7 U.S. Drug Developm l ent In the United States, the FDA regulates drugs r under the Federal Food, Drug, r and Cosmetic Act, or FDCA, and its implementing regulations, and biologics under the FDCA, the Publ u ic Health Service Act, or PHSA, and their implementing regulations. Both drugs r and biologics also are subj u ect to other federal, state and local statut t es and regulations. The process of obtaining regulatory r approvals and the subs u equent compliance with appropriate federal, state, local and foreign statut t es and regulations requires the expenditure of subs u tantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or post-market may subj u ect 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, a clinical hold, untitled or warning letters, product recalls or market withdrawals, product seizures, total or partial suspension of production or distribution, inju n nctions, fines, refusals of government contracts, restitution, disgorgement and civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effe f ct on us. Any future product candidates must be approved by the FDA through either a new drug r application, or NDA, or a biologics license application, or BLA, process before they may be legally marketed in the United States. The process generally involves the following: • completion of extensive preclinical studi t es in accordance with applicable regulations, including studi t es conducted in accordance with good labo a ratory practice, or GLP, requirements; • subm u ission to the FDA of an IND, which must become effe f ctive before human clinical trials may begin; • approval by an independent institutional review board, or IRB, or ethics committee at each clinical trial site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, good clinical practice, or GCP, requirements and other clinical trial-related regulations to establ a ish the safety and effi f cacy of the investigational product for each proposed indication; • subm u ission to the FDA of an NDA or BLA; • a determination by the FDA within 60 days of its receipt of an NDA or BLA to accept the filing for review; • satisfactory r completion of FDA pre-approval inspection of the manufact f ur t ing facility or facilities where the drug r or biologic will be produced to assess compliance with current good manufact f ur t ing practices, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug r or biologic’s identity, strength, quality and purity; • potential FDA audit of the preclinical and/or clinical trial sites that generated the data in suppor u t of the NDA or BLA; • FDA review and approval of the NDA or BLA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug r or biologic in the United States; and • compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and the potential requirement to conduct post-appr a oval studi t es. The data required to suppor u t an NDA or BLA are generated in two distinct developmental stages: preclinical and clinical. The preclinical and clinical testing and approval process requires subs u tantial time, effo f rt and financial resources, and we cannot be certain that any approvals for any future product candidates will be granted on a timely basis, or at all. Preclin l ical Studie d s and IND N The preclinical developmental stage generally involves labor a atory r evaluations of drug r chemistry, r formulation and stability, as well as studi t es to evaluate toxicity in animals, which suppor u t subs u equent clinical testing. The sponsor must subm u it the results of the preclinical stud t ies, together with manufac f turing information, analytical data, any availabl a e clinical data or literatur t e and a proposed clinical protocol, to the FDA as part of the IND. An IND is a request for authorization from the FDA to administer an investigational product to humans, and must become effe f ctive before human clinical trials may begin.