ACHN 2017 Annual Report

we or any future collaborators, are able to obtain approval for ours, which could result in our competitors establishing a strong market position before we, or any future collaborators, are able to enter the market. Many of our existing and potential future competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining marketing approvals and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology 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. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Intellectual Property Our strategy is to pursue patents, developed internally and licensed from third parties, and other means to protect our technology, inventions and improvements that are commercially important to the development of our business. We also rely on trade secrets that may be important to the development of our business. Our success will depend significantly on our ability to: • obtain and maintain patent and other proprietary protection for the technology, inventions, improvements and know-how we consider important to our business; • defend and enforce our patents; • preserve the confidentiality of our trade secrets; and • operate without infringing the valid and enforceable patents and proprietary rights of third parties. We hold issued patents and pending patent applications in the United States, and in foreign countries we deem appropriate, covering intellectual property developed as part of our research and development programs. As of December 31, 2017, our complement inhibitor patent portfolio included a large number of pending U.S. applications, international applications filed under the Patent Cooperation Treaty, referred to as the PCT, and applications that have been entered into the national phase of prosecution in foreign countries. These patents and patent applications, if issued, will expire in 2035 or 2036, without regard to possible patent term extensions to account for regulatory delay to market our drugs, or any patent term adjustment. These applications include claims directed to composition of matter, pharmaceutical composition and their methods of use to treat complement factor D related disorders, including C3G, PNH, and macular age-related degeneration. Our complement inhibitor patent portfolio includes several families of published patents and patent applications. Our first family of complement inhibitor patent filings, which consists of eight subfamilies, is based on a priority provisional application filed in February 2014. Our second family of complement inhibitor patent filings, which consists of nine subfamilies, is based on priority provisional applications filed in August 2015. Our third family of complement inhibitor patent filings, which also consists of nine subfamilies, is also based on priority provisional applications filed in August 2015. Our first family of complement inhibitor patent applications includes nine issued U.S. patents. We have received an issued U.S. patent covering the composition of matter on our lead drug candidate, ACH-4471, and its medical use (U.S. Patent No. 9,796,741). We have also received eight additional U.S. patents covering other Factor D inhibitors (U.S. Patent Nos. 9,758,537, 9,598,446, 9,663,543, 9,732,104, 9,695,205, 9,828,396, 9,732,103, and 9,643,986). All eight of the subfamilies of patent applications are currently pending in at least the United States. 9