Acquisition and Development - The company acquired Quellis Biosciences, Inc. in January 2021, resulting in gross proceeds of approximately $110.0 million from a private placement in February 2021[26]. - The company is currently focused on the development of STAR-0215 as a potential treatment for HAE, which is in preclinical development[165]. - The company has completed cell line development for STAR-0215 and is in the process of manufacturing sufficient material for nonclinical and clinical needs[53]. - The company relies on third-party manufacturers for the production of STAR-0215 and has no plans to build its own manufacturing facilities[52]. - The company has identified a cell line for STAR-0215 that can generate sufficient material for preclinical and clinical studies, with plans for Good Manufacturing Practices manufacturing[19]. STAR-0215 Clinical Trials - STAR-0215 is designed to be a best-in-class monoclonal antibody for treating Hereditary Angioedema (HAE), with a projected dosing frequency of once every three months or longer[27]. - The company plans to submit an Investigational New Drug application for STAR-0215 in mid-2022 and initiate a Phase 1a clinical trial shortly thereafter, with initial results anticipated by year-end 2022[27]. - The Phase 1a trial aims to establish safety, tolerability, and prolonged half-life of STAR-0215, with a focus on inhibiting plasma kallikrein activity[40]. - If positive data is obtained from the Phase 1a trial, the company plans to initiate a Phase 1b/2 trial in patients with HAE in 2023[39]. - The Phase 1b/2 trial in patients with HAE is expected to be a randomized, placebo-controlled, global multi-center trial, aiming to demonstrate safety, tolerability, and inhibition of plasma kallikrein activity[27]. Market Potential and Competition - The global market for HAE therapy is strong and growing, with an estimated prevalence of Type I and Type II HAE ranging from 1 in 10,000 to 1 in 50,000, translating to fewer than 8,000 patients in the U.S. and 15,000 in Europe[32]. - STAR-0215 will compete directly with TAKHZYRO, a monoclonal antibody approved for HAE, which is administered every two weeks[45]. - The company anticipates that positive data from clinical trials could establish STAR-0215 as a differentiated treatment option in the HAE market[19]. - The approved preventative therapies for HAE have limitations in dosing frequency and side effects, indicating a significant unmet medical need for more effective treatments[36]. Regulatory and Compliance - The FDA requires completion of preclinical laboratory tests in compliance with GLP regulations before a sponsor can initiate clinical trials[58]. - An IND must be submitted to the FDA, which includes a protocol for each clinical trial and results of preclinical tests, before human trials can begin[60]. - The FDA imposes a 30-day waiting period after filing an IND to review the application and ensure safety for human subjects[60]. - Clinical trials are divided into four phases, with Phase 1 focusing on safety and dosage, Phase 2 on effectiveness, Phase 3 on further evaluation in larger populations, and Phase 4 on post-approval studies[72][73]. - The FDA mandates that clinical trial information be registered on clinicaltrials.gov, with non-compliance potentially resulting in civil penalties of up to $10,000 per day[75]. Financial and Operational Risks - The company has limited financial and managerial resources, focusing on STAR-0215 as a potential treatment for HAE, a rare disease with unmet medical needs[174]. - The company acknowledges that the development timeline for STAR-0215 could take years, with significant uncertainty regarding its safety and efficacy[168]. - Delays in patient enrollment for clinical trials could hinder the receipt of necessary regulatory approvals, impacting the timeline for product candidates like STAR-0215[187]. - The company faces challenges in enrolling sufficient patients for clinical trials due to factors such as the rarity of diseases, competition for patients, and existing treatment options[190]. - The COVID-19 pandemic has caused significant disruptions, potentially delaying clinical trials and increasing costs, while also impacting the financial markets and the company's ability to raise capital[195]. Marketing and Commercialization - The company currently lacks a formal sales and marketing infrastructure, which is essential for the successful commercialization of approved products[209]. - The company plans to retain full commercialization rights for products that can be marketed with a specialized sales force and seek co-promotion rights when feasible[210]. - Establishing sales, marketing, and distribution capabilities will require substantial resources and may delay product launches, potentially leading to significant costs[211]. - Failure to establish sales and marketing capabilities could adversely affect the commercialization of approved product candidates[213]. - The potential market opportunities for product candidates are difficult to estimate, and inaccuracies in assumptions could lead to smaller actual markets than projected[208].

Financial Data and Key Metrics Changes - As of September 30, 2021, the company had cash and cash equivalents of $131.8 million, expected to fund operations through 2023 [27] - R&D expenses decreased to $3.8 million in Q3 2021 from $7.8 million in Q3 2020, while G&A expenses increased to $4.1 million from $3.1 million in the same period [27] - The operating loss was $7.9 million in Q3 2021, compared to $10.9 million in Q3 2020, with a net loss of $7.9 million or $0.61 per share [27] Business Line Data and Key Metrics Changes - The lead program, STAR-0215, is a monoclonal antibody aimed at treating hereditary angioedema (HAE), with initial clinical trial results expected by the end of 2022 [8][9] - STAR-0215 is designed to be a patient-friendly preventative therapy, with a potential for infrequent dosing due to its extended half-life [14][23] Market Data and Key Metrics Changes - The global market for HAE treatments is projected to grow from $2 billion in 2020 to over $4.5 billion by 2026, indicating a significant opportunity for STAR-0215 [11] - Approximately 8,000 people are affected by HAE in the United States, with a substantial unmet need for effective preventative treatments [11] Company Strategy and Development Direction - The company aims to develop therapeutics that address unmet needs in rare and niche allergic and immunological diseases, with a focus on patient-friendly treatment options [28] - The strategy includes evaluating opportunities to expand the pipeline while maintaining a focus on the HAE community's needs [28] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of reducing both disease and treatment burden for HAE patients, aiming for a product that offers robust efficacy with infrequent dosing [34] - The company is on track to file an IND for STAR-0215 in mid-2022 and initiate clinical trials shortly thereafter, with a focus on establishing a differentiated profile [21][42] Other Important Information - STAR-0215 has shown a tenfold improvement in potency over existing treatments in preclinical studies, with a potential for a longer duration of action due to YTE modifications [15][17] - The company is working with a CDMO to ensure efficient development and commercialization of STAR-0215 [21] Q&A Session Summary Question: Could biomarkers from the Phase 1 study serve as markers for accelerated approval? - Management confirmed that pharmacodynamic markers will be incorporated into the Phase 1 study to chart the path for future phases and regulatory strategy [32][33] Question: What is the balance between decreasing attacks and increasing time between dosing? - Management noted that patients want to decrease disease burden while also reducing treatment burden, emphasizing the importance of both factors in their product development [34][36] Question: When will full data from Phase 1 be available? - Initial results from the Phase 1 study are expected by the end of 2022, with a long follow-up period to assess safety and pharmacokinetics [41][42] Question: What attributes of STAR-0215 might help avoid concerns about prophylactic therapy efficacy? - Management highlighted the goal of maintaining a high level of plasma kallikrein inhibition for longer durations to alleviate patient anxiety about potential attacks [52][54] Question: How does the company view the competitive landscape for prophylactic treatments? - Management acknowledged the evolving landscape with various modalities and emphasized STAR-0215's differentiated profile as a trusted monoclonal antibody with potential for infrequent dosing [56] Question: What are the company's plans for pipeline expansion? - The company is open to evaluating opportunities in related areas of allergy and immunology, aiming to optimize its organizational structure while making a significant difference for patients [59]

PART I. FINANCIAL INFORMATION [Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Presents Astria Therapeutics' unaudited condensed consolidated financial statements, showing asset and equity growth from financing and a net loss from a one-time IPR&D charge [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20September%2030%2C%202021%20and%20December%2031%2C%202020) Total assets and stockholders' equity significantly increased to **$135.1 million** and **$130.4 million** respectively, driven by cash and financing activities Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $131,777 | $24,930 | | Total current assets | $134,522 | $46,325 | | Total assets | $135,129 | $47,456 | | **Liabilities & Equity** | | | | Total liabilities | $4,700 | $6,787 | | Total stockholders' equity | $130,429 | $40,669 | | Total liabilities and stockholders' equity | $135,129 | $47,456 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202021%20and%202020) The company reported a **$185.4 million** net loss for the nine months ended September 30, 2021, primarily due to a **$164.6 million** acquired IPR&D charge Statement of Operations Highlights (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $3,788 | $7,806 | $9,859 | $19,845 | | General and administrative | $4,110 | $3,057 | $10,992 | $8,612 | | Acquired in-process R&D | $0 | $0 | $164,617 | $0 | | Loss from operations | $(7,898) | $(10,863) | $(185,468) | $(28,457) | | Net loss | $(7,871) | $(10,862) | $(185,421) | $(28,322) | | Net loss per share | $(0.61) | $(3.36) | $(27.81) | $(9.56) | [Condensed Consolidated Statements of Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202021%20and%202020) Comprehensive loss for the three and nine months ended September 30, 2021, mirrored net loss due to immaterial other comprehensive loss items Comprehensive Loss (in thousands) | Period | Net Loss | Comprehensive Loss | | :--- | :--- | :--- | | Three Months Ended Sep 30, 2021 | $(7,871) | $(7,871) | | Nine Months Ended Sep 30, 2021 | $(185,421) | $(185,421) | | Three Months Ended Sep 30, 2020 | $(10,862) | $(10,863) | | Nine Months Ended Sep 30, 2020 | $(28,322) | $(28,322) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Redeemable%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202021%20and%202020) Stockholders' equity significantly changed due to Series X Preferred Stock issuance, conversion to common stock, and a non-cash dividend, increasing additional paid-in capital - In the nine months ended Sep 30, 2021, the company issued Series X Preferred Stock valued at **$240.9 million** through the Quellis acquisition and a private placement[17](index=17&type=chunk) - During the same period, **54,622 shares** of Series X Preferred Stock were converted into **9,103,664 shares** of common stock, transferring **$168.9 million** from preferred stock value to additional paid-in capital[17](index=17&type=chunk)[27](index=27&type=chunk) - A non-cash dividend of **$24.4 million** was recorded related to a beneficial conversion feature and issuance costs on the convertible preferred stock[17](index=17&type=chunk)[42](index=42&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20nine%20months%20ended%20September%2030%2C%202021%20and%202020) Net cash increased by **$106.8 million** for the nine months ended September 30, 2021, driven by **$104.3 million** from financing activities Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(23,865) | $(24,424) | | Net cash provided by investing activities | $26,445 | $26,310 | | Net cash provided by financing activities | $104,267 | $40,829 | | **Net increase in cash** | **$106,847** | **$42,715** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the Quellis Biosciences acquisition, a **$164.6 million** IPR&D charge, **$110 million** private placement, and a 1-for-6 reverse stock split - On January 28, 2021, the company acquired Quellis Biosciences, whose lead product candidate is STAR-0215 for the treatment of hereditary angioedema (HAE)[22](index=22&type=chunk) - The Quellis acquisition was accounted for as an asset acquisition, resulting in a one-time charge of **$164.6 million** for acquired in-process research and development (IPR&D) with no alternative future use[45](index=45&type=chunk)[46](index=46&type=chunk)[49](index=49&type=chunk) - Concurrent with the acquisition, the company raised gross proceeds of approximately **$110.0 million** in the February 2021 Financing through the sale of Series X Preferred Stock[25](index=25&type=chunk) - A 1-for-6 reverse stock split of common stock was effected on August 19, 2021. All share and per-share amounts have been retrospectively adjusted[23](index=23&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic pivot to STAR-0215 development, a **50%** R&D expense decrease, a **$164.6 million** IPR&D charge, and sufficient cash to fund operations through 2023 - The company's primary focus is now on STAR-0215, a monoclonal antibody inhibitor for treating hereditary angioedema (HAE), acquired through the Quellis acquisition in January 2021[67](index=67&type=chunk) - Key development milestones include submitting an IND for STAR-0215 in mid-2022, initiating a Phase 1 trial with initial results expected by the end of 2022, and a planned Phase 1b/2 trial in HAE patients in 2023[67](index=67&type=chunk) R&D Expense Breakdown (Nine Months Ended Sep 30, in thousands) | Program | 2021 | 2020 | | :--- | :--- | :--- | | STAR-0215 | $4,422 | $0 | | Edasalonexent | $660 | $13,765 | | Other research programs | $765 | $0 | | Unallocated Costs | $4,012 | $6,080 | | **Total R&D Expenses** | **$9,859** | **$19,845** | - The company recorded a **$164.6 million** expense for Acquired In-process Research and Development (IPR&D) in January 2021 related to the Quellis Acquisition[77](index=77&type=chunk)[91](index=91&type=chunk) - As of September 30, 2021, the company had **$131.8 million** in cash and cash equivalents, which is expected to be sufficient to support operating expenses through 2023[92](index=92&type=chunk)[102](index=102&type=chunk) [Qualitative and Quantitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Qualitative%20and%20Quantitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate sensitivity on its cash and cash equivalents, with a **10%** rate change deemed immaterial due to portfolio nature - The company's main market risk is interest rate sensitivity on its **$131.8 million** in cash and cash equivalents[108](index=108&type=chunk) - Due to the short-term and low-risk nature of the investment portfolio, management concludes that an immediate **10%** change in interest rates would not have a material effect on its financial position[108](index=108&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting - Management concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective at the reasonable assurance level[109](index=109&type=chunk) - There were no material changes in internal control over financial reporting during the nine months ended September 30, 2021[110](index=110&type=chunk) PART II. OTHER INFORMATION [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the Annual Report on Form 10-K for a comprehensive discussion of material risk factors - The report refers to the Risk Factors section of the Annual Report on Form 10-K for the fiscal year ended December 31, 2020, for a discussion of material risks[112](index=112&type=chunk) [Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate amendments and officer certifications - Exhibits filed include amendments to the Certificate of Incorporation and By-laws, and officer certifications pursuant to the Sarbanes-Oxley Act[113](index=113&type=chunk)

Acquisition and Product Development - The company acquired Quellis Biosciences in January 2021, resulting in gross proceeds of approximately $110.0 million from a private placement [81]. - QLS-215, the lead product candidate, is a monoclonal antibody in preclinical development for hereditary angioedema (HAE) with a projected IND submission in the first half of 2022 [82]. - Preclinical studies indicate that QLS-215 is approximately 10-fold more potent than lanadelumab in inhibiting bradykinin production, suggesting a superior efficacy profile [83]. - The pharmacokinetics of QLS-215 show a half-life of approximately 34 days, compared to lanadelumab's 10 days, potentially allowing for less frequent dosing [85]. - The company has stopped all activities related to the development of edasalonexent and substantially all activities related to the CAT-5571 program [97]. - The company anticipates significant research and development expenses in future periods related to the development of QLS-215 [98]. Financial Performance and Expenses - Total research and development expenses for the three months ended March 31, 2021, were $2.593 million, a decrease from $5.289 million for the same period in 2020 [96]. - Research and development expenses decreased by 51% to $2.6 million for the three months ended March 31, 2021, down from $5.3 million for the same period in 2020 [109]. - General and administrative expenses increased by 5% to $2.9 million for the three months ended March 31, 2021, compared to $2.8 million for the same period in 2020 [110]. - Acquired in-process research and development (IPR&D) expense was $164.6 million during the three months ended March 31, 2021, resulting from the Quellis Acquisition [111]. - Net cash used in operating activities was $8.7 million for the three months ended March 31, 2021, primarily due to a net loss of $170.1 million [118]. - The accumulated deficit as of March 31, 2021, was $431.0 million, reflecting ongoing operating losses since inception [123]. Cash Position and Funding Needs - As of March 31, 2021, the company had cash and cash equivalents of $146.9 million, expected to support operations through 2023 [90]. - The company anticipates needing substantial additional funding for future clinical trials and pipeline expansion [91]. - The company anticipates financing its cash needs through equity offerings, debt financings, collaborations, and licensing arrangements, with no committed external source of funds currently available [128]. - There is substantial doubt about the company's ability to continue as a going concern within one year from the filing of the Quarterly Report due to potential redemption payments [126]. - The company may need to delay or terminate product development if unable to raise additional funds through equity or debt financings [129]. Stockholder and Regulatory Matters - The Series X Preferred Stock issued in connection with the Quellis acquisition is convertible into common stock, pending stockholder approval [88]. - The company issued Series X Preferred Stock to Quellis stockholders as part of the Quellis Acquisition, which may require stockholder approval for conversion into common stock [125]. Risk Factors and Management - The company faces substantial doubt about its ability to continue as a going concern if it fails to raise necessary capital [92]. - The company has not experienced any material changes to its risk factors since the last annual report [139]. - Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective at the reasonable assurance level as of March 31, 2021 [135]. - The company’s primary exposure to market risk is interest rate sensitivity, with an immediate 10% change in interest rates not expected to materially affect the fair market value of its investment portfolio [133]. - The company has no material liabilities denominated in foreign currencies as of March 31, 2021 [134]. - The company has no off-balance sheet arrangements as defined under applicable SEC rules [130].

Part I [Business](index=7&type=section&id=Item%201.%20Business) Catabasis is a biopharmaceutical company that has shifted its focus to rare diseases, with its lead product candidate, QLS-215, for the treatment of hereditary angioedema (HAE) - The company's primary focus is now on QLS-215, a monoclonal antibody inhibitor of plasma kallikrein for treating hereditary angioedema (HAE), acquired through the Quellis Biosciences merger in January 2021[11](index=11&type=chunk)[234](index=234&type=chunk) - This strategic shift occurred after the company stopped the development of its edasalonexent program for Duchenne Muscular Dystrophy (DMD) in October 2020, following the failure of its Phase 3 PolarisDMD trial to meet primary and secondary endpoints[11](index=11&type=chunk)[234](index=234&type=chunk) - The company plans to submit an Investigational New Drug (IND) application for QLS-215 in the first half of 2022 and initiate a Phase 1a clinical trial, with initial results expected by the end of 2022[11](index=11&type=chunk)[23](index=23&type=chunk) [Overview and Strategy](index=7&type=section&id=Item%201.%20Business%23Overview) Catabasis is a biopharmaceutical company now focused on rare diseases, with QLS-215 for HAE as its lead candidate, acquired via the Quellis Biosciences merger in January 2021 - Acquired Quellis Biosciences, Inc. in January 2021, making QLS-215 for HAE its lead product candidate[11](index=11&type=chunk)[12](index=12&type=chunk) - Announced a private placement in February 2021, resulting in gross proceeds of approximately **$110.0 million**[11](index=11&type=chunk)[12](index=12&type=chunk) - Ceased development of edasalonexent for DMD after the Phase 3 PolarisDMD trial failed to meet its primary endpoint in October 2020[11](index=11&type=chunk) [Product Candidate: QLS-215](index=8&type=section&id=Item%201.%20Business%23Our%20Product%20Candidate) QLS-215 is a humanized monoclonal antibody designed to inhibit plasma kallikrein for HAE, showing higher potency and longer half-life than existing therapies - QLS-215 is a humanized monoclonal antibody targeting plasma kallikrein, a critical enzyme in HAE pathology[13](index=13&type=chunk)[16](index=16&type=chunk) - In a functional assay, QLS-215 showed approximately **10-fold higher potency** (IC90 of **~30 nM**) compared to lanadelumab (IC90 of **~300 nM**)[19](index=19&type=chunk)[20](index=20&type=chunk) - Pharmacokinetic studies in cynomolgus monkeys showed QLS-215 has a half-life of approximately **34 days**, about **3 to 4 times longer** than lanadelumab's **~10-day half-life**[20](index=20&type=chunk)[22](index=22&type=chunk) - The company plans to submit an IND in the first half of 2022, initiate a Phase 1a trial with results by end of 2022, and a Phase 1b/2 trial in HAE patients in 2023 with results by end of 2023[23](index=23&type=chunk) [Competition](index=12&type=section&id=Item%201.%20Business%23Competition) The HAE market is highly competitive with multiple approved therapies and a robust pipeline of investigational treatments from established companies - The HAE market has multiple approved therapies for both on-demand and prophylactic treatment, manufactured by CSL Behring, Takeda, Pharming, and BioCryst[25](index=25&type=chunk) - QLS-215 is expected to compete most directly with Takeda's TAKHZYRO, an approved monoclonal antibody inhibitor of plasma kallikrein[25](index=25&type=chunk) - Numerous other companies have HAE treatments in development, including CSL Behring (Phase 3), KalVista Pharmaceuticals (Phase 2), Ionis Pharmaceuticals (Phase 2), and others with preclinical gene therapy approaches[25](index=25&type=chunk) [Intellectual Property](index=13&type=section&id=Item%201.%20Business%23Intellectual%20Property) The company's intellectual property strategy for QLS-215 relies on patent protection and trade secrets, with a provisional patent application potentially expiring in 2042 - The company owns one U.S. provisional patent application for QLS-215 and its use in treating disorders like HAE. A granted patent from this application would expire in **2042**[26](index=26&type=chunk) - The company intends to apply for patent term extensions under the Hatch-Waxman Act and similar foreign provisions if QLS-215 receives marketing approval[26](index=26&type=chunk) - In addition to patents, the company relies on trade secret protection for proprietary information, particularly concerning manufacturing processes[26](index=26&type=chunk)[27](index=27&type=chunk) [Manufacturing and Supply](index=14&type=section&id=Item%201.%20Business%23Manufacturing%20and%20Supply) Catabasis relies entirely on third-party manufacturers for QLS-215 supply for all study phases and potential commercialization, with cGMP manufacturing planned for 2021 - The company relies on third-party manufacturers for all nonclinical, clinical, and commercial supply of QLS-215 and has no plans to build its own facilities[28](index=28&type=chunk) - Cell line development has commenced, and high-producing proprietary cell lines have been identified. The company plans to initiate cGMP manufacturing for QLS-215 in **2021**[28](index=28&type=chunk) [Government Regulation and Product Approval](index=14&type=section&id=Item%201.%20Business%23Government%20Regulation%20and%20Product%20Approval) The company's operations are subject to extensive regulation by the FDA and comparable authorities, requiring a Biologics License Application (BLA) for QLS-215 - The company must secure FDA approval for a Biologics License Application (BLA) for QLS-215 before it can be marketed in the U.S.[33](index=33&type=chunk)[44](index=44&type=chunk) - The company may seek orphan drug designation for QLS-215, which could provide **seven years** of market exclusivity in the U.S. if it is the first to receive approval for the designated rare disease[61](index=61&type=chunk) - The company's business is subject to healthcare laws including the Anti-Kickback Statute, False Claims Act, and pricing and reimbursement regulations, which are evolving due to legislative efforts like the ACA and other reforms[83](index=83&type=chunk)[88](index=88&type=chunk) - Brexit has created regulatory uncertainty for marketing products in the United Kingdom, which now operates under a separate framework from the European Union[81](index=81&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks, primarily its heavy dependence on the success of its single preclinical product candidate, QLS-215 - The business is almost entirely dependent on the success of a single preclinical product candidate, QLS-215, for HAE[4](index=4&type=chunk)[93](index=93&type=chunk) - The company will need substantial additional funding and may be forced to delay or eliminate programs if unable to raise capital on acceptable terms[4](index=4&type=chunk)[124](index=124&type=chunk) - Failure to obtain stockholder approval for the conversion of Series X Preferred Stock could trigger a cash redemption obligation, raising substantial doubt about the company's ability to continue as a going concern[4](index=4&type=chunk)[128](index=128&type=chunk)[208](index=208&type=chunk) - The company faces significant competition from established HAE therapies and a robust pipeline of new treatments from other companies[4](index=4&type=chunk)[117](index=117&type=chunk) [Unresolved Staff Comments](index=77&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[223](index=223&type=chunk) [Properties](index=77&type=section&id=Item%202.%20Properties) The company's executive offices are located in Boston, Massachusetts, consisting of approximately 11,000 square feet of subleased office space - The company subleases approximately **11,000 square feet** of office space in Boston, Massachusetts[221](index=221&type=chunk) - The current lease expires in **July 2022**[221](index=221&type=chunk) [Legal Proceedings](index=77&type=section&id=Item%203.%20Legal%20Proceedings) As of the filing date, the company is not a party to any legal proceedings or claims that are expected to have a material adverse effect on its business - The company is not currently party to any claim or litigation expected to have a material adverse effect on its business[222](index=222&type=chunk)[224](index=224&type=chunk) [Mine Safety Disclosures](index=78&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[224](index=224&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=79&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the Nasdaq Global Market under the symbol "CATB", and it has never paid cash dividends - Common stock is traded on the Nasdaq Global Market under the symbol **"CATB"**[227](index=227&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the foreseeable future[229](index=229&type=chunk) - In January and February 2021, the company issued **3,332,669 shares** of common stock and **86,077 shares** of Series X Preferred Stock in connection with the Quellis merger and a private placement financing[230](index=230&type=chunk) [Selected Financial Data](index=80&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable to the company - Not applicable[231](index=231&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=81&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's financial condition reflects its transition to developing QLS-215, with a net loss of $37.3 million in 2020 and an accumulated deficit of $260.9 million Results of Operations (in thousands) | | Year Ended December 31, | Period-to-Period Change | | :--- | :--- | :--- | | | **2020** | **2019** | **$** | | **Operating expenses:** | | | | | Research and development | $25,590 | $18,317 | $7,273 | | General and administrative | $11,845 | $8,771 | $3,074 | | **Total operating expenses** | **$37,435** | **$27,088** | **$10,347** | | **Loss from operations** | **$(37,435)** | **$(27,088)** | **$(10,347)** | | **Other income, net** | $135 | $795 | $(660) | | **Net loss** | **$(37,300)** | **$(26,293)** | **$(11,007)** | - As of December 31, 2020, the company had an accumulated deficit of **$260.9 million** and has not generated any revenue from product sales[257](index=257&type=chunk)[262](index=262&type=chunk) - The company believes its existing cash, including the **$110.0 million** gross proceeds from the February 2021 Financing, is sufficient to fund operations through **2023**, but this is contingent on stockholder approval of the Series X Preferred Stock conversion[262](index=262&type=chunk) - There is substantial doubt about the company's ability to continue as a going concern due to a potential cash redemption of Series X Preferred Stock if stockholder approval for conversion is not obtained[265](index=265&type=chunk)[308](index=308&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=90&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate sensitivity related to its cash, cash equivalents, and short-term investments, totaling $44.9 million as of December 31, 2020 - The primary market risk is interest rate sensitivity for its cash, cash equivalents, and short-term investments, which totaled **$44.9 million** at year-end 2020[273](index=273&type=chunk) - Due to the short-term and low-risk nature of its investments, a **10% change** in interest rates is not expected to have a material effect on the portfolio's fair market value[273](index=273&type=chunk) [Financial Statements and Supplementary Data](index=90&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's consolidated financial statements and the independent auditor's report, which expresses substantial doubt about the company's ability to continue as a going concern - The independent auditor's report from Ernst & Young LLP expresses substantial doubt about the Company's ability to continue as a going concern[291](index=291&type=chunk) Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | $47,456 | $41,780 | | **Total Liabilities** | $6,787 | $6,060 | | **Total Stockholders' Equity** | $40,669 | $35,720 | Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--- | :--- | :--- | | **Total operating expenses** | $37,435 | $27,088 | | **Net loss** | $(37,300) | $(26,293) | | **Net loss per share** | $(2.03) | $(2.35) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=90&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on any matter of accounting principles, practices, or financial disclosure - There has been no change of accountants nor any disagreements with accountants[273](index=273&type=chunk) [Controls and Procedures](index=90&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2020 - Management concluded that the company's disclosure controls and procedures were effective as of **December 31, 2020**[274](index=274&type=chunk) - Management assessed internal control over financial reporting using the COSO framework and believes it was effective as of **December 31, 2020**[276](index=276&type=chunk) - No changes in internal control over financial reporting occurred during the fourth quarter of 2020 that have materially affected, or are reasonably likely to materially affect, internal controls[276](index=276&type=chunk) [Other Information](index=91&type=section&id=Item%209B.%20Other%20Information) This item is not applicable - Not Applicable[276](index=276&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=92&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2021 Annual Meeting of Stockholders proxy statement - Information is incorporated by reference from the definitive proxy statement for the **2021 Annual Meeting of Stockholders**[278](index=278&type=chunk) [Executive Compensation](index=92&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's 2021 Annual Meeting of Stockholders proxy statement - Information is incorporated by reference from the definitive proxy statement for the **2021 Annual Meeting of Stockholders**[278](index=278&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=92&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership by beneficial owners and management, and equity compensation plans, is incorporated by reference from the company's 2021 Annual Meeting of Stockholders proxy statement - Information is incorporated by reference from the definitive proxy statement for the **2021 Annual Meeting of Stockholders**[278](index=278&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=92&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information concerning related person transactions and director independence is incorporated by reference from the company's 2021 Annual Meeting of Stockholders proxy statement - Information is incorporated by reference from the definitive proxy statement for the **2021 Annual Meeting of Stockholders**[279](index=279&type=chunk) [Principal Accountant Fees and Services](index=92&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information detailing fees paid to and services provided by the principal accountant is incorporated by reference from the company's 2021 Annual Meeting of Stockholders proxy statement - Information is incorporated by reference from the definitive proxy statement for the **2021 Annual Meeting of Stockholders**[279](index=279&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=93&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and the report of the independent registered public accounting firm, along with a comprehensive list of exhibits filed with the Form 10-K - This section includes the consolidated financial statements and the Report of Independent Registered Public Accounting Firm[282](index=282&type=chunk)[283](index=283&type=chunk) - A list of all exhibits filed with the Form 10-K is provided, including key agreements related to the Quellis merger, financing, and stock plans[284](index=284&type=chunk)[286](index=286&type=chunk)[287](index=287&type=chunk) [Form 10-K Summary](index=96&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Not applicable[288](index=288&type=chunk)

Financial Performance - The company reported a net loss of $10.86 million for the three months ended September 30, 2020, compared to a net loss of $6.51 million for the same period in 2019, representing an increase of 66% in losses [78]. - Net loss for the nine months ended September 30, 2020, was $28.3 million, compared to a net loss of $19.7 million for the same period in 2019, reflecting an increase of $8.6 million [83]. - Net cash used in operating activities was $24.4 million for the nine months ended September 30, 2020, compared to $18.8 million for the same period in 2019 [92]. - The accumulated deficit as of September 30, 2020, was $251.9 million, indicating ongoing operating losses since inception [97]. - The company anticipates continued significant expenses and operating losses as it explores strategic options and evaluates future business strategies [100]. Research and Development - Research and development expenses increased by $3.1 million to $7.8 million for the three months ended September 30, 2020, primarily due to a $2.8 million increase in costs associated with the edasalonexent program [79]. - Total research and development expenses for the three months ended September 30, 2020, were $19.85 million, compared to $14.05 million for the same period in 2019 [68]. - Research and development expenses increased by $5.8 million to $19.9 million for the nine months ended September 30, 2020, representing a 41% increase from $14.1 million in the same period of 2019 [84]. - Research and development expenses for the nine months ended September 30, 2020, are expected to be significantly reduced following the decision to stop activities related to edasalonexent [71]. - The Phase 3 PolarisDMD trial for edasalonexent did not meet its primary endpoint, leading to the cessation of its development and related activities [59]. Administrative Expenses - General and administrative expenses rose by $1.1 million to $3.1 million for the three months ended September 30, 2020, driven by increased consulting and professional services costs [80]. - General and administrative expenses rose by $2.3 million to $8.6 million for the nine months ended September 30, 2020, marking a 37% increase from $6.3 million in the prior year [85]. Funding and Cash Position - As of September 30, 2020, the company had cash and cash equivalents of $52.9 million, which is expected to fund operations for at least the next twelve months [63]. - The company has raised an aggregate of $315.9 million since its inception in June 2008 through various financing methods, including private placements and public offerings [62]. - The company raised an aggregate of $315.9 million through various financing activities since inception, including $26.5 million from a public offering in January 2020 [87][88]. - Net cash provided by financing activities was $40.8 million during the nine months ended September 30, 2020, compared to $21.8 million in the same period of 2019 [95]. - The company anticipates needing substantial additional funding to support future operations and product development, as profitability is not expected without pursuing new product candidates [64]. Other Income - Other income, net decreased by $0.5 million to $0.1 million for the nine months ended September 30, 2020, primarily due to lower interest rates [86]. Strategic Options - The company plans to explore strategic options, including potential mergers or business combinations, with the assistance of Ladenburg Thalmann & Co., Inc. [61].

Edasalonexent Clinical Development - Edasalonexent is a late-stage therapeutic candidate for Duchenne Muscular Dystrophy (DMD), designed to limit muscle degeneration, promote muscle regeneration, and reduce inflammation and fibrosis[7, 72] - The Phase 3 PolarisDMD trial enrolled 131 boys ages 4 to 7, with top-line results expected in Q4 2020[26, 30] - In the Phase 2 MoveDMD trial and open-label extension, all assessments of function stabilized on Edasalonexent compared to the off-treatment control period[48] - Edasalonexent has been well-tolerated in more than 150 years of cumulative patient exposure[25, 72] - A trial in non-ambulatory DMD patients is expected to initiate in 2021 with support from Duchenne UK, who granted over $600,000 in funding[71] Market Opportunity and Commercial Strategy - DMD affects 1 in 3,500-5,000 males worldwide, with a median life expectancy of approximately 30 years[8, 82, 83] - Approximately 40% of patients are diagnosed by age 4[82, 85] - The company has developed strong relationships with global Duchenne patient advocacy organizations[86] - Most US Duchenne patients have access to expert care and treatment through concentrated treatment centers[92, 94] - Edasalonexent aims to be a foundational therapy for all patients affected by Duchenne, regardless of dystrophin mutation, and can be used as mono- or potential combo-therapy[20, 99]