10-K

aard_10k_20241231.htm

10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2024

Commission File Number 001-42513

AARDVARK THERAPEUTICS, INC.

(Exact name of Registrant as specified in its Charter)

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (858) 225-7696

Securities registered pursuant to Section 12(b) of the Act:

Title of each class TradingSymbol(s) Name of each exchange on which registered

Common Stock, par value $0.00001 per share AARD The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

Large accelerated filer ☐ Accelerated filer ☐

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. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock as reported on the Nasdaq Global Select Market on February 21, 2025, was $160.5 million. The Registrant has elected to use February 21, 2025, which was the date of the closing of the partial exercise by the underwriters of their over-allotment option related to the Registrant’s initial public offering, as the calculation date because, as of June 28, 2024 (the last business day of the registrant’s most recently completed second fiscal quarter), the registrant was a privately held company.

The number of shares of Registrant’s common stock outstanding as of March 20, 2025 was 21,695,920.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Table of Contents

Page

PART I

Item 1. Business 1

Item 1A. Risk Factors 40

Item 1B. Unresolved Staff Comments 97

Item 1C. Cybersecurity 97

Item 2. Properties 98

Item 3. Legal Proceedings 98

Item 4. Mine Safety Disclosures 98

PART II

Item 6. [Reserved] 100

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 111

Item 8. Financial Statements and Supplementary Data 111

Item 9A. Controls and Procedures 112

Item 9B. Other Information 113

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 113

PART III

Item 10. Directors, Executive Officers and Corporate Governance 114

Item 11. Executive Compensation 121

Item 14. Principal Accounting Fees and Services 136

PART IV

Item 15. Exhibits, Financial Statement Schedules 137

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (Annual Report) contains forward-looking statements about us and our industry within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended (the Securities Act), which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. All statements other than statements of historical facts contained in this Annual Report, including statements regarding our future results of operations and financial position, business strategy, product candidates, planned preclinical studies and clinical trials, results of preclinical studies and clinical trials, research and development plans and costs, plans for manufacturing, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “might,” “should,” “would,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “outlook,” “projects,” “forecast,” “contemplates,” “believes,” “estimates," “predicts," “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements contained in this Annual Report include, but are not limited to, statements about:

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the initiation, timing, progress and results of our preclinical studies, clinical trials and research and development programs for our product candidates;

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our ability to demonstrate, and the timing of, preclinical proof-of-concept in vivo for our product candidates;

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our ability to successfully complete our clinical trials;

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our ability to quickly leverage our initial product candidates and to progress additional candidates;

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the prevalence of certain diseases and conditions we intend to treat and the size of the market opportunity for our product candidates;

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estimates of the number of patients with certain diseases and conditions we intend to treat and the number of subjects that we intend to enroll in our clinical trials;

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the likelihood of our clinical trials demonstrating safety and efficacy of our product candidates;

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

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the timing or likelihood of regulatory filings and approval for our product candidates;

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our ability to meet future regulatory standards with respect to our product candidates, if approved;

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

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our ability to identify additional product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;

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the rate and degree of market acceptance and therapeutic benefits of our product candidates, if approved, and any other product candidates we may develop;

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the implementation of our strategic plans for our business, product candidates, research programs and technologies;

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the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates;

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anticipated developments related to our competitors and our industry;

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our competitive position and ability to leverage the clinical, regulatory and manufacturing advancements to accelerate our clinical trials and regulatory approval of product candidates;

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

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our ability to identify and enter into future license agreements and collaborations;

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the expected potential benefits of strategic collaborations with third parties and our ability to attract collaborators with development, regulatory, manufacturing or commercialization expertise;

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our ability to efficiently and cost-effectively conduct our current and future clinical trials;

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our reliance on third parties to conduct clinical trials of our product candidates;

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our reliance on third parties for the manufacture of our product candidates;

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our plans relating to sales strategy, manufacturing and commercializing our product candidates, if approved;

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our ability to attract and retain sales personnel, or to contract with a sales organization, if our product candidates are approved;

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anticipated regulatory and legal developments in the United States and foreign countries in which we may seek regulatory approval for our product candidates in the future;

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our ability to attract and retain key scientific and management personnel;

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our financial performance;

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our ability to obtain funding for our operations necessary to complete further development and commercialization of our product candidates, if approved;

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our ability to maintain existing, and establish new, strategic collaborations, licensing, or other arrangements, including our ability to comply with our financial obligations pursuant to the terms of such agreements;

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the sufficiency of our existing capital resources to fund our future operating expenses and capital expenditure requirements;

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

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our anticipated use of our cash, cash equivalents and short-term investments resources, including the proceeds from our initial public offering (IPO), estimates of our expenses, capital requirements and needs for additional financing.

We caution you that the forward-looking statements highlighted above do not encompass all of the forward-looking statements made in this Annual Report.

We have based the forward-looking statements contained in this Annual Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations or growth prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in Part I, Item 1A,“Risk Factors”, of this Annual Report and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of this Annual Report and elsewhere in this Annual Report. Moreover, we operate in a very competitive and challenging environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. You should, however, review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission (SEC) after the date of this Annual Report.

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

The forward-looking statements made in this Annual Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Annual Report to reflect events or circumstances after the date of this Annual Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, other strategic transactions or investments we may make or enter into.

Throughout this Annual Report, unless the context otherwise requires, the terms “Aardvark,” “we,” “us” and “our” in this Annual Report refer to Aardvark Therapeutics, Inc. and its subsidiary.

PART I

Item 1. Business.

Overview

We are a clinical-stage biopharmaceutical company focused on developing novel, small-molecule therapeutics to activate innate homeostatic pathways for the treatment of metabolic diseases. We target biological pathways associated with alleviating hunger that we believe have the potential to deliver transformative outcomes for patients. We have focused our efforts on developing selective compounds, targeting Bitter Taste Receptors (TAS2Rs) for hunger-associated conditions. Our initial compounds target TAS2Rs expressed in the gut lumen, which normally respond to the nutrients in food and participate in the gut-brain axis. Our research has shown that activating these receptors can induce secretion of endogenous signaling molecules, including cholecystokinin (CCK) and glucagon-like peptide-1 (GLP-1). Our wholly-owned lead product candidate, ARD-101 (denatonium acetate monohydrate), is an oral gut-restricted small-molecule agonist of certain TAS2Rs expressed in the gut lumen for which we have initiated a Phase 3 clinical trial for hyperphagia associated with Prader-Willi Syndrome (PWS). We also intend to evaluate ARD-101 in a Phase 2 clinical trial for hyperphagia associated with acquired hypothalamic obesity (HO) resultant from treatment of craniopharyngioma, including surgery or radiation. In our completed Phase 2 clinical trial in subjects with hyperphagia associated with PWS, ARD-101 was shown to be well-tolerated and demonstrated clinical activity through a reduction in Hyperphagia Questionnaire for Clinical Trials (HQ-CT) score. We have aligned with the U.S. Food and Drug Administration (the FDA) on a protocol for a potentially pivotal Phase 3 clinical trial, which we initiated in December 2024, and we anticipate topline data will be available in early 2026. In preparing for this potentially pivotal Phase 3 clinical trial, we expanded our clinical management and regulatory capabilities, including hiring clinical, regulatory and quality personnel, and we expect to continue to need to expand our clinical management and regulatory capabilities and to rely on third parties as we continue advancing this trial and other potentially pivotal clinical trials.

TAS2Rs are a family of 26 different nutrient-sensing G protein-coupled receptors (GPCRs) that are ubiquitously expressed among vertebrates. TAS2Rs are present in the oral cavity to convey bitter taste and are highly expressed in many other tissues throughout the body where they are key in regulating metabolic and inflammatory pathways. CCK has long been recognized as a promising pharmaceutical target because its release is triggered with food and helps suppress hunger, the feeling of discomfort that comes from a perception of not having eaten recently. We believe this suppression of hunger could be complementary to the suppression of appetite reported from patients on GLP-1 targeted treatment, which reduces the desirability of food. Previous approaches to directly agonize CCK receptors through exogenous molecules have been limited by safety concerns driven by systemic exposure, resulting in on-target, off-tissue toxicity, and in turn leading to adverse effects, such aspancreatitis. Besides our product candidates, we are not aware of any approved or other clinical-stage candidates targeting certain TAS2Rs.

Our wholly-owned lead product candidate, ARD-101, is an oral gut-restricted small-molecule agonist of certain TAS2Rs expressed in the gut lumen for which we have initiated a Phase 3 clinical trial for hyperphagia associated with PWS. We also intend to evaluate ARD-101 in a Phase 2 clinical trial for hyperphagia associated with HO. ARD-101 has limited systemic absorption, which we believe reduces the potential for systemic toxicity and has contributed to ARD-101 being well-tolerated in our clinical trials to date. We have completed a Phase 1 clinical trial of ARD-101 in healthy volunteers and a Phase 2 clinical trial in subjects with hyperphagia associated with PWS. The Phase 2 clinical trial in hyperphagia associated with PWS evaluated two dosing regimens over 28 days followed by a 14-day withdrawal period. In the first part of the trial, 12 subjects completed the treatment period at a dose of 200 mg delivered orally twice daily (BID). These 12 subjects who completed treatment had no treatment-related adverse events and, of those subjects, the eight who had HQ-CT 9 scores saw an average decline in HQ-CT 9 score of approximately eight points at 28 days. In the second part of the trial, four subjects were dosed under a revised protocol: 400 mg BID for seven days, followed by 600 mg BID for seven days and ending with 800 mg BID for 14 days. The four subjects who completed the trial per protocol had only grade 1 treatment-related adverse events and showed a decrease in HQ-CT 9 of approximately eight points at 28 days. We have aligned with the FDA on a trial design for the Phase 3 clinical trial, which we refer to as the HERO (Hunger Elimination or Reduction Objective) trial, which we believe will support a new drug application (NDA) filing with the FDA.

Clinical data published in the American Journal of Physiology in 1992 (Boosalis MG, Gemayel N, Lee A, Bray GA, Laine L, Cohen H. Cholecystokinin and satiety: effect of hypothalamic obesity and gastric bubble insertion. Am J Physiol. 1992;262(2 Pt 2):R241-4) suggests administration of CCK may significantly reduce food consumption in patients with hyperphagia associated with HO. We also intend to evaluate ARD-101 for the treatment of hyperphagia associated with HO. The hypothalamus is a region in the brain responsible for regulating fundamental biological processes such as temperature control, sleep cycles and feeding behavior. One consequence of a damaged hypothalamus is HO. This condition is most commonly caused by sequelae from the treatment of hypothalamic and pituitary tumors, which includes surgery and radiation. HO is a rare form of obesity affecting approximately 5,000-10,000 people in the United States. The anatomical and phenotypical presentations of both HO and PWS are similar in many ways, including impaired hypothalamic function, impaired neuronal pathways, altered neurotransmitter activity and hyperphagia. PWS has limited therapies and interventions for the treatment of hyperphagia available while HO continues to have no approved pharmacological intervention for the treatment of hyperphagia. Subject to discussion with the FDA, we plan to conduct a Phase 2 clinical trial for hyperphagia associated with HO, which we refer to as the HONOR (Hypothalamic Obesity Neutralized On TAS2R) trial, dosing for approximately four months.

Our second TAS2R program, ARD-201, will be a fixed-dose combination of ARD-101 and a dipeptidyl peptidase IV (DPP-4) inhibitor, for the treatment of obesity and obesity-related conditions. DPP-4 inhibition is a well-established therapeutic target, with multiple approved drugs currently on the market, that acts to inhibit the degradation of incretin hormones, including GLP-1. Inhibiting DPP-4 allows endogenous incretin levels to increase throughout the body, which supports the potential for a synergistic effect with TAS2R agonism. Our preclinical studies showed that the use of ARD-101 and a DPP-4 inhibitor in combination has an additive effect resulting in greater weight loss than with the individual components. The potential benefit was also supported by our preclinical studies that showed an additive benefit when combined with GLP-1 receptor agonists. We are developing ARD-201 with a goal of addressing some of the limitations of currently marketed GLP-1therapies, which include weight regain post-withdrawal, poor gastrointestinal (GI) tolerance and loss of lean body mass. Data from our Phase 2a clinical trials of ARD-101 demonstrated reduction in hunger rating in the Control of Eating Questionnaire (CoEQ) in two distinct subject populations: (1) general obese subjects and (2) subjects who have refractory weight gain post-bariatric surgery. We plan to initiate a Phase 2 clinical trial, which we refer to as the EMPOWER (Exploratory Multi-arm Prevention Of WEight Regain) trial, to explore the efficacy of ARD-201. We are exploring the potential clinical applications for ARD-201 in obesity and obesity-related conditions and our future decisions will be informed by the results of the EMPOWER trial, which will involve a multi-arm design to explore ARD-101 in various combinations with other agents.

Our Pipeline

We are advancing the below portfolio of wholly-owned novel and proprietary small-molecule programs that we believe can induce satiety in patients with hunger-associated indications, as outlined below.

Our Hunger Associated TAS2R Pipeline(1)(2)

Our Team and Investors

We have assembled a management team of biopharmaceutical experts with extensive experience in building and operating organizations that develop and deliver innovative medicines to patients. Our Founder, Chairperson of our board of directors and Chief Executive Officer, Dr. Tien Lee, founded our company in 2017. He brings over 20 years of experience as a biotechnology innovator and executive, integrally involved with the founding or advancement of several biopharmaceutical companies. Prior to this, Dr. Lee joined NantKwest in 2014 and served as its Chief Strategy Officer until March 2017. Dr. Lee is also an inventor or co-inventor of multiple biomedical and biotechnology innovations. Our Chief Medical Officer, Dr. Manasi Jaiman, Chief Operating Officer, Dr. Bryan Jones, Chief Financial Officer, Nelson Sun, as well as other senior members of our team, collectively bring extensive clinical and business development experience to our company from organizations such as Amylin, Hoffmann-La Roche, Johnson and Johnson and ViaCyte.

Prior to our IPO in February 2025, we had raised $129.1 million supported by a syndicate of leading life sciences and institutional investors, including the completion of our $85.0 million Series C financing led by Decheng Capital in May 2024. In February 2025, we completed our IPO with the sale of 6,120,661 shares of common stock, which included the partial exercise by the underwriters of their option to purchase 232,661 additional shares, at an initial public offering price of $16.00 per share and received net proceeds of approximately $87.5million.

Our Strategy

Our goal is to become a leader in the treatment of obesity and obesity-related conditions, starting with rare hyperphagias. We intend to leverage the experience and capabilities of our executive management team and our established networks throughout the biopharmaceutical industry to identify, develop and commercialize product candidates that are designed to offer enhanced efficacy, tolerability and convenience and provide benefits to patients. We intend to achieve our goals by implementing the following strategies:

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Advance the clinical development of ARD-101 for the treatment of hyperphagia associated with PWS. Our lead product candidate, ARD-101, is an oral gut-restricted small-molecule agonist of certain TAS2Rs expressed in the gut lumen. In an open-label Phase 2 clinical trial evaluating ARD-101 in subjects with hyperphagia associated with PWS, ARD-101 demonstrated a reduction in HQ-CT score. We have received Orphan Drug Designation from the FDA and have initiated our potentially pivotal Phase 3 HERO trial to pursue development of ARD-101 in order to potentially transform the PWS treatment landscape and provide a life-changing therapeutic option for an underserved patient base with only one currently approved therapy that we believe does not fully address the needs of the patient population. In preparing for this potentially pivotal Phase 3 clinical trial, we expanded our clinical management and regulatory capabilities, including hiring clinical, regulatory and quality personnel, and we expect to continue to need to expand our clinical management and regulatory capabilities and to rely on third parties as we continue advancing this trial and other potentially pivotal clinical trials. We initiated the Phase 3 HERO trial in December 2024.

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Expand and evaluate the potential of ARD-101 for the treatment of other rare obesity-associated disorders, initially hyperphagia associated with HO. Beyond PWS, we intend to leverage our expertise and knowledge of the TAS2R gut-brain axis to advance ARD-101 into additional adjacent and similar indications. We believe hyperphagia associated with HO is an ideal second indication for ARD-101 as it is driven by pathophysiologic changes in the hypothalamus comprising its normal function. We plan to explore the potential of ARD-101 for the treatment of hyperphagia associated with HO through our Phase 2 HONOR trial. We expect to initiate the Phase 2 HONOR trial in the second half of 2025.

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Advance the clinical development of ARD-201 for obesity and obesity-related conditions. The second program of our TAS2R franchise, ARD-201, will be a combination therapy of ARD-101 and a DPP-4 inhibitor in our proprietary formulation for the treatment of obesity and obesity-related conditions. While approved GLP-1 medications have demonstrated significant and effective weight loss in patients suffering from obesity and obesity-related conditions, they also exhibit considerable limitations, including side effects such as nausea and inconvenient dosing with subcutaneous administration, resulting in an approximately 45% discontinuation rate at 12 months, increasing to approximately 65% at 24 months. Patients that have lost significant weight on GLP-1 but later discontinue treatment often experience rapid weight regain driven by the compensatory increased hunger. We are developing ARD-201 with a goal of addressing some of the limitations of currently marketed GLP-1 therapies through its novel mechanism of action that engages neural pathways to reduce hunger (rather than appetite) via induced intestinal secretion of the satiety hormone CCK and gut-brain signaling. In our planned Phase 2 EMPOWER trial, we intend to broadly explore various combinations for the treatment of obesity and obesity-related conditions. We expect to initiate the Phase 2 EMPOWER trial in the second half of 2025.

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Continue to innovate and expand our pipeline programs through our internal drug-discovery efforts. We believe that the discovery and developmental expertise of our management team in TAS2R targeting can be applied to many adjacent therapeutic areas with large unmet needs. We plan to continue to leverage our deep know-how and capabilities to further build out our pipeline of early-stage and preclinical assets across metabolic, inflammatory and other adjacent indications.

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Expand and maximize the potential of our product candidates and pipeline by selectively evaluating strategic collaborations. Our team possesses experience in drug discovery, clinical development and commercialization. From time to time, we expect to selectively evaluate potential strategic collaborations with other biopharma companies with strong and proven commercial capabilities to build upon and expand the impact of our potential therapies in certain territories. In addition, for certain programs or indications, we may selectively evaluate opportunities to partner in order to accelerate and fund their development and commercialization.

TAS2R as a Therapeutic Target

TAS2R Overview

Bitterness is one of five basic taste sensations that play a crucial role in survival by helping guide organisms to avoid harmful toxins and noxious substances. The sensors for bitter compounds in vertebrates are the evolutionarily-conserved TAS2Rs, a class of GPCRs initially identified in type II taste receptor cells located in the taste bud. In the human genome, 26 TAS2R genes have been

identified. They are located not only in the mouth and throat but are expressed widely throughout the body, for example in the intestines, skin, brain, bladder, and lower and upper respiratory tract. The expression of TAS2Rs throughout the body, as well as their involvement in multiple physiologic processes, underscore TAS2Rs as compelling potential therapeutic targets for a wide array of diseases.

In the gut, TAS2Rs control the secretion of satiety regulating gut hormones, regulate gut mobility and inhibit pre-adipocyte proliferation and differentiation, ultimately decreasing hunger, food intake and body weight. TAS2Rs are expressed on enteroendocrine cells and their activation by bitter molecules triggers the release of the peptides CCK and GLP-1, subsequently acting through the corresponding receptors in afferent sensory fibers of the vagus nerve or directly via the bloodstream to then transmit signals to the brain to control satiety and food intake.

CCK has long been recognized as a promising pharmaceutical target because its release is triggered with food and helps suppress feelings of hunger in addition to providing other therapeutic applications as shown in Figure 1 below. Major companies such as AbbVie, AstraZeneca, GSK and Novo Nordisk have attempted to pursue direct CCK receptor agonism through exogenous molecules. However, the limitations of this approach have remained a significant barrier to an effective therapy. Specifically, there were challenges with systemic exposure, resulting in on-target, off-tissue toxicity leading to safety challenges and adverse effects, including pancreatitis.

Figure 1: Potential Therapeutic Targets Involving CCK

(1)

J Endocrinol. 2013;216(1):53-9.

(2)

Biochim Biophys Acta. 2013;1830(8):4009-16.

(3)

Am J Physiol. 1992;262(2 Pt 2):R241-4.

(4)

Gastroenterology. 1994;106(6):1451-4.

(5)

J Clin Endocrinol Metab. 2001;86(12):5830-7.

(6)

Am J Med Genet. 2000;95(1):67-70.

(7)

J Clin Endocrinol Metab. 2000;85(3):1043-8.

(8)

Regul Pept. 2003;116(1-3):109-18.

Our lead product candidate, ARD-101, is an oral gut-restricted small-molecule targeting certain TAS2Rs expressed in the gut lumen. ARD-101 is composed of denatonium acetate monohydrate, and is one of the most potent TAS2R agonists identified to date. In our preclinical studies and clinical trials to date, we have found it to be approximately 99% restricted to the gut with minimal systemic exposure, which has led to local elevation of endogenous gut peptide hormones, such as CCK and GLP-1, within physiological levels. The selective local secretion avoids the off-target side effects seen with approaches using systemic exposure of artificial CCK analogue molecules. As shown in Figure 2 below, ARD-101 has the potential to affect hunger, metabolism and inflammation through gut-brain signaling, without the off-tissue toxicity of systemic exposure.

Figure 2: CCK Release Helps to Attenuate Hunger and Lead to Satiety

Prevalence of Incretin Therapies and Limitations

In recent years, third-party incretin therapies have demonstrated efficacy in large clinical trials and obtained FDA approval to be marketed for the treatment of obesity. In the United States, it is estimated that nearly 6% of all adults (approximately 5 million) are currently utilizing a GLP-1 medication, and one in eight have tried them in the past. Market analysts project global sales of branded anti-obesity drugs to reach over $100 billion by 2030.

Although GLP-1 medications have had considerable patient uptake, they have also shown limitations. Clinical trials show 50% of subjects taking GLP-1 receptor agonists encounter varying degrees of GI side effects, including nausea and vomiting, as well as heightened risk of pancreatitis and rare cancers. In addition, 50% of subjects discontinue the use of GLP-1 therapy after one year on therapy before reaching clinical benefit, with some clinical trials showing that the majority of subjects regain up to approximately two-thirds of their weight loss within one year. Loss of lean body mass is also a concern, with an estimated range of 40% to 60% of weight loss being lean body mass rather than fat, which is further exacerbated by weight regain post-discontinuation being largely fat-driven, resulting in worsening body composition. These limitations open the door of opportunity for new mechanisms, combinations and formulations. Market analysts believe that the market will see growth driven by multi-agent combinations to address some of the shortcomings of single-agent GLP-1 receptor agonism. Novel differentiated mechanisms of action for weight management, such as TAS2R agonism, may address gaps posed by GLP-1 treatment.

The Role of TAS2Rs in Hunger Versus Appetite

The key differentiating feature of gut lumen-based TAS2R agonism is its ability to stimulate local secretion of the satiety hormone CCK, which acts in an autocrine/paracrine-like manner to induce a gut-brain signal that abrogates sensations of hunger. Hunger and appetite are often subjectively perceived to be different sensations along the same axis. However, hunger and appetite represent different neurologically-based drives that guide human behavior and metabolic regulation. Appetite represents neurologic reward and pleasure seeking, whereas hunger represents the avoidance of pain and discomfort, as shown in Figure 3 below.

Ghrelin is a hormone that when elevated is concordant with sensations of hunger. In humans, hunger scores and ghrelin levels showed similar temporal profiles and similar relative differences in magnitude over a wide range of inter-meal intervals. However, some published reports suggest that ghrelin is not essential in appetite regulation, evidenced by (1) ghrelin-deficient mice, where genetic deletion of ghrelin does not decrease food intake but influences metabolic fuel preference; and (2) in ghrelin-null mice, deletion of ghrelin does not impair growth or appetite, as their size, growth rate, and food intake are indistinguishable from wild-type littermates.

Figure 3: Hunger and Appetite are Distinct Neural Pathways

For certain hyperphagia-associated disorders, such as PWS, patients are driven to eat by hunger regardless of perceived desirability of food, even going so far as to eat garbage. For general obesity, addressing hunger along with appetite has the potential for a complementary effect. Current therapeutics that engage GLP-1 receptor agonists reduce sensations of appetite to drive reduced food consumption and therefore result in weight loss, yet cannot sufficiently attenuate or improve self-reported hunger levels. This increased hunger state is in part driven by GLP-1 induction of higher levels of serum ghrelin as shown in Figure 4 below.

Figure 4: Ghrelin, Hunger, and Prader-Willi Syndrome: The Hormonal Connection

Previous attempts at pharmaceutical development of CCK receptor agonists included the development of long-acting systemic CCK analogues by chemically altering the natural CCK to extend the half-life and by administering it as a subcutaneous depot. These development programs were discontinued because of unintended on-target off-tissue toxicities, including pancreatitis. We believe that ARD-101 elicits expression of CCK in a localized manner in the peri-gut region to selectively elicit vagal gut-brain signaling without significant concomitant rise in systemic CCK. In our preclinical studies and clinical trials to date, ARD-101 was found to be approximately 99% restricted to the gut with minimal systemic exposure, and was well-tolerated at all dose levels. It resulted in no serious adverse events (SAEs), no renal or hepatic safety limitations, no additive side effects with standard of care medications and no evidence of immunosuppression. We believe ARD-101 offers a more anatomically targeted and selective approach to invoke the effects of CCK signaling.

ARD-101

ARD-101 Overview

Our lead product candidate, ARD-101, is an oral gut-restricted small-molecule agonist of certain TAS2Rs expressed in the gut lumen for the treatment of hyperphagia associated with PWS and HO. We believe its unique ability to induce gut-localized CCK and GLP-1 secretion could result in a sustainable and clinically relevant reduction in hyperphagia with a profile designed for long-term dosing without dose-limiting safety or tolerability issues.

Figure 5 below details the three specific TAS2Rs that ARD-101 binds to, along with threshold activation concentration (TAC).

Figure 5: ARD-101 Targets Three TAS2Rs Expressed on Enteroendocrine Cells

Our Phase 1 clinical trial showed that ARD-101 was well-tolerated in healthy volunteers. Data from the first of two parts of our Phase 2 clinical trial of ARD-101 in subjects 17 years or older with hyperphagia associated with PWS showed a reduction from baseline in their HQ-CT 9 or HQ-CT 13 scores, and it was well-tolerated with no SAEs. In the second part of the trial, the four subjects who completed the trial per protocol showed a decrease in HQ-CT 9 of approximately eight points at 28 days. We initiated our Phase 3 HERO trial for subjects 13 years or older with hyperphagia associated with PWS in December 2024. If data from the trial shows positive results, we anticipate it may be sufficient to support an NDA filing with the FDA. Additionally, we plan to evaluate ARD-101 in a Phase 2 clinical trial in subjects with hyperphagia associated with HO.

PWS Background

PWS is a genetic neurodevelopmental disorder caused by a lack of expression of certain genes on paternal chromosome 15, impacting males and females equally. The cardinal clinical features of PWS include severe infantile hypotonia, developmental delay, short stature and, most notably, severe hyperphagia, which typically initially presents in PWS patients between the ages of 3 and 8 years old. Patients with PWS have a median lifespan of 30 years, with obesity-related complications remaining a major cause of mortality.

PWS-associated hyperphagia manifests as a chronic and life-threatening feeling of intense persistent hunger, food pre-occupation, extreme drive to food-seeking behaviors, and consumption of food, leading to early onset obesity and metabolic disorders. This disease’s impact on quality of life affects both the patient and their family.

PWS is thought to have an incidence of approximately 1 in 15,000 births globally, with approximately 10,000 to 20,000 patients living with PWS in the United States. PWS is typically diagnosed at an early age, with many of the cases confirmed by genetic diagnoses within the first year of life. In the EU, there are approximately 15,000 PWS patients. Worldwide, there are estimated to be 350,000 to 400,000 PWS patients.

Role of CCK in Patients with PWS

CCK plays an important role in regulating hunger. In a healthy individual, when a meal is eaten, the food stimulates enteroendocrine cells to secrete CCK, which in turn stimulates the vagus nerve to send a signal to the brain through the gut-brain axis,

alleviating hunger. Individuals with PWS have been found to have abnormalities in their regulation of CCK, ghrelin and other related hormones, which may drive their hyperphagia. While individuals with PWS are thought to have functioning CCK receptors, they are observed to have disproportionately lower release of CCK in response to food, which results in persistence of hunger.

Additional observations implicate that dysfunction of CCK secretion drives many signs and symptoms of PWS. For instance, CCK is known to facilitate gut motility and contraction of the gall bladder. Individuals with PWS often experience extremely slow gut transit times, up to 4 days, and often present with gallstones at an earlier age. Other studies have observed that CCK dysfunction may also be implicated in the behavioral issues, such as anxiety, often experienced by individuals with PWS. Animal studies also support the role of CCK in controlling the perception of hunger as CCK receptor knock-out rats display hyperphagia signs similar to those in individuals with PWS.

Limitations of the Current Standard of Care for PWS

There are no disease-modifying treatments for PWS, so patients’ signs and symptoms are addressed through a multitude of approaches including behavioral, dietary and food availability interventions. Patient management frequently includes restricting access to all food in the environment in order to limit food-seeking behavior. Such hyperphagia-driven limitations impact not only the patients, but also their caregivers. Bariatric surgery is not a safe option for PWS patients due to the risk of stomach rupture from overeating.

There is currently one approved drug for hyperphagia associated with PWS. The only other approved drug for PWS patients is growth hormone to address certain non-hyperphagia aspects of the disease, notably growth. A variety of other drugs, including incretins, have been tried off-label and in clinical trials in an attempt to treat hyperphagia, but are not used routinely because of limited impact on hyperphagia symptoms.

ARD-101 for the Treatment of Hyperphagia Associated with PWS

ARD-101 is a proprietary bitter taste receptor agonist. It is an oral tablet coated to avoid conscious bitter taste perception. A key differentiating feature of ARD-101 is its ability to stimulate local secretion of the satiety hormone CCK, which acts in an autocrine/paracrine-like manner to induce a gut-brain signal that abrogates sensations of hunger and may have additional effects regulating metabolism and inflammation.

The role of abnormal CCK secretion in PWS led us to consider stimulation of the TAS2R pathway as a means to upregulate production of endogenous CCK to restore satiety and possibly address other clinical features prominent in PWS.

We completed a Phase 1 clinical trial that consisted of Single Ascending Dose (SAD) and Multiple Ascending Dose (MAD) segments in healthy volunteers. The trial demonstrated that ARD-101 was well-tolerated and was approximately 99% restricted to the gut with minimal systemic exposure.

We also evaluated ARD-101 in an open-label Phase 2 clinical trial in hyperphagia associated with PWS, which consisted of two parts: the first part was a consistent dose segment and the second part was an intra-subject dose escalation segment. Data from the first part of the trial showed notable reductions in hunger levels and that ARD-101 was well-tolerated, with no dose-limiting safety issues. In the second part of the trial, the four subjects who completed the trial per protocol showed a decrease in HQ-CT 9 of approximately eight points at 28 days. We believe this effect on hunger is attributed to ARD-101’s effect on regulating CCK release and gut-brain signaling. DEXA scans from the PWS Phase 2 trial data measuring body composition indicate a trend toward decreased body fat (approximately 1.5%) and increased lean muscle (over 2%) following 28 days of ARD-101 dosing.

In December 2024, we initiated a potentially pivotal Phase 3 clinical trial, which we refer to as the HERO (Hunger Elimination or Reduction Objective) trial, for subjects with hyperphagia associated with PWS, which we expect to readout in early 2026. In preparing for this potentially pivotal Phase 3 clinical trial, we expanded our clinical management and regulatory capabilities, including hiring clinical, regulatory and quality personnel, and we expect to continue to need to expand our clinical management and regulatory capabilities and to rely on third parties as we continue advancing this trial and other potentially pivotal clinical trials. We believe ARD-101 has the potential to transform the treatment landscape of hyperphagia associated with PWS.

ARD-101 Preclinical Data Summary

We have evaluated the tolerability and efficacy of ARD-101 in proof-of-concept preclinical models that support ARD-101’s potential to address the hyperphagia in hypothalamic syndromes, including PWS as well as obesity and obesity-related conditions. Our preclinical studies suggest that ARD-101 shows potential to be a well-tolerated, satiety-inducing drug. Animal models of obesity showed ARD-101’s potential to decrease food intake and body weight without treatment tachyphylaxis, or rapidly diminishing response to successive doses of a drug, even with chronic daily administration.

In an in vitro experiment, ARD-101 significantly stimulated the release of CCK from mouse and human enteroendocrine cell lines, as seen in Figure 6 below (representative data shown in the left panel). In an ex vivo study, we further investigated the effect of ARD-101 to induce CCK secretion in various regions of the gastrointestinal tract. Porcine duodenum, jejunum, ileum and proximal colon tissue were isolated and incubated in 6-well plates with ARD-101 at 300 mmol. A blank 6-well plate was included in the study, as well as a 24-well plate incubated with a mixture of non-radiolabeled and radiolabeled mannitol and caffeine as a reference control. Gut-tissue samples after one hour of exposure to ARD-101 were analyzed for the release of CCK, as determined by an enzyme-linked immunosorbent assay.

Figure 6: Upregulation of CCK

Major effects on hormone release were observed for ARD-101, resulting in a notable increase in the gut-tissue release of CCK in most intestinal regions, as seen in Figure 7 below.

Figure 7: CCK Release in the Porcine Gastrointestinal Tract

Additionally, orally administered ARD-101 was observed to have minimal systemic exposure, as seen in Figure 8 below, with approximately 99% of ARD-101 staying in the digestive tract, as evidenced by less than 1% bioavailability observed in mouse and monkey pharmacokinetic models, along with high fecal concentrations in mice following oral administration of ARD-101.

Figure 8: Localized CCK and GLP-1 Release with Minimal Systemic Exposure in Humans

In an in vivo study with diet-induced obese (DIO) mice, animals were randomly assigned to different groups (12 per group based on body weight) to receive either vehicle or ARD-101 at assigned dose regimens (20, 40 and 80 mg/kg BID) for 8 weeks. Estimated corresponding human doses are 162, 324 and 650 mg BID. The mice were weighed at least three times weekly. Blood was collected from fasted animals at baseline, at the study mid-point (day 28), and at termination; and serum was evaluated for metabolic parameters, including blood glucose, HbA1c, insulin, triglycerides (TG), bile acids (BA), LDL, HDL and total cholesterol (TC).

ARD-101 dosing by various regimens was well-tolerated with no notable discrepancies in metabolic parameters. As seen in Figure 9 below, all dosing regimens prevented high-fat diet-induced body weight gain in DIO mice upon 8-week treatment and exhibited a dose-dependent pattern.

Figure 9: Preclinical Modeling Doses Above 200 mg BID

Our Completed Phase 1 Clinical Trial in Healthy Volunteers

We completed a Phase 1 clinical trial of ARD-101 healthy volunteers in 2021. In the SAD segment, we administered ARD-101 at 40 mg, 100 mg or 240 mg orally once daily to healthy adult subjects after eight hours of fasting. In the MAD segment of the clinical trial, we administered oral doses of ARD-101 at 40 mg, 100 mg or 240 mg BID for 14 days in healthy adult subjects. ARD-101 was well-tolerated by subjects. Investigator-identified treatment-emergent adverse events (TEAEs) were limited to grade 1 or 2, as shown in Figure 10 below.

Figure 10: Summary of TEAEs in ARD-101 Phase 1 Clinical Trial

Pharmacokinetic parameters for ARD-101 following repeat BID oral doses of 40 mg, 100 mg and 240 mg in healthy subjects were consistent with animal models and confirmed the drug was gut-restricted, with approximately 1% detectable in systemic circulation. Of the minor amount that was in circulation, ARD-101 reached a steady state before day 11 at all tested dose levels by evaluating trough plasma concentrations (Ctrough) on days 11, 12 and 13, demonstrating overall favorable pharmacokinetic properties across test subjects. A summary of PK data following oral doses of ARD-101 is shown in Figure 11 below.

Figure 11: Summary of Pharmacokinetic Data from Phase 1 SAD and MAD Dosing

Our Completed Open-Label Phase 2 Clinical Trial in Hyperphagia Associated with PWS

We also evaluated ARD-101 in an open-label Phase 2 clinical trial in subjects with hyperphagia associated with PWS. The trial was conducted at two clinical sites: Stanford University and Colorado Children’s Hospital. This was a two-part trial design conducted in subjects aged 17-35 dosed for 28 days and followed by a 14-day withdrawal period. The key inclusion criteria were age 17-65 years, an HQ-CT 9 score greater than or equal to 10 and stable weight for two months. The first part of the trial assessed a consistent

dose of 200 mg with patient assessments at baseline as well as after 15 and 28 days on drug, while the second part assessed an intra-subject dose escalation from 400 mg up to 800 mg BID in which patients underwent an additional assessment after eight days on drug. We currently possess preliminary, non-published data from the first and second parts of the trial.

In the first part of the trial, 12 subjects completed the treatment period at a dose of 200 mg delivered orally BID. Figure 12 below summarizes the adverse events (AEs) from the first part of the clinical trial.

Figure 12: Summary of AEs in the First Part of ARD-101 Phase 2 Clinical Trial (Fixed Dose Group)

In the first part of the trial, ARD-101 demonstrated improvements in the clinical endpoints, including a reduction in hyperphagia and body fat. 11 of 12 subjects completing dosing demonstrated improvements in their HQ-CT score. Early participants had HQ-CT 13 questionnaires administered (N=4) and the rest used the HQ-CT 9 questionnaire (N=8). The analysis was therefore separated based on questionnaire type administered. The average reduction in the HQ-CT 9 score was approximately eight points at 28 days. Based on this data, we received Orphan Drug Designation from the FDA. Data from the first part of the trial are shown below in Figures 13 and 14.

Figure 13: HQ-CT Data Observed in the First Part of the Phase 2 Trial

Figure 14: Individual Patient Change in HQ-CT Data Observed in the First Part of the Phase 2 Trial

Based on the preclinical modeling showing that doses above 200 mg BID have potential for greater efficacy and that ARD-101 was well-tolerated in the first part of the Phase 2 clinical trial with most of the benefit being achieved within 15 days, we initiated the second part of the Phase 2 clinical trial to evaluate a dosing regimen that scaled up to 800 mg BID. Patients in the second part of the trial were dosed at 400 mg BID for one week, then 600 mg BID for a second week, then 800 mg BID for the final two weeks of the trial. Results from the second part of the trial demonstrated a decline in HQ-CT 9 score, with all patients who followed protocol experiencing benefit, and the majority of those seeing deepening benefit over time. Efficacy and safety data from the second part of the trial are shown below in Figures 15 and 16. AEs observed in the second part of the trial were mild in all cases.

Figure 15: HQ-CT Data Observed in the Second Part of the Phase 2 Trial

Figure 16: Summary of AEs in the Second Part of ARD-101 Phase 2 Clinical Trial (Dose Escalation Group)

One subject that took part in the first part continued into the second part of the trial (labeled as Subject 1.5 in the first part and Subject 2.5 in the second part), with approximately one year between trials. The single subject experienced a dose-dependent 16-point reduction in their HQ-CT 9 score from baseline to day 28 and then a return or increase of hyperphagia and HQ-CT 9 score after approximately 14 days off the study drug (see Figure 17 below). It should also be noted that two subjects deviated from trial protocol and would not be included in an efficacy analysis for our Phase 2 trial. Subject 2.1 received a high dose of steroids known to cause significant weight gain, from a primary care physician not involved in the trial. This subject also took two vacations during the trial period, causing food access environment-related deviations. Subject 2.2 experienced a change in their home environment and designated caregiver between day 8 and day 15 of the trial period, resulting in differences in reported results between the two caregivers. Excluding these two patients from the efficacy analysis results in an average decrease of approximately eight points at 28 days for the four remaining subjects as shown in Figure 17 below. An analysis of the individual patient change in HQ-CT score is shown in Figure 18 below.

Figure 17: Detailed HQ-CT Data Observed in Second Part of the Phase 2 Trial

Figure 18: Detailed Patient Level Change in HQ-CT Data Observed in Second Part of the Phase 2 Trial

After seeing the majority of patients following protocol in the second part of our Phase 2 trial experiencing dose dependent decreases in HQ-CT 9 scores with no safety signal beyond grade one AEs, we decided to advance that dosing scheme for evaluation in our Phase 3 trial.

Phase 3 Clinical Trial in Hyperphagia Associated with PWS

Following discussions with the FDA during pre-IND meetings, we submitted an IND for ARD-101 for the treatment of hyperphagia associated with PWS on August 30, 2024. In September 2024, following correspondence with the FDA regarding the BID dosing and titration strategy in the Phase 3 clinical trial, the FDA determined that the Phase 3 clinical trial may proceed. We designed a Phase 3, randomized, double-blind, placebo-controlled clinical trial, which we refer to as the HERO (Hunger Elimination or Reduction Objective) trial (see Figure 19 below for a graphical depiction of the trial design). The trial is designed to treat subjects over 12 weeks to support the further development of ARD-101 in subjects with PWS-associated hyperphagia. The primary objective of the Phase 3 HERO trial is to evaluate the effect of ARD-101 on hyperphagia-related behavior, using the HQ-CT questionnaire. Secondary objectives include evaluating caregiver-reported outcomes and physician-reported outcomes. Additionally, exploratory objectives aim to assess the effects of ARD-101 on various health markers, such as body weight, lean body mass, waist circumference, inflammatory cytokines, lipid parameters, glycemic control and food safety practices.

Enrollment criteria for this trial ensure that eligible subjects have a confirmed diagnosis of PWS and hyperphagia, are medically stable, are not taking certain anti-psychotics and other medications known to affect appetite and weight and are able to adhere to the trial’s requirements, with only subjects with a baseline HQ-CT score of 13 or greater expected to be included in the efficacy analysis. Dose modification is allowed in case a higher dose is not tolerated by a subject. An interim analysis will be used to help determine the statistical power of the trial, triggered by enrollment milestones.

We initiated the Phase 3 HERO trial in December 2024, and topline data readout is anticipated in early 2026. We plan to conduct the trial in the United States, the United Kingdom, South Korea, Romania, Italy, France, Spain, Canada and Australia.

Figure 19: Phase 3 HERO Trial Design for ARD-101 in PWS-Associated Hyperphagia

ARD-101 for the Treatment of Hyperphagia Associated with HO

The hypothalamus is a region in the brain responsible for regulating fundamental biological processes such as temperature control, sleep cycles and feeding behavior. One possible consequence of a damaged hypothalamus is HO. This condition is most commonly caused by the sequelae from the treatment of hypothalamic and pituitary tumors (e.g., craniopharyngiomas). HO is a rare form of obesity affecting approximately 5,000-10,000 people in the United States. HO is characterized by uncontrollable hunger (hyperphagia), metabolic dysfunction and weight gain. Additionally, due to the sudden fluctuation in eating behavior and weight, patients with HO often have resulting medical complications, such as dyslipidemia and cardiovascular disease. Both the physical and psychological impacts of this condition contribute to a decreased quality of life for patients.

CCK is an attractive target for HO given that prior administration of CCK significantly reduced food consumption in the first eating period in subjects with HO, suggesting that there is no impairment of CCK-induced satiety in subjects with hypothalamic injury and vagal afferent signaling in the hindbrain may be sufficient for CCK to produce satiety.

Limitations of the Current Standard of Care

Currently, there are no FDA-approved treatments for hyperphagia associated with acquired HO. Available interventions include behavioral/lifestyle modification, off-label pharmacotherapy (including metformin, GLP-1 receptor agonists and hormone-based treatments), and in rare instances, bariatric surgery. We believe these offered therapies are largely ineffective, despite their success in other forms of obesity, due to the inability to target the underlying pathophysiology of HO. The lack of effective treatments for these patients demonstrates the need for therapeutic intervention that directly addresses the dysregulated pathophysiology of the condition.

ARD-101 Clinical Programs for Hyperphagia Associated with HO

PWS is considered a congenital form of HO in which the hyperphagia is driven by hypothalamic dysfunction. Given the mechanism of action from ARD-101 and potential promising early data from our clinical trials for hyperphagia associated with PWS, we believe there is scientific rationale to apply ARD-101 for the treatment of hyperphagia associated with an acquired form of HO. While there is a single approved pharmacological intervention for the treatment of hyperphagia associated with PWS, there is no such approved intervention for hyperphagia associated with HO. The lack of response from agents in HO that are otherwise effective in general obesity underscores the distinction of HO from other forms of obesity, as HO is primarily driven by aberrant hunger signaling as opposed to appetite.

In our Phase 2a clinical trials evaluating ARD-101 in two different populations of obese subjects, hunger levels were reduced as measured by the Control of Eating Questionnaire (CoEQ). In a separate clinical trial, ARD-101 demonstrated a reduction in HQ-CT in subjects with hyperphagia associated with PWS, consistent with its potential role in addressing hunger-driven hyperphagia. We believe ARD-101 stimulation of gut-localized CCK release and its ability to in turn stimulate vagal afferent neurons projecting to the medulla may induce counterbalancing satiety.

Our clinical program is designed to evaluate the effect of ARD-101 versus placebo in subjects with hyperphagia associated with HO. A variety of hypothalamic pathophysiologies can result in hyperphagia associated with HO, with the highest incidence occurring after treatment of a craniopharyngioma. We intend to discuss with the FDA initiation of the Phase 2 clinical trial for the treatment of hyperphagia associated with HO, which we refer to as the HONOR (Hypothalamic Obesity Neutralized On TAS2R) trial, without completing earlier clinical trials in hyperphagia associated with HO. We plan to initiate this trial in the second half of 2025 with anticipated topline data readout in the first half of 2026.

ARD-201

ARD-201 Overview

Our second program, ARD-201, will be a fixed-dose combination of our proprietary bitter taste receptor agonist, ARD-101 (denatonium acetate monohydrate), and a DPP-4 inhibitor. Our preclinical studies in animal models demonstrated that combining ARD-101 and a DPP-4 inhibitor enhanced weight loss relative to ARD-101 alone. DPP-4 inhibition is a well-established therapeutic target, with multiple approved drugs currently on the market, that acts to inhibit the degradation of incretin hormones. DPP-4 inhibitors are also particularly amenable to combination, as they have minimal to no interactions with other drugs due to their pharmacodynamic properties. Due to potential gastroparesis risk associated with DPP-4 inhibitors, we determined that this combination is not appropriate for PWS patients. However, given the increased potency, this combination has the potential to be a treatment option for a broader range of obesity patients. We have completed Phase 2a clinical trials of ARD-101 as a single agent in obese subjects, which inform the design of further clinical trials of ARD-201.

We believe ARD-201’s ability to stimulate intestinal CCK secretion while suppressing ghrelin secretion with potential reduction of hunger cravings represents a differentiated yet complementary mechanism to GLP-1’s ability to suppress appetite. We are developing ARD-201 with a goal of addressing some of the limitations of currently marketed GLP-1therapies, which include weight regain post-withdrawal, poor GI tolerance in many patients and loss of lean body mass (see Figure 20 below). Data from our Phase 2a clinical trials of ARD-101 demonstrated reduction in hunger rating in the CoEQ in two distinct subject populations: (1) general obese subjects and (2) subjects who had refractory weight gain post-bariatric surgery. With respect to poor GI tolerance specifically, ARD-101 has been well-tolerated in all clinical trials to date, with no dose-limiting safety issues or SAEs. We plan to initiate a Phase 2 clinical trial to explore the efficacy of ARD-201. We are still evaluating the potential clinical applications for ARD-201 in obesity and obesity-related conditions, and our future decisions will be informed by the results of the multi-arm EMPOWER trial.

Figure 20: Limitations of GLP-1 Treatment

Obesity Background

Obesity is a medical condition marked by excessive body fat that presents a risk to health. According to the World Health Organization, a body mass index (BMI) over 25 is considered overweight, and over 30 is considered obese. As of 2022, over 1 billion individuals are affected by obesity worldwide. In the United States, 42% of adults are considered obese. Assuming only approximately 13% penetration, the market size for the treatment of obesity would be 15 million adults in the United States alone. Obesity is also

linked to numerous comorbidities such as diabetes, hypertension, high cholesterol, coronary artery disease, cancer and liver and pulmonary ailments, placing a significant financial burden on the healthcare system, with an estimated cost to the medical system of $261 billion in the United States in 2016. Utilizing trends, it is estimated that the global prevalence of obesity will increase by 2035 to over 50%, driving the projected global market for branded anti-obesity drugs to reach over $100 billion by 2030.

Limitations of the Current Standard of Care for Obesity

To date, the FDA has approved several anti-obesity medications for long-term use within the United States. Among these are Zepbound (tirzepatide), Wegovy (semaglutide), Contrave (naltrexone-bupropion), Saxenda (liraglutide), Xenical (orlistat), Qsymia (phentermine-topiramate) and Imcivree (setmelanotide). Currently approved GLP-1 receptor agonists lead to significant initial weight loss, typically starting within the first few weeks and peaking around the first six months; however, current GLP-1 therapies have multiple limitations, such as extensive adverse effects (nausea, vomiting and diarrhea), substantial lean body mass loss, invasive subcutaneous administration routes and weight regain upon cessation. We expect the market for new therapies that can address these gaps to increase in tandem with the market expansion of GLP-1 therapies.

Adverse Events: The common adverse events associated with GLP-1 receptor agonists include nausea and vomiting, which may lead to temporary or permanent discontinuation of treatment. Within 12 months of starting GLP-1 therapy, approximately 45% of patients discontinue treatment, and this increases to approximately 65% by the 24-month mark.

Weight Regain: After discontinuing GLP-1 receptor agonists, many subjects experience weight regain, increased hunger and caloric intake. The amount of weight regained can vary, with some clinical trials showing that the majority of subjects regain up to approximately two-thirds of their weight loss within one year. The rapid weight regain phenomenon highlights the importance of the need for treatments that can maintain weight loss (see Figure 21 below). Following treatment withdrawal, semaglutide and placebo participants regained 11.6 (SD: 7.7) and 1.9 (SD: 4.8) percentage points of lost weight, respectively, by week 120, resulting in net losses of 5.6% (SD: 8.9%) and 0.1% (SD: 5.8%), respectively, from week 0 to week 120.

Figure 21: Weight Regain After Withdrawal of Tirzepatide and Semaglutide

Lean Body Mass Reductions: Another drawback of GLP-1 receptor agonists is an associated reduction in lean body mass along with weight loss. Previous trials showed reductions in lean body mass of up to 60% as a proportion of total weight loss. In the STEP-1 trial of semaglutide in obesity, 45.2% of the weight loss was from lean body mass. In the SURMOUNT-1 trial of tirzepatide in obesity, 25.7% of weight loss arose from lean body mass loss. Current mitigation strategies include combining protein supplementation with resistance training exercises.

Our Preclinical Data in Support of ARD-201

In animal models of obesity, ARD-101 demonstrated significant body weight reduction compared to placebo controls. Figure 22 below shows the weight loss results achieved in a diet-induced mouse model of ARD-101 in combination with sitagliptin, a DPP-4 inhibitor, or liraglutide, a GLP-1 analog, versus vehicle-treated groups. Additionally, ARD-101’s localized action and gut restriction suggest that a combination with a GLP-1 receptor agonist or DPP-4 inhibitor should not increase the risk of side effects beyond those seen in either drug class independently.

Figure 22: Relative Body Weight Change of ARD-101 in Combination with GLP-1

or DPP-4 Inhibitor vs. Vehicle Treated Groups in Preclinical Study in DIO Mouse Model

In addition to the reduction of food consumption via hunger suppression, ARD-101 has also shown positive metabolic effects resulting from increased production of endogenous gut hormones. In mouse models, we have observed improvement of multiple relevant metabolic parameters, including blood glucose, HbA1c, insulin levels and LDL, suggesting potential clinical relevance.

Figure 23: Relevant Metabolic Parameters in DIO Mouse Model (56 days) and AMLN-Diet MASH Mouse Model (48 weeks)

As seen in Figure 23 above, ARD-101 normalizes metabolic parameters independent of weight loss. The treatment led to a reduction in inflammatory cytokine levels as well as in LDL, which is generally not observed with GLP-1 receptor agonists unless correlated with weight loss. Additionally, results maintained for up to 48 weeks of dosing showed no tachyphylaxis.

ARD-201 for the Treatment of Obesity

ARD-201 will be a combination of our proprietary bitter taste receptor agonist, ARD-101, and a DPP-4 inhibitor and will be designed to be taken orally once a day.

We believe that ARD-201 has high potential to address the unmet needs in the global obesity landscape and we are targeting to address some of the limitations of current therapies. In preclinical studies, ARD-101, a main component of ARD-201, stimulates intestinal CCK secretion and suppresses ghrelin level, which translates into lowered sensations of hunger. Data from our Phase 2a clinical trials of ARD-101 in general obesity subjects and subjects who have refractory weight gain post-bariatric surgery have demonstrated reduction in hunger rating in the CoEQ and was well-tolerated in both clinical trials.

We plan to initiate a Phase 2 multi-arm clinical trial, which we refer to as the EMPOWER (Exploratory Multi-arm Prevention Of WEight Regain) trial, to explore the magnitude of ARD-201’s effect on a variety of parameters related to obesity and obesity-related conditions and how it can be complementary to current GLP-1 therapies.

Our Phase 2a Clinical Trials in General Obesity Subjects and Weight-Rebound Post-Bariatric Surgery Subjects

We have completed two clinical trials dosing 200 mg orally BID to evaluate ARD-101 as a single agent for hunger management in obesity and obesity-related conditions, including (1) a Phase 2a placebo-controlled clinical trial in general obese subjects (BMI of 30-45 kg/m2, with a stable body weight (± 5%) over the previous six months) and (2) a Phase 2a clinical trial in subjects with refractory weight gain post-bariatric surgery (obese adults with weight gain at least one year elapsed since bariatric surgery). These two clinical trials provided insights into the therapeutic potential of ARD-201, given that the combination has demonstrated a stronger effect compared to the single agent (ARD-101) in a preclinical setting.Summary findings from the trials are highlighted in Figures 24 and 25 below.

Figure 24: Summary Findings from Phase 2a Clinical Trials in General Obesity Subjects and Weight-Rebound Post-Bariatric Surgery Subjects

Figure 25: Improvement in Patients with Elevated Metabolic Parameters from Baseline to Day 28 (1)(2)

The Phase 2a clinical trial for general obese subjects was an exploratory trial to evaluate the impact of ARD-101 on hunger rather than to achieve weight loss in the enrolled subjects. Using the CoEQ, subjects treated with ARD-101 experienced a 2.51-fold greater reduction in hunger rating compared to those receiving placebo, with a p-value of 0.015. We saw a statistically significant reduction in the hunger-associated hormone, ghrelin, both after a single dose and after 28 days of dosing. We also noticed that without any protocol-specified diet restrictions or exercise requirements, ARD-101 was observed to have an approximately -1% mean placebo-adjusted weight loss at 28 days, without chronic or sustained nausea as often associated with GLP-1 receptor agonists. Given this observation, we believe ARD-201’s full potential remains to be discovered in future trials, and we are targeting potency through combination with a DPP-4 inhibitor, and without the constraints in the Phase 2a clinical trial design. Figure 26 below summarizes the AEs from the clinical trial.

Figure 26: Summary of AEs in ARD-101 in General Obesity Population

In the Phase 2a clinical trial of refractory weight gain post-bariatric surgery, after 28 days of dosing on ARD-101, 9 out of 11 subjects either lost or maintained weight during the dosing period, in contrast to the trend of weight-gain in the preceding 14-day run-in period. The magnitude of change as measured by CoEQ suggested benefit in subjects’ perceived hunger (see Figure 27 below), reflecting similar observations to the general obesity Phase 2a clinical trial. A summary of TEAEs in ARD-101 from the clinical trial is shown in Figure 28 below. This data is preliminary and unpublished.

Figure 27: CoEQ Questionnaire from Phase 2a Clinical Trial in Weight-Rebound Post-Bariatric Surgery Subjects

Figure 28: Summary of TEAEs in Phase 2a Clinical Trial in Weight-Rebound Post-Bariatric Surgery

Subjects Treated with ARD-101

Our Phase 2 EMPOWER (Exploratory Multi-arm Prevention Of WEight Regain) Trial for Prospective Weight Loss

Our planned potential Phase 2 EMPOWER trial is expected to be a multi-arm longitudinal study to evaluate ARD-201’s efficacy compared to and in combination with other agents, including GLP-1 receptor agonists, for obese subjects. We also expect to explore the potential ability of ARD-201 to abrogate the weight regain associated with withdrawal from GLP-1 receptor agonists. The design of the Phase 2 EMPOWER clinical trial is illustrated below in Figure 29.

Figure 29: EMPOWER Clinical Trial Design

As depicted above, this multi-arm trial is expected to have two 3-month treatment periods, Part A and Part B, followed by a safety follow-up period. In Part A, the initial treatment period, we expect the 4 cohorts of subjects to receive a treatment regimen for 3 months. Once subjects have completed Part A, they will transition to Part B of the trial, which we expect will aim to assess whether ARD-201 can prevent weight rebound post GLP-1 agonist administration and withdrawal. The data would be assessed at the conclusion of each of Part A and Part B. Throughout the trial, we anticipate requiring our subjects to partake in lifestyle management.

We expect the EMPOWER trial to evaluate the magnitude of weight loss and the impact on lean body mass that can be achieved with ARD-201 as a standalone treatment, in combination with GLP-1 receptor agonists, and compared to GLP-1 receptor agonists alone. The primary endpoint of Part A of the EMPOWER trial is expected to be change in body weight composition between the four arms from baseline and after three months of intervention. We anticipate that the primary endpoint for Part B will be the change in body weight measurements (BMI/weight) from the start of Part B and after three months of intervention. Secondary endpoints of the trial are expected to include change in waist circumference, change in weight, ghrelin and body composition (as measured by DEXA scans).

We intend to discuss with the FDA initiation of the Phase 2 EMPOWER trial without completing earlier clinical trials of ARD-201 in obesity and obesity-related conditions. We anticipate, subject to regulatory approval to proceed, initiating this trial in the second half of 2025, with topline data expected in the first half of 2026.

Our Other Programs

Beyond our lead product candidate, ARD-101, and our ARD-201 program, we are also developing other programs for the potential treatment of indications with high unmet need, including other indications mediated by TAS2R signaling.

We also have a clinical program in development not related to TAS2R that is a low-dose liquid extended release naltrexone formulation for the treatment of autism.

Competition

The biotechnology and pharmaceutical industries are characterized by rapid evolution of technologies, fierce competition and strong defense of intellectual property. While we believe that our platform and our knowledge, experience and scientific resources provide us with competitive advantages, we face competition from major pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions, among others.

If any of our product candidates are approved for the indications for which we expect to conduct clinical trials, we anticipate they will compete with the foregoing therapies and currently marketed drugs, as well as any drugs potentially in development. It is also possible that we will face competition from other pharmaceutical approaches as well as other types of therapies. The key competitive factors affecting the success of all our programs, if approved, are likely to be their potency, tolerability, convenience, price, level of generic competition and availability of reimbursement.

With respect to ARD-101, VYKAT XR from Soleno Therapeutics is the only approved treatment for hyperphagia in patients with PWS. Additionally we are aware of other late-stage development programs including one from Acadia Pharmaceuticals. We are also aware of a therapeutic candidate in late-stage development for the treatment of hyperphagia associated with HO from Rhythm Pharmaceuticals.

Our competitors for ARD-201 include a number of major pharmaceutical companies and independent biotechnology companies developing therapeutics for the treatment of obesity and related indications, including Eli Lilly, Novo Nordisk, Roche, Pfizer, AstraZeneca, Boehringer Ingelheim, Amgen, Zealand Pharma, Viking Therapeutics, Altimmune, Terns Pharmaceuticals, Merck and Structure Therapeutics.

Many of our current or potential competitors, either alone or with their collaboration partners, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical studies, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Mergers and acquisitions in the biopharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that have fewer or less severe side effects, are more potent, are more convenient, are less expensive or are sold more effectively than any products that we may develop. Our competitors also may obtain FDA or other applicable regulatory authority approval for their product candidates more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products. There are generic products currently on the market for certain of the indications that we are pursuing and additional products are expected to become available on a generic basis over the

coming years. If our product candidates are approved, we expect that they will be priced at a significant premium over competitive generic products. Competitive products may make any products we develop obsolete or noncompetitive before we recover the expense of developing and commercializing our product candidates.

Manufacturing

We do not own or operate manufacturing facilities for the production of our product candidates and currently have no immediate plans to build our own clinical or commercial scale manufacturing capabilities. We currently engage with third-party contract manufacturing organizations (CMOs), for the manufacture of our product candidates. We rely on and expect to continue to engage third-party manufacturers for the production of both drug substance and finished drug product. We currently obtain our supplies from these manufacturers on a purchase order basis and do not have long-term supply arrangements in place. Should any of these manufacturers become unavailable to us for any reason, we believe that there are a number of potential replacements, although we may incur some delay in identifying and qualifying such replacements.

Sales and Marketing

We have not yet defined our sales, marketing or product distribution strategy for our product candidates because they are still in development. Our commercial strategy may include the use of strategic partners, distributors, a contract sales force or the establishment of our own commercial sales force. We plan to further evaluate these alternatives as we approach approval for our product candidates.

Intellectual Property

Intellectual property, including patents, trade secrets, trademarks and copyrights, is important to our business. Our commercial success depends in part on our ability to obtain and maintain proprietary intellectual property protection for our product candidates, as well as for future product candidates and novel discoveries, product development technologies and know-how. Our commercial success also depends in part on our ability to operate without infringing on the proprietary rights of others and to prevent others from infringing our proprietary rights. Our policy is to develop and maintain protection of our proprietary position by, among other methods, filing applications for U.S. and foreign patents relating to our product candidates and their methods of use.

Our patent portfolio is built with a goal of establishing broad protection that generally includes, for the product candidates, claims directed to compositions of matter, pharmaceutical compositions or formulations, methods of manufacturing and methods of treatment. We are seeking and maintaining patent protection in the United States and key foreign jurisdictions where we intend to market our product candidates, if they are approved. As of March 12, 2025, our patent portfolio comprises 22 distinct patent application families protecting our technology relating to our product candidates and included 17 issued U.S. patents, 23 issued foreign patents (not including validated European patents in individual countries) and 72 pending patent applications, of which 21 are Patent Cooperation Treaty (PCT) or U.S. patent applications and the remainder are foreign.

We are developing our lead product candidate, ARD-101, for, among others, the treatment of hyperphagia associated with PWS. We have an issued patent for an oral formulation of the acetate salt, as well as several other salts, of denatonium. U.S. Patent No. 10,835,505 generally and specifically claims oral formulations of denatonium salts as products as well as methods for both effecting weight loss and treating adult-onset diabetes. U.S. Patent No. 10,835,505 is set to expire in 2038. Members of the same patent family have also been filed in Australia, Canada, China, Europe, Hong Kong, Japan and South Korea. We have obtained an orphan drug designation for the treatment of PWS. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if, in relevant part, it is a drug intended to treat a rare disease or condition, defined as a patient population of fewer than 200,000 in the United States. If ARD-101 receives the first marketing approval for the treatment of PWS, then it would be entitled to marketing exclusivity for seven years, which precludes the FDA from approving another marketing application for the same drug for the same use or indication for seven years after ARD-101’s marketing approval.

The patents and applications discussed in this paragraph are also related to ARD-101. We are pursuing patent applications directed to solid-state forms of denatonium acetate monohydrate, filed in the United States (U.S. Ser. No. 18/631,587), Australia, Canada, China, Europe, Taiwan and Japan. This family contains composition of matter claims and process claims and is expected to expire in 2042. We are also pursuing a patent application directed to treatment of pulmonary hypertension with certain denatonium salts, filed in the United States (U.S. Ser. No. 17/257,458), which contains use claims and is projected to expire in 2039 (use claims in the U.S. take the form of methods of treatment). In addition, we are pursuing a patent application directed to treatment of asthma with certain denatonium salts, filed in the United States (U.S. Ser. No. 17/256,212), which contains use claims and is projected to expire in 2039. We are also pursuing patent applications directed to treatment of certain inflammatory disorders with certain denatonium salts, filed in the United States (U.S. Ser. No. 17/845,399), Australia, Canada, China, Europe, Hong Kong, Japan and South Korea. This family contains use claims, and patents issuing from this family are projected to have expiration dates in 2039. We are also pursuing

patent applications directed to treatment of fatty liver diseases with certain denatonium salts, filed in the United States (U.S. Ser. No. 18/274,180), Australia, Canada, China, Europe, Hong Kong, Japan and South Korea. This family contains use claims, and patents issuing from this family are projected to have expiration dates in 2041. We are also pursuing a patent application directed to treatment of Severe Acute Respiratory Syndrome or prevention of acute respiratory distress syndrome with certain denatonium salts, filed in the United States (U.S. Ser. No. 17/915,952), which contains use claims and is projected to have an expiration date in 2041. We are also pursuing patent applications directed to abuse-deterrent pharmaceutical compositions comprising a controlled pharmaceutical substance and a bitter agonist compound, filed in the United States (U.S. Ser. No. 18/924,880), Europe, Canada and Australia. This family contains product claims and is projected to expire in 2043. U.S. Patent No. 11,253,490, relating to treating or alleviating a symptom of cognitive impairment in a subject with a COVID-19 infection, contains use claims and is projected to expire in 2041.

Related to ARD-201, we are pursuing patent applications directed to combinations of certain denatonium salts and a DPP-4 inhibitor and treatment of obesity and certain related disorders, filed in the United States (U.S. Ser. No. 18/557,182), Australia, Canada, China, Europe, Hong Kong and Japan. This family contains product and use claims, and patents issuing from this family are projected to have expiration dates in 2041.

The term of individual patents in our portfolio depends upon the legal term of patents in the countries in which they are obtained. In most countries in which we file, including the United States, the patent term is 20 years from the earliest date of filing a non-provisional patent application. In the United States, the term of a patent may be eligible for patent term adjustment, which permits patent term restoration as compensation for delays incurred at the U.S. Patent and Trademark Office (the USPTO), during the patent prosecution process. In addition, for patents that cover an FDA-approved drug, the Drug Price Competition and Patent Term Restoration Act of 1984 (the Hatch-Waxman Act) permits a patent term extension of up to five years beyond the expiration of the patent. While the length of the patent term extension is related to the length of time the drug is under regulatory review, patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, and only one patent per approved drug may be extended under the Hatch-Waxman Act. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug. In the future, if and when our products receive FDA approval, we expect to apply for patent term extensions on patents covering those products. We plan to seek any available patent term extension to any granted patents we may be granted in any jurisdiction where such extensions are available; however, there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether such extensions should be granted, and if granted, the length of such extensions.

We may also rely on trade secrets relating to our discovery programs and product candidates, and seek to protect and maintain the confidentiality of proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. It is our policy to require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us, and for employees and consultants to enter into invention assignment agreements with us.

Governmental Regulations

U.S. Regulation

As a biopharmaceutical company that operates in the United States, we are subject to extensive regulation. Our product candidates will be required to comply with applicable regulatory requirements, including that production of our products must occur in registered facilities in compliance with current Good Manufacturing Practice requirements (cGMPs).

Government authorities in the United States (at the federal, state and local level) and in other countries extensively regulate, among other things, the research, development, testing, manufacturing, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of biopharmaceutical products such as those we are developing. Our product candidates must be approved by the FDA before they may be legally marketed in the United States and by the comparable foreign regulatory authority before they may be legally marketed in foreign countries. Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences. Additionally, some significant aspects of regulation in Europe are addressed in a centralized way, but country-specific regulation remains essential in many respects. We, along with our CMOs, contract research organizations (CROs), and third-party vendors, will be required to satisfy these requirements in each of the countries in which we wish to conduct studies or seek approval of our product candidates. The process for obtaining regulatory marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.

U.S. Drug Product Development

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (the FDCA) and its implementing regulations and associated guidance. Drugs are also subject to other federal, state and local statutes and regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may result in delays to the conduct of a study, regulatory review and approval, or subject an applicant to administrative or judicial sanctions. These sanctions could include, among other actions, the FDA’s refusal to approve pending applications, withdrawal of an approval, refusal to allow an applicant to proceed with clinical trials, imposition of a clinical hold, issuance of untitled or warning letters, product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits or civil or criminal investigations or penalties. Any agency or judicial enforcement action could have a material adverse effect on Aardvark.

Our product candidates must be approved by the FDA through the NDA process before they may be legally marketed in the United States. The process required by the FDA before a drug may be marketed in the United States generally involves the following:

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completion of extensive nonclinical, sometimes referred to as preclinical, laboratory tests, animal studies and formulation studies in accordance with applicable regulations, including the FDA’s Good Laboratory Practice (GLP) regulations and standards;

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submission to the FDA of an IND, which must become effective before human clinical trials may begin;

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approval by an Institutional Review Board (IRB), representing each clinical site before each clinical trial may be initiated;

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performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, Good Clinical Practices (GCPs), and other clinical trial-related regulations to establish the safety and efficacy of the proposed drug product candidate for its proposed indication;

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submission to the FDA of an NDA, requesting marketing approval for one or more proposed indications, which includes not only the results of the clinical trials, but also, detailed information on the chemistry, manufacturing and quality controls for the product candidate and proposed labeling;

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satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the product is produced, including those of third parties, to assess compliance with the FDA’s cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality, and purity;

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satisfactory completion of FDA audit(s) of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data;

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FDA review and approval of the NDA prior to any commercial marketing or sale of the product in the United States; and

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compliance with any post-approval requirements, including REMS and post-approval studies required by the FDA.

The data required to support an NDA is generated in two development stages: preclinical and clinical. The preclinical development stage generally involves laboratory evaluations of drug chemistry, manufacturing and controls, as well as studies to evaluate toxicity in animals, which support subsequent clinical testing. The conduct of the preclinical studies must comply with federal regulations, including GLPs. The sponsor must submit the results of the preclinical studies together with manufacturing information, analytical data, clinical data (if available from studies conducted outside the United States pre-IND) or literature and a proposed clinical protocol, as well as other information, to the FDA as part of the IND. An IND is a request for authorization from the FDA to administer an investigational drug product to humans. The central focus of an IND submission is on the general investigational plan and the protocol(s) for human trials. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions regarding the proposed clinical trials and places the IND on full clinical hold or partial clinical hold within that 30-day time period. Under a full clinical hold, the IND sponsor must resolve any outstanding concerns before the clinical trial can begin. Under a partial clinical hold, there may be a delay or suspension of only part of the clinical work requested under the IND. Following issuance of a clinical hold or partial clinical hold, a clinical trial (or full clinical trial in the case of a partial clinical hold) may only resume after the FDA has notified the sponsor that the trial may proceed. The FDA will base that determination on information provided by the sponsor correcting the deficiencies previously cited or otherwise satisfying the FDA that the clinical trial can proceed. The FDA may also impose clinical holds on a drug product candidate at any time before or during clinical trials due to safety concerns, non-compliance or other issues affecting the integrity or utility of the trial.

Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that could cause the trial to be suspended or terminated.

The clinical stage of development generally involves the administration of the drug product candidate to human subjects under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety and assess efficacy. Each protocol, and any subsequent amendments to the protocol, must be submitted to the FDA as part of the IND before a trial commences. Further, each clinical trial must be reviewed and approved by an IRB at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed. Additionally, some trials are overseen by an independent group of qualified experts organized by the sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether or not a trial may move forward at designated check points based on access that only the group maintains to available data from the study. The FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk.

A sponsor may choose, but is not required, to conduct a foreign clinical trial under an IND. When a foreign clinical trial is conducted under an IND, all FDA IND requirements must be met unless waived. When the foreign clinical trial is not conducted under an IND, the sponsor must ensure that the study is conducted in accordance with GCP, including review and approval by an independent ethics committee (IEC) and informed consent from subjects. The GCP requirements are intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical trials, as well as the quality and integrity of the resulting data. FDA must also be able to validate the data from the study through an on-site inspection if necessary. There are also requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries. Sponsors of certain clinical trials of FDA-regulated products are required to register and disclose certain clinical trial information, which is made publicly available at www.clinicaltrials.gov.

Clinical trials are generally conducted in three sequential phases, known as Phase 1, Phase 2 and Phase 3, and may overlap. Phase 1 clinical trials generally involve a small number of healthy volunteers who are initially exposed to a single dose and then multiple doses of the drug product candidate. The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, tolerability, adverse effects, dosage, distribution, excretion, safety of the drug product candidate and, if possible, to gain early evidence on effectiveness and to determine maximal dosage. Phase 2 clinical trials typically involve studies in disease-affected subjects to determine dosage tolerance and the optimal dose required to produce the desired benefits. At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, as well as identification of possible adverse effects and safety risks and preliminary evaluation of efficacy. Phase 3 clinical trials (also referred to as confirmatory trials, pivotal trials, registrational trials or adequate and well-controlled trials) generally involve large numbers of subjects at multiple sites, in multiple countries, and are designed to provide the data necessary to demonstrate the efficacy of the product for its intended use and its safety in use, and to establish the overall benefit/risk relationship of the product and provide an adequate basis for product approval. Phase 3 clinical trials may include comparisons with placebo and/or other comparator treatments. The duration of treatment is often extended to mimic the intended use of a product during marketing. Generally, two adequate and well-controlled Phase 3 clinical trials demonstrating that the statutory standard is met are required by the FDA for approval. In certain instances, FDA may condition approval of an NDA on the sponsor’s agreement to conduct additional clinical trials or preclinical studies (post-marketing commitments or post-marketing requirements) to further assess the drug’s safety and effectiveness after approval. Such post-approval trials are sometimes referred to as Phase 4 clinical trials. These trials are used to gain additional experience from the treatment of subjects in the intended therapeutic indication and, in the case of drugs approved under Accelerated Approval, confirm clinical benefit seen with a surrogate endpoint using a long-term clinical outcome endpoint. Failure to exhibit due diligence with regard to conducting such Phase 4 clinical trials could result in withdrawal of approval for products or other consequences.

Progress reports detailing the results of the clinical trials, among other information, must be submitted at least annually to the FDA; written IND safety reports must be submitted to the FDA and the investigators for Serious and Unexpected Suspected Adverse Reactions, findings from other studies suggesting a significant risk to humans exposed to the drug, findings from animal or in vitro testing that suggest a significant risk for human subjects and any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, if at all. The FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether or not a trial may move forward at prespecified intervals based on access to certain data from the trial and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as interim data suggesting a lack of efficacy. We may also suspend or terminate a clinical trial based on evolving business objectives and/or competitive climate.

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug product candidate as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the drug product candidate and, among other things, must develop methods for testing the identity, strength, quality, purity and potency of the final product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the drug product candidate does not undergo unacceptable deterioration over its shelf life.

Combination Therapy

Combination therapy is a treatment modality that involves the use of two or more drugs to be used in combination to treat a disease or condition. If those drugs are combined in one dosage form, that is known as a fixed dose combination product and it is reviewed pursuant to the FDA’s Combination Rule at 21 CFR 300.50 (Combination Rule). The Combination Rule provides that two or more drugs may be combined in a single dosage form when each component contributes to the claimed effects and the dosage of each component (amount, frequency and duration) is such that the combination is safe and effective for a significant patient population requiring such concurrent therapy as defined in the labeling for the drug. Similar requirements may be imposed on us by comparable regulatory authorities in other jurisdictions.

The regulatory pathway for ARD-201, which will be a fixed-dose combination of ARD-101 and DPP-4 inhibitor, may differ from the pathway for our other product candidates in development. We have not yet discussed our ARD-201 program with the FDA or comparable foreign regulatory authorities and therefore cannot be certain as to the requirements and processes that may be involved in the development of and seeking regulatory approval for this program, including the potential applicability of the Combination Rule.

FDA Review Process

Following completion of each clinical trial and trial phase, trial data are analyzed to assess safety and efficacy. The results of preclinical studies and clinical trials are then submitted to the FDA as part of an NDA, along with proposed labeling for the product and information about the manufacturing process and facilities that will be used to ensure product quality, results of analytical testing conducted on the chemistry of the product candidate and other relevant information. The NDA is a request for approval to market the drug for one or more specified indications, which is demonstrated by extensive non-clinical and clinical testing. The application may include both negative or ambiguous results of preclinical and clinical trials as well as positive findings. Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a use of a product, or from a number of alternative sources, including studies initiated by investigators, with appropriate rights of reference. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational product for the specified indication(s) to the satisfaction of the FDA. FDA approval of an NDA must be obtained before a drug may be marketed in the United States.

Under the Prescription Drug User Fee Act, as amended (PDUFA), each NDA must be accompanied by a significant user fee, which is adjusted on an annual basis. PDUFA also imposes an annual prescription drug product program fee. Fee waivers, reductions or exemptions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business (with fewer than 500 employees) and for applications seeking approval for orphan drugs.

Once an NDA is submitted, the FDA has 60 days to file the NDA, at which time the FDA begins its review process. Incomplete applications are subject to a Refuse-to-File decision. The FDA’s stated goal is to review NDAs within 10 months of the filing date for standard review or six months of the filing date for priority review. Products are eligible for priority review (a status assigned by the FDA at filing) if the application is for a product intended to treat a serious or life-threatening condition and the product, if approved, would provide a significant improvement in safety or effectiveness compared to any existing licensed products for the same intended use. The FDA has substantial discretion in the approval process and may refuse to file any application or not approve an NDA if the FDA determines that the data are insufficient for approval. The FDA may also require additional preclinical, clinical or other studies before it accepts the filing. Additionally, the review process is often significantly extended by FDA requests for additional information or clarification.

After the NDA is accepted for filing, the FDA reviews the NDA to determine, among other things, whether the proposed product candidate is safe and effective for its intended use, and whether the product candidate is being manufactured in accordance with cGMP requirements. The FDA may refer applications for drug product candidates which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. The FDA conducts its own analysis of the clinical trial data, which could result in extensive discussions between the FDA and us during the review process. The review and evaluation of an NDA by the FDA is extensive and time-consuming and may take longer than originally planned to complete, and we may not receive a timely approval, if at all.

Before approving an NDA, the FDA will generally conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether the facilities comply with cGMPs. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. In addition, before approving an NDA, the FDA may also audit data from clinical trials to ensure compliance with GCP requirements. After the FDA evaluates the application, manufacturing process and manufacturing facilities, it may issue an Approval Letter or a Complete Response Letter. An Approval Letter authorizes commercial marketing of the product with specific prescribing information for specific indications and conditions of use. A Complete Response Letter indicates that the review cycle of the application is complete and the application will not be approved in its present form. A Complete Response Letter describes all deficiencies in the NDA identified by the FDA. Responding to a Complete Response Letter may require additional clinical data and/or an additional pivotal Phase 3 clinical trial(s), and/or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. If a Complete Response Letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, withdraw the application, or engage in a dispute resolution proceeding or request a hearing. Even if additional data and information is submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. Data obtained from clinical trials are not always conclusive, and the FDA may interpret data differently than we interpret the same data.

There is no assurance that the FDA will ultimately approve a product for marketing in the United States, and we may encounter significant difficulties or costs during the review process. If a product receives marketing approval, the approval may be significantly limited to specific populations, severities of the condition being treated, and dosages, or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Furthermore, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling or may condition the approval of the NDA on other changes to the proposed labeling, development of adequate controls and specifications, or a commitment or requirement to conduct post-market testing or clinical trials and surveillance to monitor the effects of approved products. For example, the FDA may require Phase 4 trials designed to further assess the product’s safety and effectiveness and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized, including long-term follow up for certain cellular products. The FDA may also place other conditions on approvals including the requirement for a REMS, to assure the safe use of the product. If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS. The FDA will not approve the NDA without an approved REMS, if required. A REMS could include medication guides, physician communication plans, or elements to assure safe use (ETASU), such as restricted distribution methods, patient registries and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products. Product approvals may be withdrawn for non-compliance with regulatory standards or based on the results of post-market studies or surveillance programs. Additionally, post-approval, many types of changes to the approved product, such as adding new indications, changing manufacturing processes and adding labeling claims, are subject to further testing requirements and FDA review and approval. Such post-approval requirements can be costly and time-consuming and can affect the potential market and profitability of the product.

Orphan Designation and Exclusivity

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making the product available in the United States for this type of disease or condition will be recovered from sales of the product.

Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the identity of the product and its orphan designated use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, or if a subsequently designated product is determined to be clinically superior to the first such product on the basis of greater effectiveness or safety or providing a major contribution to patient care or in instances of drug supply issues, the sponsor will be entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same drug or biologic for the same indication for seven years from the date of such approval, except in limited circumstances, such as a supply shortage. Competitors, however, may receive approval of either a different product for the same indication or the same product for a different indication but that could be used off-label in the orphan indication. Orphan drug exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval before we do for the same product, as defined by the FDA, for the same indication we are seeking approval, or if our product is determined to be contained within the scope of the competitor’s product for the same indication or disease. If we pursue marketing approval for an indication broader than the orphan drug designation we have received, we may not be entitled to orphan drug exclusivity for the broader indication. Orphan drug status in the European Union has similar, but not identical, requirements and benefits.

In Catalyst Pharms., Inc. v. Becerra, 14 F.4th 1299 (11th Cir. 2021), the court disagreed with the FDA’s longstanding position that the orphan drug exclusivity only applies to the approved use or indication within the relevant orphan drug designation. This decision created uncertainty in the application of the orphan drug exclusivity. In January 2023, the FDA published a notice in the Federal Register to clarify that while the FDA complies with the court’s order in Catalyst, the FDA intends to continue to apply its longstanding interpretation of the regulations to matters outside of the scope of the Catalyst order – that is, the agency will continue tying the scope of orphan-drug exclusivity to the uses or indications for which a drug is approved, which permits other sponsors to obtain approval of a drug for new uses or indications within the same orphan designated disease or condition that have not yet been approved. It is unclear how future litigation, legislation, FDA decisions, and administrative actions will impact the scope of the orphan drug exclusivity.

Expedited Development and Review Programs

Fast-Track Designation and Accelerated Approval Pathway

The FDA has a fast track designation program that is intended to expedite or facilitate the process for reviewing new drugs and biological products that meet certain criteria. Specifically, new drugs and biological products are eligible for fast track designation if they are intended to treat a serious or life-threatening condition and nonclinical or clinical data demonstrate the potential to address unmet medical needs for the condition. Fast track designation applies to the combination of the product and the specific indication for which it is being studied. The sponsor of a new drug or biologic may request the FDA to designate the drug or biologic as a fast track product concurrently with, or at any time after, submission of an IND, and the FDA must determine if the product qualifies for fast track designation within 60 days of receipt of the sponsor’s request. Under the fast track designation, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.

Any product submitted to the FDA in a marketing application, including a fast track designated product, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. Any product intended to treat a serious or life-threatening condition is eligible for priority review, or review within a six-month timeframe from the date a complete NDA is accepted for filing, if it has the potential to provide a significant improvement in safety and effectiveness compared to available therapies for the same intended use. The FDA will attempt to direct additional resources to the evaluation of an application for a new drug or biological product designated for priority review in an effort to facilitate the review.

Additionally, a product may be eligible for accelerated approval if it treats a serious or life-threatening condition and generally provides a meaningful advantage over available therapies and demonstrates an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality (IMM), that is reasonably likely to predict an effect on IMM or other clinical benefit. As a condition of approval, the FDA will require that a sponsor of a drug or biological product receiving accelerated approval perform a post-approval confirmatory study and, under the Food and Drug Omnibus Reform Act of 2022 (FDORA), the FDA is now permitted to require, as appropriate, that such trials be underway prior to approval or within a specific time period after the date of approval for a product approved under the accelerated approval pathway. FDA has issued draft guidance that proposes criteria it will evaluate to determine if a trial is underway, including whether enrollment in the trial has been initiated. Since the FDORA amendments, the FDA has increased authority for expedited procedures to withdraw approval of a drug or indication approved under accelerated approval if, for example, the confirmatory trial fails to verify the predicted clinical benefit of the product. In addition, the FDA currently requires as a condition for accelerated approval pre-approval review of promotional materials, which could adversely impact the timing of the commercial launch of the product. Fast track designation, priority review and accelerated approval do not change the standards for approval but may expedite the development or approval process.

Breakthrough Therapy Designation

A product can be designated as a Breakthrough Therapy if it is intended to treat a serious or life-threatening condition and preliminary clinical evidence indicates that it may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. A sponsor may request that a drug product candidate be designated as a Breakthrough Therapy concurrently with, or at any time after, the submission of an IND, and the FDA must determine if the drug product candidate qualifies for Breakthrough Therapy designation within 60 days of receipt of the sponsor’s request. If so designated, the FDA shall act to expedite the development and review of the product’s marketing application, including by meeting with the sponsor throughout the product’s development, providing timely advice to the sponsor to ensure that the development program to gather preclinical and clinical data is as efficient as practicable, involving senior managers and experienced review staff in a cross-disciplinary review, assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient review of the development program and to serve as a scientific liaison between the review team and the sponsor, and taking steps to ensure that the design of the clinical trials is as efficient as practicable. Breakthrough Therapy designation does not change the standards for approval but may expedite the development or approval process.

Pediatric Trials

Under the Pediatric Research Equity Act, a marketing application for a drug or biological product for a new active ingredient, new indication, new dosage form, new dosing regimen, or new route of administration must contain data to assess the safety and efficacy of the product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDCA requires that a sponsor submit an initial Pediatric Study Plan (PSP) within 60 days of an end-of-Phase 2 meeting or as may be agreed between the sponsor and the FDA. The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information. The FDA and the sponsor must reach agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from nonclinical studies, early phase clinical trials and/or other clinical development programs. The FDA may, on its own initiative or at the request of the sponsor, grant deferrals for submission of data or full or partial waivers. Furthermore, with some exceptions, requirements under the Pediatric Research Equity Act generally do not apply to a drug for an indication for which orphan designation has been granted.

Post-Approval Requirements

Following approval of a new product, the manufacturer of the approved product is subject to continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse experiences with the product, providing the regulatory authorities with updated safety and efficacy information, product sampling, distribution, and tracking and tracing requirements and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting products for uses or in patient populations that are not described in the product’s approved labeling (known as off-label use), limitations on industry-sponsored scientific and educational activities and requirements for promotional activities involving the internet. Although physicians may prescribe legally available drugs and biologics for off-label uses, manufacturers may not market or promote such off-label uses.

Modifications or enhancements to the product or its labeling or manufacturing changes are often subject to the approval of the FDA and comparable foreign regulatory authorities, which may result in a lengthy review process and additional fees in certain cases. Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use.

In the United States, once a product is approved, its manufacturer is subject to comprehensive and continuing regulation by the FDA. The FDA regulations require that products be manufactured in specific approved facilities and in accordance with cGMPs. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in accordance with cGMP regulations. cGMP regulations require, among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Manufacturers and other entities involved in the manufacture and distribution of approved products are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. Manufacturers are also subject to record requests from the FDA that demonstrate cGMP compliance through data and other information. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance and oversight. These regulations also impose certain organizational, procedural and documentation requirements with respect to manufacturing and quality assurance activities. NDA holders using contract manufacturers, laboratories, or packagers are responsible for the selection and monitoring of qualified firms, and, in certain circumstances, qualified suppliers to these firms. These firms and, where applicable, their suppliers are subject to inspections by the FDA at any time, and the discovery of violative conditions, including failure to conform to cGMP, could result in enforcement actions that interrupt the operation of any such facilities or the ability to distribute products manufactured, processed or tested by them. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer or holder of an approved NDA, including, among other things, recall or withdrawal of the product from the market.

The FDA also may require post-approval testing, sometimes referred to as Phase 4 testing, REMS and post-marketing surveillance to monitor the effects of an approved product or place conditions on an approval that could restrict the distribution or use of the approved product. Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, untitled or warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development.

Other Regulatory Matters

Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in addition to the FDA, including, in the United States, the CMS, other Agencies of the Department of Health and Human Services (HHS) (e.g., the Office of Inspector General and Office for Civil Rights), the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments. In the United States, sales, marketing and scientific/educational programs must also comply with federal and state fraud and abuse laws, data privacy and security laws, transparency laws and pricing and reimbursement requirements in connection with governmental payor programs, among others. The handling of any controlled substances must comply with the U.S. Controlled Substances Act and Controlled Substances Import and Export Act. Products must meet applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging Act. Manufacturing, sales, promotion and other activities are also potentially subject to federal and state consumer protection and unfair competition laws.

The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.

The failure to comply with regulatory requirements subjects firms to possible legal or regulatory action. Depending on the circumstances, failure to meet applicable regulatory requirements can result in criminal prosecution, fines or other penalties, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of product approvals or refusal to allow a firm to enter into supply contracts, including government contracts. In addition, even if a firm complies with FDA and other requirements, new information regarding the safety or efficacy of a product could lead the FDA to modify or withdraw product approval. Prohibitions or restrictions on sales or withdrawal of future products marketed by us could materially affect our business in an adverse way.

Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example: (i) changes to our manufacturing arrangements; (ii) additions or modifications to product labeling; (iii) the recall or discontinuation of our products; or (iv) additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of our business.

505(b)(2) NDAs

The FDA is authorized to approve an alternative type of NDA under Section 505(b)(2) of the FDCA. Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference from the data owner. The applicant may rely upon the FDA’s findings of safety and efficacy for an approved product that acts as the “listed drug.” The FDA may also require 505(b)(2) applicants to perform additional studies or measurements to support the change from the listed drug. The FDA may then approve the new product for all, or some, of the conditions of use for which the branded reference drug has been approved, or for a new condition of use sought by the 505(b)(2) applicant.

Abbreviated New Drug Applications

The Hatch-Waxman amendments to the FDCA established a statutory procedure for submission and FDA review and approval of abbreviated new drug applications (ANDA) for generic versions of listed drugs. An ANDA is a comprehensive submission that contains, among other things, data and information pertaining to the active pharmaceutical ingredient, drug product formulation, specifications and stability of the generic drug, as well as analytical methods, manufacturing process validation data, and quality control procedures. Premarket applications for generic drugs are termed abbreviated because they generally do not include clinical data to demonstrate safety and effectiveness. However, a generic manufacturer is typically required to conduct bioequivalence studies of its test product against the listed drug. Bioequivalence is established when there is an absence of a significant difference in the rate and extent for absorption of the generic product and the reference listed drug. For some drugs, other means of demonstrating bioequivalence may be required by the FDA, especially where the rate or extent of absorption is difficult or impossible to measure. The FDA will approve an ANDA application if it finds that the generic product does not raise new questions of safety and effectiveness as compared to the reference listed drug. A product is not eligible for ANDA approval if the FDA determines that it is not bioequivalent to the reference listed drug if it is intended for a different use or if it is not subject to, and requires an approved suitability petition.

Hatch-Waxman Patent Certification and the 30-Month Stay

In seeking approval of an NDA or a supplement thereto, NDA sponsors are required to list with the FDA each patent with claims that cover the applicant’s product or an approved method of using the product. Upon approval, each of the patents listed by the NDA sponsor is published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Upon submission of an ANDA or 505(b)(2) NDA, an applicant is required to certify to the FDA concerning any patents listed for the RLD in the Orange Book that:

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no patent information on the drug product that is the subject of the application has been submitted to the FDA;

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such patent has expired;

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the date on which such patent expires; or

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such patent is invalid, unenforceable or will not be infringed upon by the manufacture, use, or sale of the drug product for which the application is submitted.

Generally, the ANDA or 505(b)(2) NDA cannot be approved until all listed patents have expired, except where the ANDA or 505(b)(2) NDA applicant challenges a listed patent through the last type of certification, also known as a paragraph IV certification. If the applicant does not challenge the listed patents or indicates that it is not seeking approval of a patented method of use, the ANDA or 505(b)(2) NDA application will not be approved until all of the listed patents claiming the referenced product have expired. If the ANDA or 505(b)(2) NDA applicant has provided a paragraph IV certification the applicant must send notice of the paragraph IV certification to the NDA and patent holders once the application has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the paragraph IV certification. If the paragraph IV certification is challenged by an NDA holder or the patent owner(s) asserts a patent challenge to the paragraph IV certification, the FDA may not approve that application until the earlier of 30 months from the receipt of the notice of the paragraph IV certification, the expiration of the patent, when the infringement case concerning each such patent was favorably decided in the applicant’s favor or settled, or such shorter or longer period as may be ordered by a court. This prohibition is generally referred to as the 30-month stay. In instances where an ANDA or 505(b)(2) NDA applicant files a paragraph IV certification, the NDA holder or patent owner(s) regularly take action to trigger the 30-month stay, recognizing that the related patent litigation may take many months or years to resolve. Thus, approval of an ANDA or 505(b)(2) NDA could be delayed for a significant period of time depending on the patent certification the applicant makes and the reference drug sponsor’s decision to initiate patent litigation. If the drug has new chemical entity (NCE) exclusivity and the ANDA is submitted four years after approval, the 30-month stay is extended so that it expires seven and a half years after approval of the innovator drug, unless the patent expires or there is a decision in the infringement case that is favorable to the ANDA applicant before then.

U.S. Patent Term Restoration and Marketing Exclusivity

Depending upon the timing, duration and specifics of the FDA approval of our drug product candidates, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of an NDA plus the time between the submission date of an NDA and the approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence. Only one patent applicable to an approved drug is eligible for the extension and, among other requirements, the application for the extension must be submitted prior to the expiration of the patent. The USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, we may apply for restoration of patent term for our currently owned or licensed patents to add patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant NDA.

The Hatch-Waxman Amendments provide a period of five years of non-patent marketing exclusivity for the first approved drug containing an NCE as an active ingredient. An NCE is an active moiety that has not been approved by the FDA in any other NDA. An “active moiety” is defined as the molecule or ion responsible for the drug substance’s physiological or pharmacologic action. During the five-year exclusivity period, the FDA cannot accept for filing any ANDA or 505(b)(2) NDA seeking approval of a product that contains the same active moiety, except that the FDA may accept such an application for filing after four years if the application includes a paragraph IV certification to a listed patent. In the case of such applications accepted for filing between four and five years after approval of the reference drug, the 30-month stay of approval triggered by a timely patent infringement lawsuit is extended by the amount of time necessary to extend the stay until 7-1/2 years after the approval of the reference drug NDA. If approved in the United States, as ARD-101 has not been previously approved in the United States for any indication, ARD-101 may be eligible for

five years of NCE, which would run concurrently with its seven years of orphan drug exclusivity. Although ARD-101’s active moiety has been available as a bittering agent, it has not ever previously been approved by the FDA in an NDA.

Pediatric exclusivity is another type of regulatory market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the end of the other exclusivity protection or patent term, may be granted based on the voluntary completion and submission of data from of a pediatric trial conducted in accordance with an FDA-issued “Written Request” for such a trial.

Pricing and Reimbursement

United States

Sales of our products will depend, in part, on the extent to which our products, if approved, will be covered and reimbursed by third-party payors, such as government health programs, commercial insurance and managed healthcare organizations. These third-party payors are increasingly reducing reimbursements for medical products and services. The process for determining whether a third-party payor will provide coverage for a drug product typically is separate from the process for setting the price of a drug product or for establishing the reimbursement rate that a payor will pay for the drug product once coverage is approved. Third-party payors may limit coverage to specific drug products on an approved list, also known as a formulary, which might not include all of the approved drugs for a particular indication.

In order to secure coverage and reimbursement for any drug product candidate that might be approved for sale, we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the drug product candidate, in addition to the costs required to obtain FDA or other comparable regulatory approvals. Whether or not we conduct such studies, our drug product candidates may not be considered medically necessary or cost-effective. A third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Third party reimbursement may not be sufficient to enable us to maintain price levels high enough to realize an appropriate return on our investment in product development. In the United States, the principal decisions about reimbursement for new drug products are typically made by CMS, an agency within HHS. CMS decides whether and to what extent a new drug product will be covered and reimbursed under Medicare, and private payors tend to follow CMS to a substantial degree. However, no uniform policy of coverage and reimbursement for drug products exists among third-party payors and coverage and reimbursement levels for drug products can differ significantly from payor to payor. Additionally, one third-party payor’s decision to cover a particular product or service does not ensure that other payors will also provide coverage for the product or service, and the level of coverage and reimbursement can differ significantly from payor to payor. As a result, the coverage determination process will often require us to provide scientific and clinical support for the use of our products to each payor separately and can be a time-consuming process, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

The containment of healthcare costs has become a priority of federal and state governments, and the prices of drugs, including biologics, have been a focus in this effort. The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. In many countries, the prices of drug products are subject to varying price control mechanisms as part of national health systems. In general, the prices of drug products under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for drug products, but monitor and control company profits. Accordingly, in markets outside the United States, the reimbursement for drug products may be reduced compared with the United States. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. The IRA, for example, includes provisions that impose new manufacturer financial liability on certain drugs under Medicare Part D, allowing the U.S. government to negotiate Medicare Part B and Part D price caps for certain high-cost drugs and biologics without generic or biosimilar competition. Orphan drugs are exempted from the Medicare drug price negotiation program, but as described in CMS guidance, this exemption will apply only to products that have no more than one rare disease designation and for which the only approved indication is for that disease or condition. Decreases in third-party reimbursement for our drug product candidate or a decision by a third-party payor to not cover our drug product candidate could reduce physician usage of the drug product candidate and have a material adverse effect on our sales, results of operations and financial condition.

Outside of the United States, the pricing of pharmaceutical products is subject to governmental control in many countries. For example, in the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that products may be marketed only after a reimbursement price has been approved. Some countries may require the completion of additional studies that compare the cost effectiveness of a particular therapy to currently available therapies or so-called health technology assessments, in order to obtain reimbursement or pricing approval. Other countries may allow companies to fix their own prices for products, but monitor and control product volumes and issue guidance to physicians to limit prescriptions. Efforts to control

prices and utilization of pharmaceutical products will likely continue as countries attempt to manage healthcare expenditures. Historically, products launched in the European Union do not follow price structures of the United States and generally prices tend to be significantly lower.

Other Healthcare Laws and Compliance Requirements

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any products for which we obtain marketing approval. Our business operations in the United States and our current and future arrangements with clinical investigators, healthcare providers, consultants, third-party payors and patients may expose us to broadly applicable federal and state fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute any drugs for which we obtain marketing approval. In the United States, these laws include: the federal Anti-Kickback Statute, the False Claims Act, and the HIPAA.

AARD US Equity

AARD · 10-K · period ended 2024-12-31

Item 1. Business.

AARD US Equity☆

AARD · 10-K · period ended 2024-12-31

Item 1. Business.

AARD US Equity