+Added: Factors that could cause or contribute to differences in our future financial and operating results include those discussed in the risk factors set forth in this Annual Report on Form 10-K.
+Added: The risks described in this Annual Report and are not the only risks that we face.
+Added: Additional risks not presently known to us or that we do not currently consider significant may also have an adverse effect on the Company.
+Added: If any of the risks actually occur, our business, results of operations, cash flows or financial condition could suffer.
Summary of Risk Factors
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• We will need to raise additional capital to fund our operations and improve our platform.
−Removed: If we are unable to raise additional capital on terms acceptable to us or at all, we may not be able to compete successfully, which would harm our business, operations, and financial condition;
−Removed: • Our commercial success depends on the technological capabilities of our Integrated Drug Creation Platform and its utilization by our existing partners and adoption by new partners;
+Added: If we are unable to raise additional capital on terms acceptable to us or at all, we may not be able to execute on our business strategy or compete successfully, which would harm our business, operations, and financial condition;
+Added: • Our commercial success depends on the technological capabilities of our Integrated Drug Creation platform;
• We are substantially dependent on the successful application of our Integrated Drug Creation platform to biologic drug discovery and cell line development partnerships, and we have only recently begun to enter into biologic drug discovery partnerships;
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• Our Integrated Drug Creation platform may not meet the expectations of our partners, which means our business, financial condition, results of operations and prospects could suffer;
−Removed: • The loss of any member of our senior management team or our inability to attract and retain highly skilled scientists and business development professionals could adversely affect our business;
−Removed: • If we are unable to obtain and maintain sufficient intellectual property protection for our technologies, including our platform, Denovium Engine deep learning technology and computational antibody and target discovery technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technologies or a platform similar or identical to ours, and our ability to successfully leverage our platform technologies may be impaired;
+Added: • The loss of any member of our senior leadership team or our inability to attract and retain highly skilled scientists, business development professionals, and other personnel could adversely affect our business;
+Added: • If we are unable to obtain and maintain sufficient intellectual property protection for our technologies, including our cell line and expression technologies, generative deep learning technology, proprietary assays and techniques and computational antibody and target discovery technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technologies or a platform similar or identical to ours, and our ability to successfully leverage our platform technologies may be impaired;
• Our share price may be volatile, and our operating results may fluctuate significantly from time to time.
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In such an event, the market price of our common stock could decline, and you may lose all or part of your investment.
−Removed: risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and the market price of our common stock.
+Added: Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and the market price of our common stock.
Risks Related to Our Limited Operating History, Financial Condition and Prospects
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We are very early in the adoption phase of our business model, and, as of March 15, 2023, no partner has entered into a license for clinical or commercial use of any intellectual property rights related to biologic drug candidates or cell lines generated utilizing our platform.
−Removed: Moreover, we have only agreed upon clinical or commercial license terms for seven of our Active Programs in the event an option is exercised by a partner to license such intellectual property rights.
We may never achieve commercial success and we have limited historical financial data upon which we may base our projected revenue.
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We have incurred significant losses since our inception.
−Removed: For the year ended December 31, 2021 and 2020, we incurred net losses of $101.0 million and $14.4 million, respectively.
+Added: For the years ended December 31, 2022 and 2021, we incurred net losses of $104.9 million and $101.0 million, respectively.
As of December 31, 2022, we had an accumulated deficit of $295.9 million.
−Removed: We expect that our operating expenses will continue to increase as we grow our business and will also increase as a result of our being a public company.
−Removed: Since our inception, we have financed our operations primarily from private placements of our preferred equity securities, convertible promissory notes, the sale of common stock in our initial public offering (IPO) and the incurrence of other indebtedness, and to a lesser extent, revenue derived from our Integrated Drug Creation Platform.
+Added: We expect that our operating expenses will continue to increase as we grow our business.
+Added: Since our inception, we have financed our operations primarily from private placements of our preferred equity securities, convertible promissory notes, the sale of common stock in our initial public offering (IPO), the incurrence of other indebtedness and other financing activities, and to a lesser extent, revenue derived from our technology development activities leveraging our Integrated Drug Creation platform.
We have devoted substantially all of our resources to the development of our Integrated Drug Creation platform and commercialization of resulting technology development capabilities.
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If we are unable to raise additional capital on terms acceptable to us or at all, we may not be able to compete successfully, which would harm our business, operations, and financial condition.
−Removed: As of December 31, 2021, we had $252.6 million in cash and cash equivalents.
+Added: As of December 31, 2022, we had $164.4 million in cash and cash equivalents and short term investments.
In July 2021, we consummated our IPO and issued 14,375,000 shares of common stock, including full exercise of the underwriters’ overallotment option, for net proceeds of $210.1 million, after deducting underwriting discounts and offering related expenses.
−Removed: We expect our current cash and cash equivalents and anticipated cash flows from operations, will be sufficient to meet our working capital and capital expenditure needs over at least the next 12 months.
−Removed: If our available cash resources, including the net proceeds from our IPO, and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for the application of our Integrated Drug Creation Platform to biologic drug discovery or cell line development, or the realization of other risks described in this "Risk Factors” section, we will be required to raise additional capital prior to such time through issuances of equity or convertible debt securities, entrance into a credit facility or another form of third party funding, or seek other sources of financing.
+Added: We expect our current cash and cash equivalents and short term investments and anticipated cash flows from operations, will be sufficient to meet our working capital and capital expenditure needs over at least the next 12 months.
+Added: If our available resources and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for the application of our Integrated Drug Creation platform to biologic drug discovery or cell line development, higher expenses than we anticipate related to our investments in our platform technology and the preclinical or later development of internal assets or the realization of other risks described in this "Risk Factors” section, we will be required to raise additional capital through issuances of equity or convertible debt securities, entrance into a credit facility or another form of third party funding, or seek other sources of financing.
Such additional financing may not be available on terms acceptable to us or at all.
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• fund business development efforts for our current and future programs;
−Removed: • expand the capabilities of our platform into additional areas of biopharmaceutical research and development, such as drug target discovery;
+Added: • expand the capabilities of our platform into additional areas of biopharmaceutical research and development, such as drug target discovery or translational medicine;
• acquire, license or invest in additional technologies or complementary businesses or assets;
• pursue opportunities to apply our protein creation technologies beyond the biopharmaceutical industry;
−Removed: • advancing internal assets through preclinical validation;
+Added: • advance internal assets through preclinical or later validation;
• finance capital expenditures and general and administrative expenses.
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• the cost of expanding our operations, including our business development efforts;
−Removed: • our rate of progress in selling access to our platform and business development activities associated therewith;
−Removed: • our rate of progress in, and cost of development of new technologies;
+Added: • our rate of progress in collaborating with partners to leverage our platform and business development activities associated therewith;
+Added: • our rate of progress in, and cost of, developing new technologies;
• the effect of competing technological and market developments;
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We have not received any such milestone or royalty revenues to date, and it may be years before we realize any such revenues, if at all.
−Removed: For the year ended December 31, 2021 and 2020, substantially all of our revenue was generated by technology development fees through performing technology development activities addressing molecules in programs for our partners.
+Added: For the year ended December 31, 2022, substantially all of our revenue was generated by technology development fees through performing technology development activities addressing molecules in programs for our partners.
To date, such fees have generally been payable upon both the inception of, and the demonstration of technical achievement of program milestones, under technology development agreements with our partners.
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We are still in the very early stages of implementing our business model and, to date, no partner has entered into a license for clinical or commercial use of any intellectual property rights related to biologic drug candidates or cell lines generated utilizing our platform.
−Removed: Moreover, we have only agreed upon clinical or commercial license terms for seven of our Active Programs in the event an option is exercised by a partner to license such intellectual property rights.
−Removed: If we are unable to maintain partnerships covering Active Programs (including if any partnership covering an Active Program is terminated during or upon completion of the technology development phase) or we are otherwise unable to enter into license agreements for our Active Programs, we will not receive any downstream payments under these programs, which will have a material and adverse effect on our business prospects.
+Added: If we are unable to maintain partnerships covering Active Programs (including if any partnership covering an Active Program is terminated during or upon completion of the technology development phase) or we are otherwise unable to enter into license agreements for our Active Programs, we will not receive any downstream payments under these programs, which may have a material and adverse effect on our business prospects.
Additionally, any such license agreements that we may enter into may not be on terms that are favorable to us and may not result in meaningful revenues to us, or at all, or such license agreements may be terminated.
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Risks Related to Our Business Model and Partnerships
−Removed: Our commercial success depends on the technological capabilities of our Integrated Drug Creation Platform and its utilization by our existing partners and adoption by new partners.
+Added: Our commercial success depends on the technological capabilities of our Integrated Drug Creation platform.
We utilize our Integrated Drug Creation platform to identify biopharmaceutical drug candidates and associated production cell lines for further development and potential commercialization by our partners.
−Removed: As a result, the quality and sophistication of our platform and technology are critical to our ability to conduct our technology development activities and to deliver more promising molecules and cell lines and to accelerate and lower the costs of discovery and cell line development for our existing and potential partners, as compared to other methods.
+Added: As a result, the quality and sophistication of our platform and technology are critical to our ability to conduct our technology development activities and to generate more promising molecules and cell lines and to shorten and lower the costs of discovery and cell line development for our existing and potential partners, as compared to other methods.
In particular, our business depends, among other things, on:
−Removed: • our platform’s ability to successfully identify appropriate molecules and production cell lines for our partners and provide them to our partners on the desired timeframes;
+Added: • our ability to successfully identify appropriate molecules and production cell lines through our platform and provide them to our partners on the desired timeframes and for further development;
• our partners’ determination that the product candidates and/or production cell lines that we provide to them can ultimately be used to advance our partners’ clinical development programs;
−Removed: • our partners' willingness to enter into license agreements with economic terms that are acceptable to us, which is based substantially on the value our partners believe can be recognized from the product candidates and/or production cell lines that we provide to them;
+Added: • our partners' entering into license agreements with economic terms that are acceptable to us, which is based substantially on the value our partners believe can be recognized from the product candidates and/or production cell lines that we provide to them;
• our ability to execute on our strategy to enter into new partnerships with new or existing partners on technology development terms that are acceptable to us;
+Added: • our ability to use our generative AI models to create actionable biological insights;
• our ability to increase awareness of the capabilities of our technologies and solutions;
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• our platform’s ability to offer sufficient cost effectiveness, efficiency, and performance to warrant partners’ continued adoption of and ongoing reliance on our technologies;
−Removed: • our platform’s ability to screen a high number of cells and drug candidates;
+Added: • our platform’s ability to screen a high number of cells and drug candidates and leverage this data to train our generative AI models;
• whether competitors develop a platform that enables biologic drug discovery and cell line development more effectively than our platform;
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• our ability to adapt our assays to screen effectively for certain types of drug modalities or targets;
−Removed: • our ability to adapt our assays to de-orphan antibodies we discover using technology acquired through our acquisition of Totient;
+Added: • our ability to adapt our assays to de-orphan antibodies we discover using our target technology;
• our ability to construct diverse genetic libraries covering sufficient diversity of protein sequence variants and folding and expression solutions combinations;
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• our ability to optimize our fermentation conditions to scale at an effective level;
−Removed: • our ability to use our deep learning AI to generate actionable biological insights;
• our platform’s ability to create new drug modalities and novel conjugates;
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Food and Drug Administration (FDA) or any other regulatory body for drugs that are developed based on molecules discovered and/or manufactured using our Integrated Drug Creation platform technologies;
−Removed: • our partners’ and the biopharmaceutical industry’s continued interest and investment in next-generation biologic drug development, and the continued market growth and clinical and regulatory success of this category collectively;
+Added: • our partners’ and the biopharmaceutical industry’s continued interest and investment in biologic drug development, and the continued market growth and clinical and regulatory success of this category collectively;
• the impact of our investments in innovation and commercial growth;
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• our ability to further validate and enhance our platform through research and technology development activities;
+Added: • our ability to leverage our platform technologies to create product candidates for internal development and advancement into clinical trials.
There can be no assurance that we will successfully address any of these or other factors that may affect the market acceptance of our platform or our technology.
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Substantially all of our revenue generated to date is from technology development arrangements for our CLD applications.
−Removed: To date, we have very limited experience and expertise in the biologic drug discovery using our platform and have not demonstrated success in expanding our platform into biologic drug discovery.
+Added: To date, we have very limited experience and expertise in the biologic drug discovery using our platform and have achieved limited success in expanding our platform into biologic drug discovery.
In order to realize the benefits of such an expanded scope of our Integrated Drug Creation platform, we need to further advance our technology and further market our expanded capabilities to existing and new partners.
−Removed: Our future revenue growth and market potential may depend on our ability to leverage our Integrated Drug Creation Platform, together with our custom libraries and other proprietary tools, into other areas of biopharmaceutical research and development, such as biologics drug discovery.
−Removed: However, we may not be able to successfully validate that our Integrated Drug Creation Platform will accelerate the hit identification and lead optimization steps of biologic drug discovery or that they will allow us to discover more effective drugs.
+Added: Our future revenue growth and market potential will likely depend on our ability to leverage our Integrated Drug Creation platform, together with our custom libraries, data sets and other proprietary tools, into other areas of biopharmaceutical research and development, including biologics drug discovery.
+Added: However, we may not be able to successfully validate that our Integrated Drug Creation platform will shorten the hit identification and lead optimization steps of biologic drug discovery or that our platform will enable us to discover promising biologic candidates for further development.
Our inability to continue these initiatives and initiate new technology development efforts could result in a failure to develop our platform, improve upon existing technologies, develop and advance opportunities such as biologics drug discovery, and expand our addressable market, each of which could have a material and adverse impact on our business development, business, financial position and results of operations.
−Removed: We do not expect to generate significant recurring revenue unless and until such time as we enter into further agreements that, in the aggregate, result in regular and continuous fees for our performance of technology development activities, and, more importantly, agreements under which we would be eligible for
−Removed: future payments upon our partners’ achievement of development and regulatory milestones or commencement of commercial sales with respect to any drug candidates generated using our platform.
+Added: We do not expect to generate significant recurring revenue unless and until such time as we enter into further agreements that, in the aggregate, result in regular and continuous fees for our performance of technology development activities or agreements under which we would be eligible for future payments upon our partners’ achievement of development and regulatory milestones or commencement of commercial sales with respect to any drug candidates generated using our platform.
We are unable to predict whether and the extent to which payments will be made to us under our arrangements and whether and the extent to which we will be able to enter into future arrangements under which we are eligible to generate additional revenues, or the timing of the achievement of any milestones under these agreements, if they are achieved at all.
−Removed: The timing and likelihood of payments to us under these agreements is dependent on our partners’ successful development and commercialization of the molecules discovered using our platform, which is outside of our control.
+Added: The timing and likelihood of payments to us under these agreements is dependent on our partners’ successful development and commercialization of the molecules discovered using our platform, which are typically outside of our control.
Because of these factors, our operating results could vary materially from quarter to quarter.
Our future success is dependent on the eventual approval and commercialization of biologic drugs developed under our partnerships for which we have no control over the clinical development plan, regulatory strategy or commercialization efforts.
−Removed: Our business model is dependent on the eventual progression of biologic drug candidates discovered or initially developed utilizing our Integrated Drug Creation Platform into clinical trials and commercialization.
−Removed: This requires us to attract partners and enter into agreements with them that contain obligations for the partners to pay us milestone payments as well as royalties on sales of approved products for the biologic drug candidates they develop that are generated utilizing our platform.
−Removed: Given the nature of our relationships with our partners, we do not control the progression, clinical development, regulatory strategy or eventual commercialization, if approved, of these product candidates.
−Removed: As a result, our future success and the potential to receive milestones and royalties are entirely dependent on our partners’ efforts, over which we have no control.
−Removed: If our partners determine not to proceed with the future development of a product candidate discovered or initially developed utilizing our Integrated Drug Creation Platform or if it implements a clinical or regulatory strategy that ultimately does not enable the further development, approval or commercialization of the product candidate, we will not receive the benefits of our partnerships, which may have a material and adverse effect on our operations.
+Added: Our business model depends on the eventual progression of biologic drug candidates discovered or initially developed utilizing our Integrated Drug Creation platform into clinical trials and commercialization.
+Added: This requires us to attract partners and enter into agreements with them that contain obligations for the partners to pay us milestone payments as well as royalties on sales of approved products for the biologic drug candidates that they develop and were generated utilizing our platform.
+Added: Given the nature of our relationships with our partners and future partners, we do not control the progression, clinical development, regulatory strategy or eventual commercialization, if approved, of these product candidates.
+Added: As a result, our future success and the potential to receive milestones and royalties are entirely dependent on our partners’ efforts, over which we have little control.
+Added: If a partner determines not to proceed with the future development of a product candidate discovered or initially developed utilizing our Integrated Drug Creation platform, if it implements a clinical or regulatory strategy that ultimately does not enable the further development, approval or commercialization of the product candidate, or if we cannot find a partner to advance an asset that we develop using our platform, we will not receive the benefits of our partnerships, which may have a material and adverse effect on our operations.
In addition, biologic drug development is inherently uncertain and very few product candidates ultimately progress through clinical development and receive approval for commercialization.
See the risk factor section below “Risks Related to Biologic Drug Development” for additional information related to the risks of biologic drug development.
−Removed: If our partners do not receive regulatory approval for a sufficient number of product candidates originating from our partnerships, we may not be able sustain our business model.
−Removed: Further, we will have little control over how diversified our portfolio of potential milestone payments or royalties will end up being.
+Added: If our partners do not receive regulatory approval for a sufficient number of product candidates originating from our platform, we may not be able sustain our business model.
While as a general matter we intend to periodically report on the status of our business development initiatives, including anticipated next steps, we may not provide forward-looking guidance on the timing of those next steps.
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If we cannot maintain our current relationships with partners, fail to expand our relationships with our current partners, or if we fail to enter into new relationships, our future operating results would be adversely affected as a general matter.
−Removed: In the years ended December 31, 2021 and 2020, revenue from two partners accounted for 73% and 77% of our technology development revenue, respectively.
+Added: In the years ended December 31, 2022 and 2021, revenue from three partners accounted for 98% and two partners accounted for 73% of our technology development revenue, respectively.
The revenue attributable to these partners may fluctuate in the future, which could have an adverse effect on our business, financial condition, results of operations and prospects.
Our existing partners may cease to use our technologies depending on their own technological developments, availability of other competing technologies and internal decisions regarding allocation of time and resources to the discovery and development of biologic product candidates, over which we have no control.
−Removed: Our existing and future partners may have limited bandwidth to initiate new programs, which could limit their adoption or scale of application of our technologies.
−Removed: In addition, existing partners may choose to produce some or all of their requirements internally by using or developing their own manufacturing capabilities or by using capabilities from acquisitions of assets or entities from third parties with such capabilities.
−Removed: While our business is not substantially dependent on technology development revenues from any
−Removed: individual partner, because we currently have a limited number of partnerships, a loss of one of our partners could adversely impact our revenue, results of operations, cash flows or reputation in any given period.
+Added: Our existing and future partners may have limited resources to initiate new programs, which could limit their adoption or scale of application of our technologies.
+Added: In addition, existing partners may choose to produce some or all of their requirements
+Added: internally by using or developing their own manufacturing capabilities or by using capabilities from acquisitions of assets or entities from third parties with such capabilities.
+Added: While our business is not substantially dependent on technology development revenues from any individual partner, because we currently have a limited number of partnerships, a loss of one of our partners could adversely impact our revenue, results of operations, cash flows or reputation in any given period.
Our future success also depends on our ability to expand relationships with our existing partners and to establish relationships with new partners.
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There is no assurance that any of these discussions will result in a technology development and/or license agreement, or if an agreement is reached, that the resulting relationship will be successful, or that the terms of such agreement will be favorable to us.
+Added: We target partnerships with biotechnology and pharmaceutical companies.
+Added: Macro-economic market conditions have had, and may continue to have a significant effect on the formation, funding and research and development budgets of these types of entities and could have a significant effect on the number of viable companies with whom we may partner or the programs viable partners may elect to pursue.
+Added: Our partners may also determine their research and development budgets based on other factors, including conservation of cash resources, changes in business priorities, the need to develop new products, technological expertise, continued availability of governmental and other funding, competition, and intellectual property landscape.
+Added: If research and development budgets of viable partners are reduced or the number of viable partners decline, the impact could adversely affect our business, financial condition, results of operations and prospects.
In addition, our ability to monitor the achievement of clinical, regulatory and commercial milestones by our partners and enforce the payment of any corresponding fees is limited.
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Consequently, a decline in demand for our platform, a decline in new or renewed business in any one quarter or any delays in the achievement, or any failure to achieve, development, regulatory and commercial milestones by our partners with respect to product candidates generated using our platform, may not significantly reduce our revenue for that quarter but could negatively affect our revenue in future quarters.
−Removed: Our revenue recognition model also makes it difficult for us to rapidly increase our revenue through increased operations in any period, as revenue from partners is recognized over the course of their drug development and commercialization process.
+Added: Our revenue recognition model also makes it difficult for us to rapidly increase our revenue through increased operations in any period, as revenue from partners is recognized over the course of their drug development and commercialization efforts.
We expect to make significant investments in our continued research and development of new technology development and platform expansion, which may not be successful.
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We expect to incur significant expenses to advance these research and development efforts or to invest in, or acquire complementary technologies, but these efforts may not be successful.
−Removed: For instance, we have very limited experience with the discovery of novel biologic drug candidates and incorporation of nsAAs, and we have not yet deployed these technologies in the context of partnered programs.
+Added: For instance, we have limited experience with the discovery of novel biologic drug candidates and incorporation of nsAAs.
Additional development will be required for the routine and robust use of these technologies in partnered programs.
−Removed: Through the course of additional technology development, significant unanticipated
−Removed: challenges may arise that adversely affect our future partnership prospects.
+Added: Through the course of additional technology development, significant unanticipated challenges may arise that adversely affect our future partnership prospects.
To expand the scope of our platform, we acquired Denovium, an AI company leveraging deep learning for protein discovery and engineering, in January 2021, and Totient, a computational antibody and target discovery platform company, in June 2021.
−Removed: We are working to integrate the Denovium Engine deep learning technology and computational antibody and target discovery technology into our Integrated Drug Creation Platform to accelerate drug discovery and cell line development efforts.
+Added: We continue to integrate generative AI deep learning technology and computational antibody and target discovery technology into our Integrated Drug Creation platform to shorten drug discovery and cell line development timelines.
Our long-term goals for this technology, such as constructing deep learning models capable of in silico target identification and drug and cell line design, will require significant investment and long development times and may ultimately never materialize.
−Removed: Additionally, we may make significant investments in proprietary drug candidates we seek to discover, and any discovery and subsequent development efforts for such drug candidates may not be successful.
−Removed: Such investments may be costly, and, given the uncertain nature of biologic drug discovery and development, our efforts in this field may not be successful.
−Removed: We may also make significant investments in pursuing technology development in industries other than the biopharmaceutical industry, and such pursuits may not be successful.
+Added: Additionally, we may also make significant investments in pursuing technology development in industries other than the biopharmaceutical industry, and such pursuits may not be successful.
We have no prior experience in using our technology platform in industries outside of the biopharmaceutical industry, and the economic structure of any future transactions in other industries may be less favorable to us than transactions in the biopharmaceutical industry.
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Additionally, development of any technology may be disrupted or made less viable by the development of competing technologies, and changes in the industry in which our technologies are applied could obsolete our technologies.
−Removed: For example, advancements in gene therapy or RNA-based vaccine technologies could significantly reduce the market share of protein-based biologics.
New potential technologies may fail any stage of development or commercialization and if we determine that any of our current or future technologies are unlikely to succeed, we may abandon them without any return on our investment.
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We may not be successful in our efforts to identify or discover internally-generated drug candidates.
−Removed: The development of internal assets through pre-clinical validation requires financial and human resource investments in R&D.
+Added: We may make significant investments in proprietary drug candidates we seek to discover, and any discovery and subsequent development efforts for such drug candidates may not be successful.
+Added: Such investments may be costly, and, given the uncertain nature of biologic drug discovery and development, our efforts in this
+Added: field may not be successful.
+Added: The development of internal assets through preclinical or later validation requires financial and human resource investments in R&D.
We have not internally developed any drug candidates to date, and we may fail to identify viable drug candidates.
Similarly, a key element of our business plan is to continue to expand our Integrated Drug Creation platform through an increase in partnered programs.
−Removed: A failure to validate aspects of our platform by using it ourselves to discover drug candidates for internal development could limit our business prospects and business development efforts.
−Removed: Our efforts to develop internal assets may limit the resources available for other programs.
−Removed: Additionally, the development of any drug candidate we pursue may ultimately prove to be unsuccessful or less successful than another potential drug candidate that we might have chosen to pursue on a more aggressive basis or at all.
+Added: Our business prospects and business development efforts could be limited if we are unable to validate aspects of our platform to discover drug candidates for our own internal development.
+Added: Our efforts to develop an internal asset may also limit the resources available for other programs and may be less successful than if we allocated those resources to a partnered program.
+Added: The development of any drug candidate we pursue may also ultimately prove to be unsuccessful or less successful than another potential drug candidate that we might have chosen to pursue on a more aggressive basis or at all.
The failure of our partners to meet their contractual obligations to us could adversely affect our business.
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The actual timing of these events can vary dramatically due to a number of factors such as delays or failures in our or our current and future partners’ drug discovery and development programs, the amount of time, effort, and resources committed by us and our current and future partners, and the numerous uncertainties inherent in the development of drugs.
−Removed: Additionally, to date, none of our partners has successfully completed a regulatory submission, such as an IND application or BLA, for a drug candidates generated using our platform.
+Added: Additionally, to date, none of our partners has successfully completed a regulatory submission, such as an IND application or BLA, for a drug candidate generated using our platform.
There can be no assurance that our partners’ current and future programs will advance or be completed in the time frames we or they expect.
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Our partners have significant discretion in determining when and whether to make announcements about the status of our partnerships, including about preclinical and clinical developments and timelines for advancing product candidates generated using our platform.
−Removed: We do not plan to disclose the development status and progress of individual drug candidates of our partners, unless and until those partners do so first.
+Added: We do not plan to disclose the development
+Added: status and progress of individual drug candidates of our partners, unless and until those partners do so first.
Our partners may wish to report such information more or less frequently than we expect, or they may not report such information at all, in which case we would not report that information either.
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Furthermore, approved drugs may not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, in which case revenue generated from their sales would be limited.
−Removed: Likewise, our partners have to make decisions about which clinical stage and pre-clinical drug candidates to develop and advance, and our partners may not have the resources to invest in all of the drug candidates generated using our platform, or clinical data and other development considerations may not support the advancement of one or more drug candidates.
+Added: Likewise, our partners have to make decisions about which clinical stage and preclinical drug candidates to develop and advance, and our partners may not have the resources to invest in all of the drug candidates generated using our platform, or clinical data and other development considerations may not support the advancement of one or more drug candidates.
Decision-making about which drug candidates to prioritize involves inherent uncertainty, and our partners’ development program decision-making and resource prioritization decisions, which are outside of our control, may adversely affect the potential value of those partnerships.
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In addition to the inherent uncertainty in drug development addresses above, our ability to forecast our future revenues may be limited.
−Removed: In addition, we intend to advance proprietary drug candidates through preclinical validation, and may seek to license or co-develop such proprietary drug candidates with a partner for clinical development.
+Added: In addition, we intend to advance proprietary drug candidates through preclinical or later validation, and may seek to license or co-develop such proprietary drug candidates with a partner for clinical development.
In such case, we would also be dependent on our ability to enter into partnerships with respect to the drug candidate with license or joint development terms that are acceptable to us in a timely manner.
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and 3T Biosciences, Inc.;
−Removed: ◦ in the field of AI-guided drug design and discovery, we may face competition from companies designing novel proteins such as Generate Biopharma, as well as adjacent technology companies pursuing small molecule design such as Schrodinger, Inc., Recursion Pharmaceuticals, Inc., Relay Therapeutics, Inc.
+Added: • in the field of AI-guided drug design and discovery, we may face competition from companies designing novel proteins such as Generate Biomedicines, Inc., as well as adjacent technology companies pursuing small molecule design such as Schrodinger, Inc., Recursion Pharmaceuticals, Inc., Relay Therapeutics, Inc.
and Exscientia Limited;
• in the field of scaffold design and drug platform development, we may face competition from pharmaceutical and biotechnology companies developing novel biologic modalities including Amgen Inc., Crescendo Bioscience, Inc.
−Removed: and Harpoon Therapeutics, Inc.
−Removed: among others;
+Added: and Harpoon Therapeutics, Inc., among others;
• in the field of novel human/humanized antibody discovery, we may face competition from companies such as AbCellera Biologics Inc.
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In addition, we are aware of other synthetic biology companies focused on developing various custom cell lines in a variety of model organisms for biomanufacturing of molecules relevant to other industries.
−Removed: These companies, which include Ginkgo Bioworks, Inc.
−Removed: and Zymergen Inc., may in the future pursue biopharmaceutical applications of their platforms that could compete with our technologies.
+Added: These companies may in the future pursue biopharmaceutical applications of their platforms that could compete with our technologies.
Our target partners may also elect to develop their processes on in-house systems, or using other methods, rather than implementing our technologies and may decide to stop using our technologies.
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In addition, competitors may be acquired by, receive investments from or enter into other commercial relationships with larger, well-established and well-financed companies.
−Removed: Certain of our competitors may be able to secure key inputs from vendors on more favorable terms, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing policies and devote substantially more resources to technology and platform development than we can.
+Added: Certain of our competitors may be able to secure key inputs from vendors on more favorable terms, devote greater resources to marketing and
+Added: promotional campaigns, adopt more aggressive pricing policies and devote substantially more resources to technology and platform development than we can.
If we are unable to compete successfully against current and future competitors, we may be unable to increase market adoption of our platform technologies for the biologic drug discovery and cell line development, which could prevent us from increasing our revenue or achieving and sustaining profitability.
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In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our products profitably.
−Removed: In particular, in 2010, the Patient Protection and Affordable Care Act, as amended by the ACA, was enacted, which, among other things, subjected biologic products to potential competition by lower-cost biosimilars;
+Added: In particular, in 2010, the Patient Protection and Affordable Care Act, as amended by the ACA,
+Added: was enacted, which, among other things, subjected biologic products to potential competition by lower-cost biosimilars;
addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;
increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program;
−Removed: extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled
−Removed: in Medicaid managed care organizations;
+Added: extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations;
subjected manufacturers to new annual fees and taxes for certain branded prescription drugs;
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If efforts to contain the price of biopharmaceutical products are successful, the magnitude of milestone payments and royalties we would expect to receive in connection with our partners’ future prioritization and investment in developing novel biologics may be impacted.
+Added: Furthermore in August 2022, President Biden signed the Inflation Reduction Act, which among other things:
+Added: allows for the Centers for Medicare & Medicaid Services to impose price controls for certain single-source drugs and biotherapeutics reimbursed under Medicare Part B and Part D.
+Added: Over time, the Inflation Reduction Act could reduce the revenues we are able to collect from sales of products developed using our platform;
+Added: however, the degree of impact that the Inflation Reduction Act will ultimately have upon our business remains unclear.
Our business could become subject to government regulation, and the regulatory approval and maintenance process may be expensive, time-consuming and uncertain both in timing and in outcome.
−Removed: Our operations are currently not subject to the direct regulation by the FDA or other regulatory bodies.
−Removed: However, our business could in future become subject to more direct oversight by the FDA, or other domestic or international agencies.
−Removed: For example, we may be subject to evolving and variable regulations governing the production of genetically engineered organisms.
+Added: Our operations are currently not subject to direct regulation by the FDA or other regulatory bodies.
+Added: However particularly if we determine to advance internally-developed product candidates generated from our Integrated Drug Creation platform into clinical development, our business could in the future become subject to more direct oversight by the FDA, or other domestic or international agencies.
+Added: In addition, we may become subject to evolving and variable regulations governing the production of genetically engineered organisms.
Furthermore, while we have no active plans to operate a manufacturing facility designed to comply with cGMPs, future market pressures or the lack of available capacity at cGMP manufacturing facilities may necessitate our entry into this market.
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Risks Related to Our Operations
−Removed: We rely on a limited number of suppliers or, in many cases, single suppliers, for laboratory equipment and materials and may not be able to find replacements or transition to alternative suppliers on a timely basis, or at all.
−Removed: We rely on a limited number of suppliers, or in many cases single suppliers, to provide certain consumables and equipment that we use in our laboratory operations, as well as reagents and other laboratory materials involved in the development of our technology.
−Removed: As a result of the ongoing COVID-19 pandemic, national lockdowns and global personnel shortages as a result of “stay-at-home” orders, employees being impacted by COVID-19, workforce reductions and employee attrition have contributed to delays or pauses in the distribution of raw materials and finished goods, and disruptions to manufacturing and supply chains across various industries.
+Added: We rely on a limited number of suppliers for laboratory equipment and materials and may not be able to find replacements or transition to alternative suppliers on a timely basis, or at all.
+Added: We rely on a limited number of suppliers to provide certain consumables and equipment that we use in our laboratory operations, as well as reagents and other laboratory materials involved in the development of our technology.
Fluctuations in the availability and price of laboratory materials and equipment could have an adverse effect on our ability to meet our technology development goals with our partners and thus our results from operations as well as future partnership opportunities.
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Any such interruption could significantly affect our business, financial condition, results of operations and reputation.
−Removed: In particular, we have purchased and rely on the Sartorius Ambr system.
−Removed: Sartorius AG (Sartorius) supplies us with the Ambr bioreactor system and related equipment and consumables, which are critical to our business.
−Removed: The Ambr system and its related consumables are provided solely by Sartorius.
−Removed: We are also materially reliant on the liquid handling robotics and associated consumables produced solely by the Hamilton Company (Hamilton).
−Removed: We obtain our supplies of equipment and materials from Sartorius and Hamilton under purchase orders and do not have supply contracts in place with either of these suppliers.
−Removed: Any disruption in the supply chain for these products would materially affect our business.
−Removed: While there are alternative types of equipment that we could use as a replacement for the Ambr system and/or the Hamilton workstations, switching to different systems would require significant capital investment, long lead times and significant training and validation.
+Added: In particular, we have purchased and rely on a bioreactor system and related equipment, consumables and liquid handling robotics, and associated consumables.
+Added: We obtain our supplies of equipment and materials under purchase orders and do not have supply contracts in place with certain suppliers.
+Added: Any disruption in the supply chain for these products could materially affect our business.
+Added: While there are alternative types of
+Added: equipment that we could use as a replacement, switching to different systems could require significant capital investment, long lead times and significant training and validation.
Our Integrated Drug Creation platform may not meet the expectations of our partners, which means our business, financial condition, results of operations and prospects could suffer.
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There is no assurance that we will be able to meet our partners’ needs in the future, or at all.
−Removed: To date, we have not yet had a program enter clinical testing licensing technology from our platform or progress to manufacture in a cGMP environment, which may reduce our existing and prospective partners' confidence in our platform.
−Removed: We also believe that pharmaceutical and biotechnology companies are likely to be particularly sensitive to defects in, or suboptimal performance of, our platform, including if our platform fails to deliver meaningful acceleration of certain research timelines accompanied by results at least as good as the results generated using legacy or other alternative technologies.
+Added: To date, we have not yet had a program licensing technology from our platform advance into clinical testing or progress to manufacture in a cGMP environment, which may reduce our existing and prospective partners' confidence in our platform.
+Added: We also believe that pharmaceutical and biotechnology companies are likely to be particularly sensitive to defects in, or suboptimal performance of, our platform, including if our platform fails to deliver meaningful reduction of certain research timelines accompanied by results at least as good as the results generated using legacy or other alternative technologies.
There can be no guarantee that our platform will meet the expectations of pharmaceutical and biotechnology companies.
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If we are unable to support fluctuations in the demand for our technology development programs, including ensuring that we have adequate capacity to meet increased demand, our business could suffer.
−Removed: As of March 1, 2022, we had 216 full-time employees and we expect to increase the number of employees and the scope of our operations as we continue to develop our technologies.
+Added: As of December 31, 2022, we had 193 full-time employees and we expect to increase the number of employees and the scope of our operations as we continue to develop our technologies and expand our number of programs.
As we seek to increase the number of our partnerships, expand the scope of our existing partnerships, pursue internal programs and further develop our technological capabilities, we may need to incorporate new equipment, implement new technology systems and laboratory processes and hire new personnel with different qualifications.
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A failure in any one of these areas could make it difficult for us to meet market expectations for our technologies, and could damage our reputation and the prospects for our business.
−Removed: To manage our anticipated expansion, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel.
−Removed: Also, our management team may need to divert a disproportionate amount of its attention away from its day-to-day activities and devote a substantial amount of time to managing these business expansion activities.
+Added: To manage future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel.
+Added: Also, our management team may need to divert a disproportionate amount of its attention away from its day-to-day activities and devote a substantial amount of time to managing growth activities.
Due to our limited resources and early stage of growth, we may not be able to effectively manage this simultaneous execution and the expansion of our operations.
This may result in weaknesses in our infrastructure, operational mistakes, slower development of our technology development programs, loss of business opportunities, loss of employees and reduced productivity among our employees.
−Removed: If our management is unable to effectively manage our expected development and expansion, our expenses may increase more than expected, our ability to generate or increase our revenue could be reduced and we may not be able to implement our business strategy.
−Removed: Our future financial performance, and our ability to develop and commercialize our technologies and compete effectively, will depend, in part, on our ability to effectively manage our future development and expansion.
+Added: If our management is unable to effectively manage our expected development and growth, our expenses may increase more than expected, our ability to generate or increase our revenue could be reduced and we may not be able to implement our business strategy.
+Added: Our future financial performance, and our ability to develop and commercialize our technologies and compete effectively, will depend, in part, on our ability to effectively manage our future development and growth.
Our business development organization is currently limited, and if we are unable to expand our business development organization to reach our existing and potential partners, our business may be adversely affected.
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Competition for employees capable of negotiating and entering into partnerships with pharmaceutical and biotechnology companies is intense.
−Removed: We may not be able to attract and retain personnel or be able to build an efficient and effective business development organization, which could negatively impact market adoption of our platform and limit our revenue growth and potential profitability.
−Removed: In addition, the time and cost of establishing a specialized business development or sales team for a particular
−Removed: future service, technology, asset, or set of assets, may be difficult to justify in light of the revenue generated or projected.
+Added: We may not be able to attract and retain personnel
+Added: or be able to build an efficient and effective business development organization, which could negatively impact market adoption of our platform and limit our revenue growth and potential profitability.
+Added: In addition, the time and cost of establishing a specialized business development or sales team for a particular future service, technology, asset, or set of assets, may be difficult to justify in light of the revenue generated or projected.
Our expected future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees.
Our future financial performance and our ability to successfully sell our programs and to compete effectively will depend, in part, on our ability to manage this potential future growth effectively, without compromising quality.
−Removed: The loss of any member of our senior management team or our inability to attract and retain highly skilled scientists and business development professionals could adversely affect our business.
−Removed: Our success depends on the skills, experience and performance of key members of our senior management team, including Sean McClain, our founder and Chief Executive Officer, and Matthew Weinstock, our Chief Technology Officer.
+Added: Our corporate reorganization plan and the associated workforce reduction announced in August 2022 may not result in the full anticipated savings and may disrupt operations.
+Added: In August 2022, we announced a corporate reorganization plan to streamline our scientific and technical teams and prioritize key technical initiatives including AI drug and target discovery.
+Added: We may not fully realize the anticipated benefits, savings and improvements in our cost structure from our reorganization efforts due to unforeseen difficulties, delays or unexpected costs.
+Added: If we are unable to realize anticipated cost savings from the reorganization, our operating results and financial condition may be adversely affected.
+Added: Furthermore, our corporate reorganization plan may be disruptive to our operations.
+Added: For example, our workforce reductions could lead to unanticipated consequences, such as turnover beyond planned reductions, increased difficulties in our day-to-day operations or claims of unlawful discharge.
+Added: Our workforce reductions may also harm our ability to attract and retain qualified personnel who are critical to our business.
+Added: Any failure to attract or retain qualified personnel could prevent us from successfully executing key technical initiatives.
+Added: The loss of any member of our senior leadership team or our inability to attract and retain highly skilled scientists and business development professionals could adversely affect our business.
+Added: Our success depends on the skills, experience and performance of key members of our senior leadership team, including Sean McClain, our founder and Chief Executive Officer, and Andreas Busch, Ph.D., our Chief Innovation Officer.
The individual and collective efforts of these employees will be important as we continue to develop our platform and our technology, and as we expand our commercial activities.
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Competition for personnel with expertise in AI-powered drug discovery is particularly intense.
−Removed: Additionally, our geographic location in Vancouver, Washington, which does not have as high a concentration of innovative biotechnology or AI companies as other geographic locations, may negatively impact our ability to attract and retain top talent.
+Added: Additionally, our headquarters located in Vancouver, Washington, which does not have as high a concentration of innovative biotechnology or AI companies as other geographic locations, may negatively impact our ability to attract and retain top talent.
We also face competition from universities and public and private research institutions in recruiting and retaining highly qualified scientific personnel.
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A key risk in the area of retention is that all of our employees are at-will.
−Removed: We may not realize the expected benefits of our recent acquisitions because of difficulties related to integration.
+Added: We may not realize the expected benefits of our acquisitions because of difficulties related to integration.
In January 2021, we consummated the Denovium acquisition, and, in June 2021, we consummated the Totient acquisition.
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If we are not able to successfully integrate Denovium’s or Totient’s businesses with ours, the anticipated benefits of such acquisitions may not be realized fully or may take longer than expected to be realized.
−Removed: For instance, in connection with the Denovium acquisition, we acquired a team of computational biologists and artificial intelligence experts along with a proprietary deep learning platform geared for protein discovery and engineering.
−Removed: There is no guarantee that the assets acquired in the Denovium transaction will continue to benefit our projects or that we will be able to achieve our ultimate goal of in silico protein and cell line design.
−Removed: Further, it is possible that we will experience disruption of either our ongoing business or the legacy Denovium business, including as we continue to service a limited number of Denovium’s ongoing contracts for the foreseeable future.
+Added: For instance, in connection with the
+Added: Denovium acquisition, we acquired a team of computational biologists and artificial intelligence experts along with a proprietary deep learning platform geared for protein discovery and engineering.
+Added: There is no guarantee that the assets acquired in the Denovium transaction will continue to benefit our projects or that we will be able to achieve our ultimate goal of in silico biologic drug discovery and cell line design.
+Added: Further, it is possible that we will experience disruption of our ongoing business.
We may also incur higher than expected costs as a result of the acquisitions or experience an overall post-completion process that takes longer than originally anticipated.
In addition, at times the attention of certain members of our management and resources may be focused on integration of the acquired businesses and diverted from day-to-day business operations, which may disrupt our ongoing business and the business of the combined company.
−Removed: We have incurred, and expect to continue to incur, significant, non-recurring costs in connection with the acquisitions of Denovium and Totient and integrating our operations with Denovium’s and Totient’s, including costs to maintain employee morale and to retain key employees.
+Added: We have incurred significant, non-recurring costs in connection with the acquisitions of Denovium and Totient and integrating our operations with Denovium’s and Totient’s, including costs to maintain employee morale and to retain key employees.
Management cannot ensure that the elimination of duplicative costs or the realization of other efficiencies will offset the transaction and integration costs in the near term or at all.
−Removed: Furthermore, uncertainty about the effect of the Denovium acquisition or the Totient acquisition on our business, employees, partners, and third parties with whom we have relationships may have an adverse effect on our business, financial condition, results of
−Removed: operations and prospects.
−Removed: In addition, such challenges in integrating our acquisition of Denovium or Totient may be magnified by the ongoing COVID-19 pandemic.
+Added: Furthermore, uncertainty about the effect of the Denovium acquisition or the Totient acquisition on our business, employees, partners, and third parties with whom we have relationships may have an adverse effect on our business, financial condition, results of operations and prospects.
Other potential difficulties we may encounter as part of the integration process include (i) the challenge of integrating complex systems, operating procedures, regulatory compliance programs, technology, networks and other assets of Denovium and Totient in a seamless manner that minimizes any adverse impact on our employees, suppliers and other business partners;
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We have made technology acquisitions and expect to pursue acquisitions of businesses and assets in the future.
−Removed: We also may pursue strategic alliances and joint ventures that leverage our technologies and industry experience to expand our offerings.
+Added: We also may pursue strategic alliances, joint ventures or other commercial deal structures that leverage our technologies and industry experience to expand our offerings.
Additionally, we may invest in certain wholly-owned preclinical and/or clinical development programs with the goal of licensing them to partners for clinical development.
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Integration of an acquired company also may disrupt ongoing operations and require management resources that we would otherwise focus on developing our existing business.
−Removed: We may not realize the anticipated benefits of any acquisition, technology license, strategic alliance or joint venture.
+Added: We may not realize the anticipated benefits of any acquisition, technology license, strategic alliance, joint venture, or other commercial deal structure.
We also may experience losses related to investments in other companies, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
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To finance any acquisitions or asset purchase, we may choose to issue securities as consideration, which would dilute the ownership of our stockholders.
−Removed: Additional funds may not be available on terms that are favorable to us, or at all.
+Added: Additional funds may not be available on terms that are favorable
+Added: to us, or at all.
If the price of our common stock is low or volatile, we may not be able to acquire companies or assets using our securities as consideration.
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If our partners’ operations are found to be in violation of any of such laws or any other governmental regulations that apply, we may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations, exclusion from participation in federal and state healthcare programs and responsible individuals may be subject to imprisonment.
−Removed: Our loan and security agreement contains covenants that restrict our operating activities, and we may be required to repay the outstanding indebtedness in an event of default, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
−Removed: In June 2018, we entered into a Loan and Security Agreement (LSA), which was subsequently amended, with Bridge Bank (Lender), a di vision of Western Alliance Bank pursuant to which the Lender agreed to provide us a term loan up to $3.0 million with a maturity date in May 2022.
−Removed: We initially borrowed $0.3 million that was funded in June 2018.
−Removed: In March 2019, we entered into a first amendment to the loan and security agreement to increase total borrowings to $3.0 million.
−Removed: In May 2020, we entered into a second amendment to the loan and security agreement that increased total borrowings to $5.0 million and extended the maturity term date through May 2024.
−Removed: In June 2021, we entered into the fifth amendment, which modified the term maturity date and related amortization schedule to end in June 2023.
−Removed: Until we have repaid such indebtedness, the LSA subjects us to various customary covenants, including requirements as to financial reporting, liquidity ratios and insurance and restrictions on our ability to dispose of our business or property, to change our line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on our property, to pay any dividends or make other distributions on capital stock other than dividends payable solely in capital stock, to redeem capital stock, to enter into in-bound licensing agreements, to engage in transactions with affiliates, and to encumber our intellectual property.
+Added: Our equipment financing agreements may contain covenants that restrict our operating activities, and we may be required to repay the outstanding indebtedness in an event of default, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
+Added: We have entered into a Master Financing Agreement (MFA) pursuant to which the lender agreed to provide us equipment financing.
+Added: Until we have repaid such indebtedness, the MFA subjects us to various customary covenants, including requirements as to financial reporting, liquidity ratios and maintaining insurance.
Our business may be adversely affected by these restrictions on our ability to operate our business.
−Removed: Following the amendments, we were permitted to make interest only payments on the LSA through May 2021, at which time amortization began.
−Removed: However, we may be required to repay the outstanding indebtedness under the loan facility if an event of default occurs under the LSA.
−Removed: An event of default will occur if, among other things, we fail to make required payments under the LSA;
−Removed: we breach any of our covenants under the LSA, subject to specified cure periods with respect to certain breaches;
−Removed: the Lender determines that a material adverse change (as defined in the LSA) has occurred;
+Added: We may be required to repay the outstanding indebtedness under the MFA if an event of default occurs under the MFA.
+Added: An event of default will occur if, among other things, we fail to make required payments under the MFA;
+Added: we breach any of our covenants under the MFA, subject to specified cure periods with respect to certain breaches;
+Added: the lender determines that a material adverse change (as defined in the MFA) has occurred;
we or our assets become subject to certain legal proceedings, such as bankruptcy proceedings;
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In such a case, we may be required to delay, limit, reduce or terminate our operations or grant to other parties the rights to develop and market our Integrated Drug Creation platform that we would otherwise prefer to develop and market ourselves.
−Removed: The Lender could also exercise its rights as secured lender to take possession of and to dispose of the collateral securing the term loan, which collateral includes substantially all of our property (excluding intellectual property, which is subject to a negative pledge).
+Added: The lender could also exercise its rights as secured lender to take possession of and to dispose of the collateral securing the MFA, which collateral includes substantially all of our property.
Our business, financial condition, results of operations and prospects could be materially adversely affected as a result of any of these events.
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Our facility and equipment could be harmed or rendered inoperable or inaccessible by natural or man-made disasters or other circumstances beyond our control, including fire, earthquake, power loss, communications failure, war or terrorism, or another catastrophic event, such as a pandemic or similar outbreak or public health crisis, which may render it difficult or impossible for us to support our partners and develop updates, upgrades and other improvements to our technology and platform, advanced automation systems, and advanced application for some period of time.
−Removed: We may be unable to execute on our technology development activities if our facility is inoperable or suffers a loss of utilization for even a short period of time, may result in the loss of partners or harm to our reputation, and we may be unable to regain those partners or repair our reputation in the future.
+Added: We may be unable to execute on our technology development activities if our facility is inoperable or suffers a loss of utilization for even a short period of time, which may result in the loss of partners or harm to our reputation, and we may be unable to regain those partners or repair our reputation in the future.
Furthermore, our facility and the equipment we use to perform our technology development work could be unavailable or costly and time-consuming to repair or replace.
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We depend on our information technology systems, and any failure of these systems could harm our business.
−Removed: We depend on information technology and telecommunications systems for significant elements of our business operations, including the operation of our AI platform (Denovium Engine), our antibody discovery software platform, our computational biology system, our knowledge management system, our partner reporting, our platform, our advanced automation systems, and advanced application software.
−Removed: These systems involve computational resources and data storage distributed between onsite servers, cloud platforms hosted by numerous third-party providers (e.g., Amazon Web Services), and a private graphics processing unit cluster owned by us but located and maintained at a facility in Texas.
+Added: We depend on information technology and telecommunications systems for significant elements of our business operations, including the operation of our AI Engine, our antibody discovery software platform, our computational biology system, our knowledge management system, our partner reporting, our platform, our advanced automation systems, and advanced application software.
+Added: These systems involve computational resources and data storage distributed between onsite servers, cloud platforms hosted by third-party providers, and a private graphics processing unit cluster owned by us but located and maintained at a facility in Texas.
We have installed, and expect to expand, a number of enterprise software systems that affect a broad range of business processes and functional areas, including for example, systems handling human resources, procurement, financial controls and reporting, contract management, regulatory compliance and other infrastructure operations.
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Because we currently market our technologies and our partners may market products derived from our technologies outside of the United States and we or our partners may market future technologies, products and services outside of the United States, if cleared, authorized or approved, our business is subject to risks associated with doing business outside of the United States, including an increase in our expenses and diversion of our management’s attention from the development of future products and services.
−Removed: In addition, as a result of the Totient acquisition, we currently maintain offices and have employees located in Serbia.
+Added: In addition, we currently maintain offices and have employees located in Zug, Switzerland and Belgrade, Serbia.
Our current and planned international operations could expose us to additional risks that may adversely affect our business and financial results, including:
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Public health crises such as pandemics or similar outbreaks could cause a disruption of the development of our platform technologies, and adversely impact our business.
−Removed: In late 2019, a novel strain of coronavirus, SARS-CoV-2, which resulted in the ongoing COVID-19 pandemic, surfaced in Wuhan, China.
−Removed: Since then, COVID-19 has spread across the globe and to multiple regions within the United States, including Vancouver, Washington, where our primary office and laboratory space is located.
−Removed: The COVID-19 pandemic is continuing to evolve, and to date has led to the implementation of various responses, including government imposed shelter-in-place orders, quarantines, travel restrictions, vaccination and mask mandates and other public health safety measures, as well as reported adverse impacts on healthcare resources, facilities and providers across the United States and in other countries.
−Removed: In addition, the spread of more contagious strains, such as the Omicron and Delta variants, could cause the COVID-19 pandemic to last longer than expected.
−Removed: In the event that government authorities were to further modify current restrictions, our employees conducting technology development or manufacturing activities may not be able to access our laboratory and manufacturing space, and our core activities may be significantly limited or curtailed, possibly for an extended period of time.
−Removed: Our business has been and may continue to be impacted negatively in a number of ways.
−Removed: For example, we have experienced delays in technology development activities due to supply chain interruptions related to global personnel shortages resulting in delays or pauses in the distribution of raw materials and finished goods, as well as diversion of personal protective equipment and biotechnology research and biomanufacturing supplies to healthcare organizations and COVID-19 vaccine developers.
−Removed: In addition, the global focus on the pandemic and uncertainties of markets has extended our business development timelines, and has negatively impacted our partners’ and potential partners’ willingness to advance negotiations in a timely manner.
−Removed: We have also experienced difficulties recruiting personnel, especially from outside our region, due to travel restrictions and overall uncertainties and reluctance of prospective employees to relocate during the COVID-19 pandemic.
−Removed: As a result of the ongoing COVID-19 pandemic, or similar pandemics and outbreaks, we have experienced and may continue to experience severe delays and disruptions, including, for example:
+Added: The COVID-19 pandemic has led to the implementation of various responses, including government imposed shelter-in-place orders, quarantines, travel restrictions, vaccination and mask mandates and other public health safety measures, as well as reported adverse impacts on healthcare resources, facilities and providers across the United States and in other countries.
+Added: In the event that government authorities were to impose additional restrictions due to COVID-19 or other public health crises, our employees conducting technology development or manufacturing activities may not be able to access our laboratory and manufacturing space, and our core activities may be significantly limited or curtailed, possibly for an extended period of time.
+Added: Our business may continue to experience delays in technology development activities due to supply chain interruptions, as well as diversion of biotechnology research and biomanufacturing supplies to healthcare organizations and vaccine developers.
+Added: As a result of the COVID-19 pandemic, or similar pandemics and outbreaks, we have experienced and may continue to experience severe delays and disruptions, including, for example:
• interruption of or delays in receiving products and supplies from third parties;
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• limitations on employee resources that would otherwise be focused on the conduct of our activities, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people.
−Removed: Any of these factors could severely impact our technology development activities, business operations and business development, or delay necessary interactions with local regulators, and other important contractors and partners.
−Removed: These and other factors arising from the COVID-19 pandemic could worsen in countries that are already afflicted with COVID-19, could continue to spread to additional countries, or could return to countries where the pandemic has been partially contained, and could further adversely impact our ability to conduct our business generally and have a material adverse impact on our operations and financial condition and results.
−Removed: The extent to which the COVID-19 pandemic may negatively impact our operations and results of operations or those of our stakeholders will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, additional or modified government actions, new information that will emerge concerning the severity and impact of the COVID-19 pandemic, the spread of new and potentially more contagious strains of COVID-19, such as the Omicron and Delta variants, and actions to contain the outbreak or treat its impact, such as social distancing, quarantines, isolation periods, lock-downs or business closures.
+Added: Any of these factors could severely impact our technology development activities, business operations and business development, or delay necessary interactions with local regulators, and other important contractors
+Added: and partners.
+Added: These and other factors may adversely impact our ability to conduct our business generally and have a material adverse impact on our operations and financial condition and results.
We rely and expect in the future to rely on a limited number of outside parties to perform the cGMP manufacturing for clinical development and commercialization of any biologic product candidates produced using our technology.
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Risks Related to Our Intellectual Property
−Removed: If we are unable to obtain and maintain sufficient intellectual property protection for our technologies, including our platform, Denovium Engine deep learning technology and computational antibody and target discovery technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technologies or a platform similar or identical to ours, and our ability to successfully leverage our platform technologies may be impaired.
+Added: If we are unable to obtain and maintain sufficient intellectual property protection for our technologies, including our cell line and expression technologies, generative deep learning technology, proprietary assays and techniques, and antibody and target discovery technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technologies similar or identical to ours, and our ability to successfully leverage our technologies may be impaired.
We rely on patent protection as well as trademark, copyright, trade secret and other intellectual property rights protection and contractual restrictions to protect our proprietary technologies, all of which provide limited protection and may not adequately protect our rights or permit us to gain or keep a competitive advantage.
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Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.
−Removed: As of March 1, 2022, we own 54 issued or granted patents and 109 pending patent applications worldwide, which includes five issued U.S.
−Removed: patents and 60 pending U.S.
−Removed: patent applications.
+Added: We own issued, or granted, patents and pending patent applications worldwide.
It is possible that none of our pending patent applications will result in issued patents in a timely fashion or at all, and even if patents are granted, they may not provide a basis for intellectual property protection of commercially viable products or services, may not provide us with any competitive advantages, or may be challenged and invalidated by third parties.
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The outcome of patent litigation or other proceeding can be uncertain, and any attempt by us to enforce our patent rights against others or to challenge the patent rights of others may not be successful, or, if successful, may take substantial time and result in substantial cost, and may divert our efforts and attention from other aspects of our business.
+Added: As another example, a European Unified Patent Court (UPC) is scheduled to come into force during 2023.
+Added: The UPC will be a common patent court to hear patent infringement and revocation proceedings effective for member states of the European Union.
+Added: This could enable third parties to seek revocation of any of our European patents in a single proceeding at the UPC rather than through multiple proceedings in each of the jurisdictions in which the European patent is validated.
+Added: Any such revocation and loss of patent protection could have a material adverse impact on our business and our ability to commercialize or license our technology and products.
+Added: Moreover, the controlling laws and regulations of the UPC will develop over time, and may adversely affect our ability to enforce our European patents or defend the validity thereof.
+Added: We may decide to opt out our European patents and patent applications from the UPC.
+Added: If certain formalities and requirements are not met, however, our European patents and patent applications could be challenged for non-compliance and brought under the jurisdiction of the UPC.
+Added: We cannot be certain that our European patents and patent applications will avoid falling under the jurisdiction of the UPC, if we decide to opt out of the UPC.
Any changes we make to our technology, including changes that may be required for commercialization or that cause them to have what we view as more advantageous properties may not be covered by our existing patent portfolio, and we may be required to file new applications and/or seek other forms of protection for any such alterations to our technology.
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Assuming that other requirements for patentability are met, prior to March 16, 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent.
−Removed: On or after March 16, 2013, under the Leahy-Smith America Invents Act (America Invents Act) enacted in September 16, 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention.
+Added: On or after March 16, 2013, under the Leahy-Smith America Invents Act (America Invents Act) enacted in September 16, 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a
+Added: third party was the first to invent the claimed invention.
A third party that files a patent application in the USPTO on or after March 16, 2013, but before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by such third party.
This will require us to be cognizant of the time from invention to filing of a patent application.
−Removed: Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any patent application related to our technology or (ii) invent any of the inventions claimed in our or our licensor’s patents or patent applications.
+Added: Because patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any patent application related to our technology or (ii) invent any of the inventions claimed in our or our licensor’s patents or patent applications.
The America Invents Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation.
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The outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable.
−Removed: If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on certain aspects of
−Removed: our platform technologies.
+Added: If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on certain aspects of our platform technologies.
In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future products.
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If any such in-license is terminated, or if the licensed patents fail to provide the intended exclusivity, competitors or other third parties might have the freedom to market or develop technologies similar to ours.
−Removed: In addition, absent the rights granted to us under such license agreements, we
−Removed: may infringe the intellectual property rights that are the subject of those agreements, we may be subject to litigation by the licensor, and if such litigation by the licensor is successful we may be required to pay damages to our licensor, or we may be required to cease our technology development and commercialization activities which are deemed infringing, and in such event we may ultimately need to modify our activities or technologies to design around such infringement, which may be time- and resource-consuming, and which may not be ultimately successful.
+Added: In addition, absent the rights granted to us under such license agreements, we may infringe the intellectual property rights that are the subject of those agreements, we may be subject to litigation by the licensor, and if such litigation by the licensor is successful we may be required to pay damages to our licensor, or we may be required to cease our technology development and commercialization activities which are deemed infringing, and in such event we may ultimately need to modify our activities or technologies to design around such infringement, which may be time- and resource-consuming, and which may not be ultimately successful.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.
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Moreover, our licensors may own or control intellectual property that has not been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing or otherwise violating the licensor’s rights.
−Removed: In addition, certain of our agreements with third parties may provide that intellectual property arising under these agreements, such as data that could be valuable to our business, will be owned by the counterparty, in which case, we may not have adequate rights to use such data or have exclusivity with respect to the use of such data, which could result in third parties, including our competitors, being able to use such data to compete with us.
+Added: In addition, certain of our agreements with third parties
+Added: may provide that intellectual property arising under these agreements, such as data that could be valuable to our business, will be owned by the counterparty, in which case, we may not have adequate rights to use such data or have exclusivity with respect to the use of such data, which could result in third parties, including our competitors, being able to use such data to compete with us.
If we cannot acquire or license rights to use technologies on reasonable terms or if we fail to comply with our obligations under such agreements, we may not be able to commercialize new technologies or services in the future and our business could be harmed.
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The actions of our licensors may therefore affect our rights to use our sublicensed intellectual property, even if we are in compliance with all of the obligations under our license agreements.
−Removed: Should our licensors or any of the upstream licensors fail to comply with their obligations under the agreements pursuant to which they obtain
−Removed: the rights that are sublicensed to us, or should such agreements be terminated or amended, our or our partners’ ability to further commercialize our technologies or products generated using our technologies may be materially harmed.
+Added: Should our licensors or any of the upstream licensors fail to comply with their obligations under the agreements pursuant to which they obtain the rights that are sublicensed to us, or should such agreements be terminated or amended, our or our partners’ ability to further commercialize our technologies or products generated using our technologies may be materially harmed.
Further, we may not have the right to control the prosecution, maintenance and enforcement of all of our licensed and sublicensed intellectual property, and even when we do have such rights, we may require the cooperation of our licensors and upstream licensors, which may not be forthcoming.
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Our licensors may have relied on third-party consultants or partners or on funds from third parties such that our licensors are not the sole and exclusive owners of the patents and patent applications we in-license.
−Removed: If other third parties have ownership rights to patents or patent applications we in-license, they may be able to license such patents to our competitors, and our competitors could market competing technologies and services.
+Added: If other third parties have ownership rights to patents or patent applications we in-license, they may be able to license such patents to our competitors, and our competitors could market competing technologies and
This could have a material adverse effect on our competitive position, business, financial conditions, results of operations and prospects.
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The legal systems of many other countries do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult for us to stop the misappropriation or other violations of our intellectual property rights including infringement of our patents in such countries.
−Removed: Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent
−Removed: applications at risk of not issuing, and could provoke third parties to assert claims against us.
+Added: Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert claims against us.
We may not prevail in any lawsuits that we initiate, or that are initiated against us, and the damages or other remedies awarded, if any, may not be commercially meaningful.
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In addition to pursuing patents on our technologies, we take steps to protect our intellectual property and proprietary technologies by entering into agreements, including confidentiality agreements, non-disclosure agreements and intellectual property assignment agreements, with our employees, consultants, academic institutions, corporate and/or strategic partners, potential or existing investors and, when needed, our advisers.
−Removed: However, we cannot be certain that such agreements have been entered into with all relevant parties, and we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.
+Added: we cannot be certain that such agreements have been entered into with all relevant parties, and we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.
For example, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.
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Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.
−Removed: In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual
−Removed: property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own.
+Added: In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own.
The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property.
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If we or our future licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our systems.
−Removed: Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees, and certain partners or partners may defer engaging with us until the particular dispute is resolved.
+Added: Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees, and certain partners may defer engaging with us until the particular dispute is resolved.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.
If we become involved in patent litigation or other proceedings related to a determination of rights, we could incur substantial costs and expenses, substantial liability for damages or be required to stop our development and commercialization efforts of our technologies.
−Removed: There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the life sciences, clinical diagnostics and drug discovery industries,
−Removed: including patent infringement lawsuits, declaratory judgment litigation and adversarial proceedings before the USPTO, including interferences, derivation proceedings, ex parte reexaminations, post-grant review and inter partes review, as well as corresponding proceedings in foreign courts and foreign patent offices.
+Added: There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the life sciences, clinical diagnostics and drug discovery industries, including patent infringement lawsuits, declaratory judgment litigation and adversarial proceedings before the USPTO, including interferences, derivation proceedings, ex parte reexaminations, post-grant review and inter partes review, as well as corresponding proceedings in foreign courts and foreign patent offices.
We may, in the future, become involved with litigation or actions at the USPTO or foreign patent offices with various third parties.
−Removed: We expect that the number of such claims may increase as our business, visibility and partnership base expand and the number of our technology development programs and resultant licensed technologies increases, and as the level of competition in our industry increases.
+Added: We expect that the number of such claims may increase as our business, visibility and partnership base expand and the number of our technology development programs and resultant licensed
+Added: technologies increases, and as the level of competition in our industry increases.
Any infringement claim, regardless of its validity, could harm our business by, among other things, resulting in time-consuming and costly litigation, diverting management’s time and attention from the development of our business, requiring the payment of monetary damages (including treble damages, attorneys’ fees, costs and expenses) or royalty payments.
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We could also voluntarily agree to defend or indemnify third parties in instances where we are not obligated to do so if we determine it would be important to our business relationships.
−Removed: If we are required or agree to defend or indemnify third parties in connection with any infringement claims, we could incur significant costs and expenses that could adversely affect our business, operating results or financial condition.
+Added: If we are required or agree to defend or indemnify third parties in connection with
+Added: any infringement claims, we could incur significant costs and expenses that could adversely affect our business, operating results or financial condition.
Obtaining and maintaining our patent protection depends on compliance with various required procedures, document submissions, fee payments and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
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Some of our jointly owned or licensed patents are subject to the provisions of the Bayh-Dole Act.
−Removed: If our licensors fail to
−Removed: comply with the regulations of the Bayh-Dole Act, they could lose title to any patents subject to such regulations, which could affect our license rights under the patents and our ability to stop others from using or commercializing similar or identical technology and products, or limit patent protection for our technology and products.
+Added: If our licensors fail to comply with the regulations of the Bayh-Dole Act, they could lose title to any patents subject to such regulations, which could affect our license rights under the patents and our ability to stop others from using or commercializing similar or identical technology and products, or limit patent protection for our technology and products.
Risks Related to Our Common Stock
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• significant lawsuits, including patent or stockholder litigation;
−Removed: • the impact of the ongoing COVID-19 pandemic, including the Omicron and Delta variants, on our business;
+Added: • the impact of public health crises, including the COVID-19 pandemic, on our business;
• general political and economic conditions;
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In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities.
−Removed: This type of litigation,
−Removed: if instituted, could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, financial condition and results of operations.
−Removed: We identified a material weakness in our internal control over our financial reporting process.
−Removed: If we are unable to remediate this material weakness, we may not be able to accurately or timely report our financial condition or results of operations.
+Added: This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, financial condition and results of operations.
+Added: We in the past have had, and in the future may have, a material weakness in our internal control over our financial reporting process.
+Added: If we are unable to remediate an identified material
+Added: weakness, we may not be able to accurately or timely report our financial condition or results of operations.
Prior to our IPO, we were a private company with limited accounting personnel to adequately execute our accounting processes and other supervisory resources with which to address our internal control over financial reporting.
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A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: We identified a material weakness in our internal control over our financial statement close process specifically related to an insufficient complement of accounting and finance personnel with the necessary US GAAP technical expertise to timely identify and account for complex or non-routine transactions.
−Removed: These control deficiencies could result in a misstatement of our accounts or disclosures that would result in a material misstatement of our financial results that would not be prevented or detected, and accordingly, we determined that these control deficiencies constitute a material weakness.
−Removed: We are working to remediate the material weakness and are taking steps to strengthen our internal control over financial reporting through the hiring of additional finance and accounting personnel with the requisite technical knowledge and skills.
−Removed: With the additional personnel, we intend to take appropriate and reasonable steps to remediate this material weakness through the implementation of appropriate segregation of duties, formalization of accounting policies and controls and retention of appropriate expertise for complex accounting transactions.
−Removed: We will not be able to fully remediate these control deficiencies until these steps have been completed and have been operating effectively for a sufficient period of time.
−Removed: The hiring of additional finance and accounting personnel and the implementation of improvements to our accounting and proprietary systems and controls may be costly and time consuming.
−Removed: We cannot assure you that the measures we have taken to date will be sufficient to remediate the material weakness we identified or avoid the identification of additional material weaknesses in the future.
−Removed: If the steps we take do not remediate the material weakness in a timely manner, there could continue to be a reasonable possibility that this material weakness or other control deficiencies could result in a material misstatement of our annual or interim financial statements that would not be prevented or detected on a timely basis.
−Removed: If we fail to remediate our material weakness, identify future material weaknesses in our internal control over financial reporting or fail to meet the demands that will be placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act of 2002, as amended (Sarbanes-Oxley Act), we may be unable to accurately report our financial results or report them within the timeframes required by law or stock exchange regulations.
+Added: As of December 31, 2022, this material weakness has been remediated, see “Part II — Item 9A-Remediation of Material Weakness” in this Annual Report on Form 10-K.
+Added: Although we were able to remediate this material weakness, there is no guarantee that we will not experience additional material weaknesses in the future or that we will be able to remediate any such material weakness in a timely manner or at all.
+Added: If we identify future material weaknesses in our internal control over financial reporting, we may be unable to accurately report our financial results or report them within the timeframes required by law or stock exchange regulations.
Failure to comply with Section 404 of the Sarbanes-Oxley Act could also potentially subject us to sanctions or investigations by the SEC or other regulatory authorities.
If additional material weaknesses exist or are discovered in the future, and we are unable to remediate any such material weakness, our reputation, results of operations and financial condition could suffer.
−Removed: If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.
−Removed: Ensuring that we have effective internal financial and accounting controls and procedures in place so that we can produce financial statements that are, in all material respects, in conformity with accounting principles generally accepted in the United States, on a timely basis is a costly and time-consuming effort that needs to be re-evaluated annually.
−Removed: Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles.
−Removed: In connection with our IPO, we began the process of documenting, reviewing and improving our internal controls and procedures for compliance with Section 404 of the Sarbanes-Oxley Act, which require annual management assessment of the
−Removed: effectiveness of our internal control over financial reporting.
−Removed: We continue to recruit additional finance and accounting personnel with certain skill sets that we need as a public company.
−Removed: Implementing any appropriate changes to our internal controls may distract our officers and employees, entail substantial costs to modify our existing processes, and take significant time to complete.
−Removed: These changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our business.
−Removed: In our efforts to maintain proper and effective internal control over financial reporting, we may discover new significant deficiencies or material weaknesses in our internal control over financial reporting, which we may not successfully remediate on a timely basis or at all.
−Removed: Any failure to remediate our existing any new significant deficiencies or material weaknesses identified by us or to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements.
−Removed: If we identify one or more material weaknesses in the future, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements, which may harm the market price of our common stock.
+Added: We are obligated to develop and maintain proper and effective internal control over financial reporting.
+Added: These internal controls may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.
+Added: We are required, pursuant to Section 404 of the Sarbanes–Oxley Act, to furnish a report by management on the effectiveness of our internal control over financial reporting on an annual basis.
+Added: This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
+Added: During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.
+Added: Any failure to remediate new significant deficiencies or material weaknesses identified by us or to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements.
+Added: If we identify one or more material weaknesses in the future, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements, which may harm the market price of our common stock, and we may be subject to investigation or sanctions by the SEC.
We continue to identify key business metrics to evaluate our business and technology, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions, and any such metrics may not accurately reflect all aspects of our business needed to make such evaluations and decisions, in particular as our business continues to grow.
−Removed: In addition to our financial results, we expect to review a number of operating and financial metrics, including number of programs under contract, the trend of potential downstream revenue terms (milestones and royalties) of the portfolio, the performance of the portfolio in probability of success in achieving clinical milestones as compared to historical averages and the performance of the portfolio in the time taken to achieve clinical milestones on a Net Present Value (NPV) basis, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.
+Added: In addition to our financial results, we expect to review a number of operating and financial metrics, including number of programs under contract, the trend of potential downstream revenue terms (milestone payments and royalties) of the portfolio, the performance of the portfolio in probability of success in achieving clinical milestones as compared to historical averages and the performance of the portfolio in the time taken to achieve clinical milestones on a Net Present Value (NPV) basis, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.
To date, we have only entered into a limited number of programs with respect to which we have or are positioned to negotiate royalty- and milestone-bearing licenses.
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Any metrics that we may identify may not accurately reflect all aspects of our business and we anticipate that these metrics may change or may be substituted for additional or different metrics as our business grows and as we introduce new solutions.
−Removed: If we fail to review other relevant information or change or substitute the key business metrics we review as our business grows, our ability to accurately formulate financial projections and make strategic decisions may be compromised and our business, financial results and future growth prospects may be adversely impacted.
+Added: If we fail to review other relevant information or change or substitute the key
+Added: business metrics we review as our business grows, our ability to accurately formulate financial projections and make strategic decisions may be compromised and our business, financial results and future growth prospects may be adversely impacted.
Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall.
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If we sell common stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales.
−Removed: Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences, and privileges senior to the holders of our common stock, including common stock sold in our IPO.
+Added: Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences, and privileges senior to the holders of our common stock.
Pursuant to our 2021 Stock Option and Incentive Plan (2021 Plan) we are authorized to grant stock options, restricted stock units, stock appreciation rights and other stock-based awards to our employees, directors and consultants.
Pursuant to our 2021 Employee Stock Purchase Plan (2021 ESPP), we may sell shares of our common stock to eligible employees at a discount to the market price of our common stock.
−Removed: Initially, the aggregate number of shares of our common stock that may be issued pursuant to share awards under the 2021 Plan and 2021 ESPP is 9,037,500 shares.
−Removed: The number of shares of common stock reserved for issuance under the 2021 Plan and 2021 ESPP shall be increased on January 1, 2022 and each January 1
−Removed: thereafter by 5% and 1%, respectively, of the total number of shares of common stock outstanding on December 31 of the preceding calendar year or a lesser number of shares determined by our board of directors.
+Added: As of January 1, 2023 the aggregate number of shares of our common stock that may be issued pursuant to share awards under the 2021 Plan and 2021 ESPP is 15,322,711 shares.
+Added: The number of shares of common stock reserved for issuance under the 2021 Plan and 2021 ESPP are automatically increased on each January 1 by 5% and 1%, respectively, of the total number of shares of common stock outstanding on December 31 of the preceding calendar year or a lesser number of shares determined by our board of directors.
Unless our board of directors elects not to increase the number of shares available for future issuance each year, our stockholders will experience additional dilution, which could cause our share price to fall.
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Our principal stockholders and management own a significant percentage of our shares and will be able to exert significant influence over matters subject to stockholder approval.
−Removed: As of March 1, 2022, our executive officers, directors, and 5% stockholders beneficially owned approximately 60.73% of our common stock.
+Added: As of March 15, 2023, our executive officers, directors, and 5% stockholders beneficially owned greater than 50% of our common stock.
Therefore, these stockholders have the ability to influence us through this ownership position.
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Sales of a substantial number of shares of our common stock in the public market, including any time following the expiration of legal restrictions on resale or the perception in the market that the holders of a large number of shares of our common stock intend to sell shares, could reduce the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.
−Removed: We have filed registration statements on Form S-8 to register our common stock that are issuable pursuant to our equity incentive plans.
−Removed: Shares registered under these registration statements on Form S-8 will be available for sale in the public market subject to vesting arrangements and exercise of options.
+Added: We have filed a registration statement on Form S-3 with respect to potential future sales of our securities.
+Added: We have also filed a registration statement on Form S-8 to register our common stock that is issuable pursuant to our equity incentive plans.
+Added: Shares registered under the registration statements on Form S-8 will be available for sale in the public market subject to vesting arrangements and exercise of options.
Additionally, certain holders of our common stock are entitled to rights with respect to registration of such shares under the Securities Act pursuant to a registration rights agreement between such holders and us.
−Removed: If such holders, by exercising their registration rights, sell a large number of shares, they could adversely affect the market price for our common stock.
+Added: If such holders, by
+Added: exercising their registration rights, sell a large number of shares, they could adversely affect the market price for our common stock.
An active trading market for our common stock may not be maintained.
−Removed: Our common stock only recently began trading on the Nasdaq Global Select Market, and we can provide no assurance that we will be able to maintain an active trading market on the Nasdaq Global Select Market or any other exchange in the future.
+Added: Our common stock began trading on the Nasdaq Global Select Market in July 2021, and we can provide no assurance that we will be able to maintain an active trading market on the Nasdaq Global Select Market or any other exchange in the future.
If an active trading market for our common stock is not maintained, or if we fail to satisfy the continued listing standards of the Nasdaq Global Select Market for any reason and our common stock is delisted, it may be difficult for our stockholders to sell shares without depressing the market price for the shares or at all.
1 unchanged sentence
Provisions in our corporate charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management.
−Removed: Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares.
+Added: Provisions in our amended and restated certificate of incorporation (the “Restated Certificate”) and our amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares.
These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock.
−Removed: In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current
−Removed: management by making it more difficult for stockholders to replace members of our board of directors.
+Added: In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
Because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team.
8 unchanged sentences
• stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company;
+Added: • stockholders must include management’s nominees on its proxy card in contested director elections, which may decrease the likelihood that a potential acquiror can replace a majority of the Board;
• our board of directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror.
4 unchanged sentences
Our amended and restated bylaws also provide that the federal district courts of the United States of America are the exclusive forum for the resolution of any complaint asserting a cause of action against us or any of our directors, officers, employees or agents and arising under the Securities Act.
−Removed: The choice of forum provisions
−Removed: do not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
+Added: The choice of forum provisions do not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
We believe these provisions may benefit us by providing increased consistency in the application of Delaware law and federal securities laws by chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum litigation.
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As a result, even if we attain profitability, we may be unable to use a material portion of our NOL carryforwards and other tax attributes, which could adversely affect our future cash flows.
+Added: Changes in tax law may adversely affect us or our investors.
+Added: The rules dealing with U.S.
+Added: federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S.
+Added: Treasury Department.
+Added: Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock.
+Added: For example, under Section 174 of the Code, in taxable years beginning after December 31, 2021, expenses that are incurred for research and development in the U.S.
+Added: are now capitalized and amortized, which may have an adverse effect on our future cash flows.
+Added: In recent years, many such changes have been made, and changes are likely to continue to occur in the future.
+Added: It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our shareholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
General Risk Factors
7 unchanged sentences
Our results of operations could be adversely affected by general conditions in the global economy and financial markets.
−Removed: The most recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets.
A severe or prolonged economic downturn could result in a variety of risks to our business, including weakened demand for our technologies and our ability to raise additional capital when needed on favorable terms, if at all.
−Removed: A weak or declining economy could strain our partners, possibly resulting in supply disruption, or cause delays in their payments to us.
+Added: Recently, the rate of inflation has increased throughout the U.S.
+Added: Inflation may adversely affect us by increasing the costs associated with performing research and development on internal research initiatives and partnered programs.
+Added: We may experience significant increases in the prices of labor, consumables, and other costs of doing business.
+Added: In an inflationary environment, such cost increases may outpace our expectations, causing us to use cash faster than forecasted.
+Added: A weak or declining economy may also strain our partners, possibly resulting in supply disruption, or cause delays in their payments to us.
Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
+Added: Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.
+Added: Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems.
+Added: For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver.
+Added: Although a statement by the U.S.
+Added: Department of the Treasury, the Federal Reserve and the FDIC indicated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts, borrowers under credit agreements, letters of credit and certain other financial instruments with SVB or any other financial institution that is placed into receivership by the FDIC may be unable to access undrawn amounts thereunder.
+Added: Although we are not a borrower or party to any such instruments with SVB or any other financial institution currently in receivership, if any of our customers, suppliers or other parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to pay their
+Added: obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.
+Added: Although the U.S.
+Added: Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediately liquidity may exceed the capacity of such program.
+Added: Additionally, there is no guarantee that the U.S.
+Added: Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.
+Added: In addition, investor concerns regarding the U.S.
+Added: or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.
+Added: Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations, result in breaches of our financial and/or contractual obligations or result in violations of federal or state wage and hour laws.
+Added: Any of these impacts, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations.
+Added: Any further deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by our partners or vendors, which in turn, could have a material adverse effect on our current and/or projected business operations and results of operations and financial condition.
+Added: For example, a partner may fail to make payments when due, default under their agreements with us, become insolvent or declare bankruptcy, or a vendor may determine that it will no longer deal with us as a customer.
+Added: In addition, a partner or vendor could be adversely affected by any of the liquidity or other risks that are described above as factors that could result in material adverse impacts on us, including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution.
+Added: Any partner or vendor bankruptcy or insolvency, or the failure of any partner to make payments when due, or any breach or default by a partner or vendor, or the loss of any significant vendor relationships, could result in material losses to us and may have a material adverse impact on our business.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies.
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Such misconduct could result in legal or regulatory sanctions and cause serious harm to our reputation.
−Removed: It is not always possible to identify and deter employee misconduct, and any other precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses, or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
+Added: It is not always possible to identify and deter employee misconduct, and any other precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses, or in protecting us from governmental investigations or
+Added: other actions or lawsuits stemming from a failure to comply with these laws or regulations.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could result in the imposition of significant civil, criminal and administrative penalties, which could have a significant impact on our business.
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Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.
−Removed: In the ordinary course of our business, we generate and store sensitive data, including research data, intellectual property and proprietary business information owned or controlled by ourselves or our
−Removed: employees, partners and other parties.
+Added: In the ordinary course of our business, we generate and store sensitive data, including research data, intellectual property and proprietary business information owned or controlled by ourselves or our employees, partners and other parties.
We manage and maintain our applications and data utilizing a combination of on-site systems and cloud-based data centers.
1 unchanged sentence
These applications and data encompass a wide variety of business-critical information, including research and development information, commercial information and business and financial information.
−Removed: We face a number of risks relative to protecting this critical information, including loss of access risk, inappropriate use or disclosure, accidental exposure, unauthorized access, inappropriate modification and the risk of our being unable to adequately monitor and audit and modify our controls over our critical information.
+Added: We face a number of risks relative to protecting this critical information, including loss of access risk, inappropriate use or disclosure, accidental exposure, unauthorized access, inappropriate modification, remediation costs, lost revenues, damages to our competitiveness, stock price and long-term stockholder value, and the risk of our being unable to adequately monitor and audit and modify our controls over our critical information.
This risk extends to the third party vendors and subcontractors we use to manage this sensitive data or otherwise process it on our behalf.
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Unauthorized access, loss or dissemination could also disrupt our operations and damage our reputation, any of which could adversely affect our business.
−Removed: Additionally, although we maintain cybersecurity insurance coverage, we cannot be certain that such coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident, will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
+Added: Additionally, although we maintain cybersecurity insurance coverage, we cannot be certain that such coverage will be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident, will continue to be available to us on economically reasonable terms, or at
+Added: all, or that any insurer will not deny coverage as to any future claim.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, financial condition and results of operations.
+Added: We or our partners may be adversely affected by natural or man-made disasters or other business interruptions, such as cybersecurity attacks, and our business continuity and disaster recovery plans, or those of our partners, may not adequately protect us from the effects of a serious disaster.
+Added: Natural and man-made disasters and other events beyond our control could severely disrupt our operations, or those of our partners, and have a material adverse impact on our business, results of operations, financial condition and prospects.
+Added: If a natural disaster, power outage, cybersecurity attack or other event occurred that prevented us from using all or a significant portion of our headquarters, damaged critical infrastructure, such as our laboratory facilities or those of our partners, limited our or our partners’ ability to access or use our respective digital information systems or that otherwise disrupted our respective operations, it may be difficult or, in certain cases, impossible for us or our partners to continue our respective businesses for a substantial period of time.
+Added: The disaster recovery and business continuity plans we and our partners currently have in place are limited and are unlikely to prove adequate in the event of a serious disaster or similar event.
+Added: Our cybersecurity liability insurance may not cover any or all damages, depending on the severity and extent, we or our partners could sustain based on any breach of our respective computer security protocols or other cybersecurity attack.
+Added: We may incur substantial expenses as a result of the limited nature of our respective disaster recovery and business continuity plans, which could have a material adverse impact on our business.
+Added: Social media platforms present new risks and challenges to our business.
+Added: As social media continues to expand, it also presents us with new risks and challenges.
+Added: Social media is increasingly being used to communicate information about us, our technology and our programs.
+Added: Social media practices in the pharmaceutical and biotechnology industries are evolving, which creates uncertainty and risk of noncompliance with regulations applicable to our business.
+Added: In addition, there is risk of inaccurate disclosure of information about us, our technology, or our programs on any social media platform.
+Added: Although we have adopted policies and procedures around the use of social media by our employees, we may be unable to control the disclosure of non-public information by our workforce.
+Added: Any of these events or our failure to comply with applicable regulations could expose us to liability, restrictive regulatory actions, irreversible damage to our reputation, brand image and goodwill, or have a material adverse effect on our business, prospects, operating results, and financial condition and could adversely affect the price of our common stock.
We are an emerging growth company, and the reduced reporting requirements applicable to emerging growth companies could make our common stock less attractive to investors.
4 unchanged sentences
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards.
−Removed: This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
+Added: This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply
+Added: to private companies.
We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.
17 unchanged sentences
The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees, or as executive officers.
−Removed: Pursuant to Section 404, in our second annual report due to be filed with the SEC after becoming a public company, we will be required to furnish a report by our management on our internal control over financial reporting.
−Removed: To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging.
−Removed: In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing whether such controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting.
+Added: Pursuant to Section 404, we are required to furnish a report by our management on our internal control over financial reporting.
+Added: To achieve compliance with Section 404 annually, we will engage in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging.
+Added: In this regard, we will need to continue to dedicate internal resources, engage outside consultants, execute our detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing whether such controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting.
Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404.
In addition, investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm the market price of our stock.
−Removed: We or our partners may be adversely affected by natural or man-made disasters or other business interruptions, such as cybersecurity attacks, and our business continuity and disaster recovery
−Removed: plans, or those of our partners, may not adequately protect us from the effects of a serious disaster.
−Removed: Natural and man-made disasters and other events beyond our control could severely disrupt our operations, or those of our partners, and have a material adverse impact on our business, results of operations, financial condition and prospects.
−Removed: If a natural disaster, power outage, cybersecurity attack or other event occurred that prevented us from using all or a significant portion of our headquarters, damaged critical infrastructure, such as our laboratory facilities or those of our partners, limited our or our partners’ ability to access or use our respective digital information systems or that otherwise disrupted our respective operations, it may be difficult or, in certain cases, impossible for us or our partners to continue our respective businesses for a substantial period of time.
−Removed: The disaster recovery and business continuity plans we and our partners currently have in place are limited and are unlikely to prove adequate in the event of a serious disaster or similar event.
−Removed: Our cybersecurity liability insurance may not cover any or all damages, depending on the severity and extent, we or our partners could sustain based on any breach of our respective computer security protocols or other cybersecurity attack.
−Removed: We may incur substantial expenses as a result of the limited nature of our respective disaster recovery and business continuity plans, which could have a material adverse impact on our business.
Our results of operations and financial condition could be materially adversely affected by changes in accounting principles.
12 unchanged sentences
We are subject to certain reporting requirements of the Exchange Act.
−Removed: Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed,
−Removed: summarized, and reported within the time periods specified in the rules and forms of the SEC.
+Added: Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC.
We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
5 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.