposed tax reform legislation to increase the U.S. corporate income tax rate, increase U.S. taxation of international business operations and impose a global minimum tax, which could result in increased marginal corporate tax rates. A number of countries, as well as organizations such as the Organization for Economic Cooperation and Development, support the global minimum tax initiative. Such countries and organizations are also actively considering changes to existing tax laws or have proposed or enacted new laws that could increase our tax obligations in countries where we do business or cause us to change the way we operate our business. The effect on our income tax liabilities resulting from the above-mentioned factors or other factors could have a material adverse effect on our results of operations.
Risks Related to the Development and Commercialization of our Product Candidate
Interim, preliminary or topline data from our clinical trials, including the interim data from our LUM-201 Trials that we announced on November 14, 2022, 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.
On November 14, 2022, we announced interim data from our LUM-201 Trials, and from time to time, we may publish other interim, preliminary or topline data from clinical trials. Such interim data from our clinical trials 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. Interim or preliminary data from clinical trials, including our November 14, 2022 interim data, may not be indicative of the final results of the trial or may be inconclusive and are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data becomes available. Thus, favorable interim results may not necessarily lead to favorable final results or FDA or other regulatory approval. While the interim results of our LUM-201 Trials announced on November 14, 2022 were encouraging, there was an imbalance in the baseline characteristics of the control arm and the final results of such trials may be materially different than the interim results. Interim results may also be inconclusive which would create uncertainty as to whether we should continue the clinical trial or what the final results of the trial will be. Interim or preliminary data also remains subject to audit and verification procedures that may result in the final
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data being materially different or materially adverse from the interim or preliminary data. As a result, any interim or preliminary data should be viewed with caution until the final data are available. Adverse differences between interim, preliminary or topline data and final data could significantly harm our reputation and business prospects. We do not know whether any clinical trials we may conduct will demonstrate consistent or adequate efficacy and safety sufficient to obtain marketing approval to market our product candidates.
In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically more extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure. Any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or our business. Similarly, even if we are able to complete our planned and ongoing preclinical studies and clinical trials of our product candidates according to our current development timeline, the positive results from such preclinical studies and clinical trials of our product candidates may not be replicated in subsequent preclinical studies or clinical trial results. Moreover, preclinical, nonclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA or other regulatory approval.
Our success depends heavily on the successful development, regulatory approval and commercialization of our only product candidate, LUM-201.
We do not have any products that have gained regulatory approval. Our current clinical-stage product candidate, LUM-201, is an orally-formulated GH stimulating therapeutic for a subset of PGHD patients and potentially other endocrine disorders. As a result, our near-term prospects, including our ability to finance our operations and generate revenue, are substantially dependent on our ability to obtain regulatory approval for and, if approved, to successfully commercialize LUM-201 in a timely manner.
We cannot commercialize LUM-201 or any future product candidates in the United States without first obtaining regulatory approval for the product from the FDA, nor can we commercialize LUM-201 or any future product candidates outside of the United States without obtaining regulatory approval from comparable foreign regulatory authorities. The FDA approval process typically takes years to complete and approval is never guaranteed. Before obtaining regulatory approvals for the commercial sale of LUM-201 for a target PGHD indication or any future product candidates, we generally must demonstrate with substantial evidence gathered in preclinical and well-controlled clinical trials that the product candidate is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate. We are pursuing the same regulatory pathway for LUM-201 followed by most of the approved rhGH products and long-acting GH products under development with LUM-201 focused on a subset of previously diagnosed PGHD patients. We intend to study treatment naïve patients by conducting trials including our OraGrowtH210 dose-finding trial and a Phase 3 clinical trial with a primary endpoint of 12 month mean height velocity that is intended to support regulatory approval. If we must conduct additional or different trials than prior rhGH products were required to complete, this could increase the amount of time and expense required for regulatory approval of LUM-201, if any. In addition, while the available growth data from published studies of approved rhGH therapy products suggest that six and 12 months mean height velocities are well correlated, it is possible that LUM-201, due to its unique properties, will produce different results. If the six months mean height velocities that we observe for LUM-201 in the OraGrowtH210 Trial do not correlate to 12 month mean height velocities that we ultimately observe in any Phase 3 clinical trial that we may conduct, LUM-201 may not achieve the required primary endpoint in the Phase 3 clinical trial, and LUM-201 may not receive regulatory approval. Moreover, obtaining regulatory approval for marketing of LUM-201 in one country does not ensure we will be able to obtain regulatory approval in other countries, while a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in other countries.
Even if LUM-201 or any of our future product candidates were to successfully obtain approval from the FDA and comparable foreign regulatory authorities, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements. If we are unable to obtain regulatory approval for LUM-201 in one or more jurisdictions, or any approval contains significant limitations, we may not be able to obtain sufficient funding or generate sufficient revenue to continue to fund its operations. Also, any regulatory approval of LUM-201 or any future product candidates, once obtained, may be withdrawn. Furthermore, even if we obtain regulatory approval for LUM-201, the commercial success of LUM-201 will depend on a number of factors, including the following:
development of our own commercial organization or establishment of a commercial collaboration with a commercial infrastructure;
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establishment of commercially viable pricing and obtaining approval for adequate reimbursement from third-party and government payors;
the ability of our third-party manufacturers to manufacture quantities of LUM-201 using commercially viable processes at a scale sufficient to meet anticipated demand and reduce our cost of manufacturing, and that are compliant with the FDA’s cGMP;
our success in educating physicians and patients about the benefits, administration and use of LUM-201;
the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments;
the effectiveness of our own or our potential strategic collaborators’ marketing, sales and distribution strategy and operations;