ACHN 2017 Annual Report

Several of the subfamilies of the first family of complement inhibitor patent applications were entered into the international phase with PCT applications in February 2015 and then entered into the national phase of prosecution in the United States and in foreign countries in August 2016. Two of the subfamilies are currently pending in a number of foreign jurisdictions including the major market countries (China, Australia, Canada, Japan and South Korea) and three regional patent offices (European Patent Office (EPO), African Regional Patent Office (ARIPO), and Eurasian Patent Office (EAPO)). Our second family of patent applications was entered into the international phase with PCT applications in August 2016. United States patent applications are pending in five of the subfamilies, and two additional subfamilies will enter the United States in February 2018. One of the subfamilies will be filed in foreign jurisdictions in February 2018. This subfamily covers several of our most advanced complement D inhibitors, including ACH-5228. Our third family of complement inhibitor patent filings was entered into the international phase with PCT applications in August 2016. In February 2018, we expect to file some of these applications in the United States, and in Europe. In September 2017, the Janssen HCV collaboration was terminated and the intellectual property rights we had exclusively licensed to Janssen under the Janssen Agreement were returned to us. As a result of the Janssen collaboration, we also have several U.S. and PCT applications that we own jointly with Janssen. We currently have no plans to advance the HCV program on our own. We are in the process of evaluating our HCV intellectual property portfolio and may discontinue most of the patents and patent applications that comprise that portfolio. We rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. In order to protect our proprietary technology and processes, we also rely in part on confidentiality and intellectual property assignment agreements with our corporate partners, employees, consultants, outside scientific collaborators and sponsored researchers, and other advisors. Manufacturing and Supply We currently rely on contract manufacturers to produce drug substances and drug products required for our clinical trials under current good manufacturing practices (cGMP), with oversight by our internal managers. We plan to continue to rely upon contract manufacturers and collaboration partners to manufacture commercial quantities of our drug candidates if and when approved for marketing by the FDA. We currently rely on a limited number of manufacturers for the preclinical or clinical supplies of each of our drug candidates we are developing and do not currently have relationships for redundant supply or a second source for any of these drug candidates. We believe that there are alternate sources of supply that can satisfy our clinical trial requirements without significant delay or material additional costs. Sales and Marketing We intend to establish our own sales and marketing capabilities if and when we obtain regulatory approval of our drug candidates. In North America and Western Europe, patients in the markets for our drug candidates are largely managed by medical specialists in the areas of immunology, nephrology, and hematology. Historically, companies have experienced substantial commercial success through the deployment of specialized sales forces which can address a majority of key prescribers. Therefore, we expect to utilize a specialized sales force in North America for the sales and marketing of drug candidates that we may successfully develop. We currently have no marketing, sales or distribution capabilities. In order to participate in the commercialization of any of our drugs, we must develop these capabilities on our own or in collaboration with third parties. We may also choose to hire a third party to provide sales personnel instead of developing our own staff. 10