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Item 1A. Risk Factors

2024-03-21 compared with 2023-03-30 · 393 added, 293 removed, 844 unchanged (45% of the section changed)

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This summary does not address all of the risks that we face.

Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Annual Report on Form 10-K and our other filings with the SEC, before making investment decisions regarding our common stock.

Form 10-K and our other filings with the SEC, before making investment decisions regarding our common stock.

• Our current business has a limited operating history, which may make it difficult to evaluate our business and predict our future performance;

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• We will need to raise additional capital to fund our operations and improve our platform.

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;

• 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;

• 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;

• If we cannot maintain our current relationships with partners, or if we fail to expand our relationships with our current partners or enter into new relationships, our operating results would be adversely affected as a general matter;

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;

• Our commercial success depends on the technological capabilities of our Integrated Drug Creation platform and the advancement of our internal asset programs;

• We are substantially dependent on the successful application of our Integrated Drug Creation platform to initiate and advance partnered programs and to develop our internal asset programs that can be further developed by our current or future partners;

• We rely and expect to continue to rely on third parties to conduct our preclinical studies and any eventual clinical trials.

If those third parties do not perform as contractually required, fail to satisfy legal or regulatory requirements, miss expected deadlines or the relationship terminates prematurely, the development of our internal asset programs could be delayed, more costly or unsuccessful, and the programs may never obtain regulatory approval or commercialization;

• If we do not achieve our projected development goals in the timeframes we announce and expect, the commercialization of our programs and validation of our platform technology may be delayed and our expenses may increase and, as a result, our stock price may decline;

• Our future success significantly depends on the eventual approval and commercialization of biologic drugs developed under our partnerships for which we may have no control over the clinical development plan, regulatory strategy or commercialization efforts;

• 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;

• Biologic drug development is inherently uncertain, and it is possible that our technology may not succeed in discovering appropriate molecules or producing cell lines.

Even if we do succeed, it is possible that none of the drug candidates discovered using our platform, if any, that are further developed by our partners will achieve development or regulatory milestones, including marketing approval, or become viable commercial technologies, on a timely basis or at all, which would harm our ability to generate revenue;

• If our partners experience any of a number of possible unforeseen or negative events in connection with preclinical or clinical development, regulatory approval or commercialization of product candidates generated through our partnerships, this could negatively affect our revenue opportunity for that program, and/or have broader deleterious effects on our reputation and future partnership prospects;

Even if we do succeed, it is possible that none of the drug candidates created using our platform, if any, that are further developed by our partners will achieve development or regulatory milestones, including marketing approval, or become viable commercial technologies, on a timely basis or at all, which would harm our ability to generate revenue;

• If we or our partners experience any of a number of possible unforeseen or negative events in connection with preclinical or clinical development, regulatory approval or commercialization of product candidates generated through our platform, this could negatively affect our revenue opportunity for that program, and/or have broader deleterious effects on our reputation and future partnership prospects;

• The biopharmaceutical platform technology market is highly competitive, and if we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue, or achieve and sustain profitability;

• 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 immediately transition to alternative suppliers;

• 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;

• 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;

• 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;

• 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.

• 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;

• If we are unable to obtain and maintain sufficient intellectual property protection for our technologies, including for 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.

• Preclinical development is uncertain.

Our preclinical product candidates may experience delays or may never advance to clinical trials, which would adversely affect our or our partners’ ability to obtain regulatory approvals or commercialize these product candidates on a timely basis or at all, which would have an adverse effect on our business.

Investing in our common stock involves a high degree of risk.

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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

Risks Related to Our Financial Condition and Need for Additional Capital

Our current business has a limited operating history, which may make it difficult to evaluate our business and predict our future performance.

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Before engaging in commercial operations, we focused primarily on technology development.

Total revenue was $5.7 million for the year ended December 31, 2022 compared to $4.8 million for the year ended December 31, 2021.

Our revenue was generated primarily from technology development activities.

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.

Our revenue has been generated primarily from drug creation activities.

We are still early in the adoption phase of our drug creation model, and, as of March 6, 2024, 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.

We also have only recently begun to develop our own proprietary drug candidates and may experience difficulties monetizing these programs.

We may never achieve commercial success and we have limited historical financial data upon which we may base our projected revenue.

We also have limited historical financial data upon which we may base our planned operating expense or upon which you may evaluate our business and prospects.

Based on our limited experience in developing and marketing new technologies, we may not be able to effectively:

We also have limited historical financial data upon which we may base our planned operating expenses or upon which you may evaluate our business and prospects.

Based on our limited experience, we may not be able to effectively:

• drive adoption of our technologies;

• develop proprietary drug candidates;

• attract and retain partners;

• enter into licensing arrangements with our partners following completion of our technology development activities;

• enter into licensing arrangements with our partners following completion of our drug creation activities;

• establish partnerships that contain economic terms sufficient to make our business model viable;

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• anticipate and adapt to changes in the existing and emerging markets in which we operate;

• focus our technology development efforts in areas that generate returns on these efforts;

• succeed in achieving our technology development goals;

• maintain and develop strategic relationships with suppliers to acquire necessary materials and equipment for the development of our technologies on appropriate timelines, or at all;

• focus our platform drug creation efforts in areas that generate returns on these efforts;

• succeed in achieving our platform drug creation goals;

• maintain and develop strategic relationships with suppliers to acquire necessary materials and equipment for the development of our platform technologies and proprietary drug candidates on appropriate timelines, or at all;

• implement an effective business development strategy to drive adoption of our Integrated Drug Creation platform by new and existing partners;

• scale our technology development activities to meet potential demand at a reasonable cost;

• create a pipeline of internal drug candidates that generate future partnership opportunities;

• scale our drug creation activities to meet potential demand at a reasonable cost;

• acquire, in-license or otherwise obtain technologies that enable us to expand our platform capabilities;

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• obtain and maintain valid and enforceable patents and other intellectual property rights that give us a competitive advantage;

• protect our proprietary technologies;

• protect our proprietary technologies and internal asset programs;

• attract, retain and motivate qualified personnel.

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As of December 31, 2023, we had an accumulated deficit of $406.5 million.

We expect that our operating expenses will continue to increase as we grow our business.

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.

We expect that our operating expenses, excluding a non-cash goodwill impairment charge of $21.3 million during the year ended December 31, 2023, will continue to increase as we grow our business and advance internal asset programs.

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 drug creation 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 drug creation capabilities.

We will need to generate significant additional revenue to achieve and sustain profitability, and even if we achieve profitability, we cannot be sure that we will remain profitable for any substantial period of time.

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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.

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.

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.

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.

As of December 31, 2023, we had $97.7 million in cash, cash equivalents and short term investments.

We expect our current cash, 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.

If our available resources and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our Integrated Drug Creation platform, higher expenses than we anticipate related to our investments in our platform technology or development of internal asset programs, 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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• increase our business development efforts to drive market recognition of our platform and address competitive developments;

• fund business development efforts for our current and future programs;

• expand the capabilities of our platform into additional areas of biopharmaceutical research and development, such as drug target discovery or translational medicine;

• advance additional internal asset programs;

• fund business development efforts for our current or future partnered and internal asset programs;

• further 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;

• advance internal assets through preclinical or later validation;

• advance internal asset programs through preclinical or later validation;

• finance capital expenditures and general and administrative expenses.

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• our rate of progress in collaborating with partners to leverage our platform and business development activities associated therewith;

• preclinical and clinical drug development, including costs associated with third-party clinical investigators, CROs or clinical data management organizations;

• our rate of progress in, and cost of, developing new technologies;

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Any preferred equity securities issued also would likely provide for rights, preferences or privileges senior to those of holders of our common stock.

If we raise funds by issuing debt securities, those debt securities would have rights, preferences and privileges senior to those of holders of our common stock.

If we raise funds by issuing debt securities, those debt securities may have rights, preferences and privileges senior to those of holders of our common stock.

Debt financing and preferred equity financing, if available, may also involve agreements that include covenants restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making asset acquisitions, making capital expenditures, or declaring dividends.

If we are unable to obtain adequate financing or financing on terms satisfactory to us, if we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and could have a material adverse effect on our business, financial condition, results of operations and prospects.

Substantially all of our historical revenue is related to technology development activities, and we have not demonstrated the ability to enter into a sufficient number of partnerships providing for long-term license arrangements under which we are entitled to receive milestone payments or royalties on net product sales.

Substantially all of our historical revenue is related to partnered drug creation activities, and we have not demonstrated the ability to enter into a sufficient number of partnerships providing for long-term license arrangements under which we are entitled to receive milestone payments or royalties on net product sales.

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.

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.

Our business model is dependent on the successful completion of the technology development phase under these arrangements and, more importantly, on our subsequent entry into long-term license arrangements with our partners that entitle us to development, regulatory and commercial milestones and/or royalties with respect to product candidates generated through our platform, which may include product candidates discovered and/or manufactured in cell lines developed by us.

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.

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.

For the year ended December 31, 2023, substantially all of our revenue was generated by technology development fees through performing drug creation activities for our partnered programs.

To date, such fees have generally been payable upon both the inception of, and the demonstration of technical achievement of program milestones, under drug creation agreements with our partners.

Our business model depends on the successful completion of the drug creation phase under these arrangements and, more importantly, on our subsequent entry into long-term license arrangements with our partners that entitle us to development, regulatory and commercial milestones and/or royalties with respect to product candidates generated through

our platform, which may include product candidates discovered and/or manufactured in cell lines developed by us.

We are still in the very early stages of implementing our drug creation 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.

If we are unable to maintain partnerships covering Active Programs (including if partnerships covering Active Programs are terminated during or upon completion of the drug creation phase) or we are otherwise unable to enter into commercial 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.

Technology development fees are generated by technology development activities that we perform for our partners, the timing and nature of which are dictated by the timing of program commencement, which depends on various permissions, information and supplies provided by our partners and/or third party vendors as well as the pace of program progression and receipt of ongoing input from our partners.

Our eligibility to receive milestone payments is generally subject to the negotiation of future arrangements, as described above.

As a result, we currently do not generate significant recurring revenue and, until we are able to establish significant recurring revenue, if at all, we will be prone to regular fluctuations in our revenue dependent on the timing of our entry into partnership agreements, our partners advancing subject

programs, and our partners achieving development milestones or commercial sales with respect to drug candidates discovered and/or manufactured in cell lines developed by us.

Technology development fees are generated by drug creation activities that we perform for our partners, the timing and nature of which are dictated by the timing of program commencement, which depends on various permissions, information and supplies provided by our partners and/or third party vendors as well as the pace of program progression and receipt of ongoing input from our partners.

Our eligibility to receive milestone payments from our drug creation partners is generally subject to the negotiation of future arrangements, as described above.

As a result, we currently do not generate significant recurring revenue and, until we are able to establish significant recurring revenue, if at all, we will be prone to regular and significant fluctuations in our revenue dependent on the timing of our entry into partnership agreements, our partners advancing subject programs, and our partners achieving development milestones or commercial sales with respect to drug candidates discovered and/or manufactured in cell lines developed by us.

Risks Related to Our Business Model and Partnerships

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.

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.

Our commercial success depends on the technological capabilities of our Integrated Drug Creation platform and the advancement of our internal asset programs.

We utilize our Integrated Drug Creation platform to identify promising opportunities for therapeutic development and potential commercialization by our partners.

As a result, the quality and sophistication of our platform and technology are critical to our ability to conduct our drug creation activities and to generate more promising molecules and cell lines and to shorten and lower the costs of therapeutic development for our existing and potential partners, as compared to other methods.

In particular, our business depends, among other things, on:

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• 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;

• our ability to execute on our strategy to enter into new partnerships with new or existing partners on terms that are acceptable to us;

• our ability to identify partners to license or acquire rights to our internal asset programs for further preclinical or clinical development;

• our ability to use our generative AI models to create actionable biological insights;

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• 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;

• our ability to bioengineer our bespoke E.

coli SoluPro and Bionic SoluPro strains to produce certain types of proteins;

• whether competitors develop a platform that enables biologic drug creation more effectively than our platform;

• our ability to bioengineer our proprietary E.

coli SoluPro and Bionic SoluPro strains to produce certain types of proteins, validate protein sequences and further train our AI models;

• our ability to adapt our assays to screen effectively for certain types of drug modalities or targets;

• our ability to adapt our assays to de-orphan antibodies we discover using our target technology;

• our ability to adapt our assays to de-orphan antibodies we create 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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• negative publicity regarding our or our competitors’ technologies resulting from defects or errors;

• our ability to further validate and enhance our platform through research and technology development activities;

• our ability to further validate and enhance our platform through research and development activities;

• our ability to leverage our platform technologies to create product candidates for internal development and advancement into clinical trials.

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If we are unsuccessful in achieving and maintaining market acceptance of our platform, our business, financial condition, results of operations and prospects could be adversely affected.

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.

To date, we have invested nearly all of our efforts and financial resources in technology development relating to our bespoke E.

coli SoluPro and Bionic SoluPro strains.

The biologic drug discovery and cell line development business is capital intensive, particularly for early stage companies that do not have significant off-setting revenues.

Our success is dependent on our ability to drive adoption of our platform by partners, developing technologies for our partners, and entering into license agreements with such partners.

Further, our success depends upon our expansion of our existing partnerships, and entry into new partnerships, to include our Discovery applications, as well as continuing to drive adoption of our CLD applications.

Substantially all of our revenue generated to date is from technology development arrangements for our CLD applications.

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.

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.

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.

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 substantially dependent on the successful application of our Integrated Drug Creation platform to initiate and advance partnered programs and to develop our internal asset programs that can be further developed by our current or future partners.

The biologic drug development business is capital intensive.

Our success significantly depends on our ability to apply our platform for partnered programs, develop promising internal asset programs, and enter into agreements with our current and future partners to further develop these programs.

We have only recently expanded our platform into biologic drug discovery, both for programs that we develop with our partners and those that we internally develop.

In order to attempt to realize the full benefits of our Integrated Drug

Creation platform, we must continue to advance our platform technology and market our expanded capabilities to existing and potential new partners and develop our internal asset programs.

Our future revenue growth and market potential will depend on our ability to continue leveraging our Integrated Drug Creation platform, together with our custom libraries, data sets and other proprietary tools, for biologics drug creation and other areas of biopharmaceutical drug development.

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 creation or that our platform will enable us to create promising biologic candidates for further development.

Our inability to continue these initiatives and initiate new drug creation efforts could result in a failure to develop our platform, improve upon existing technologies, partner internal assets for clinical development, 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.

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 drug creation 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, whether those programs were developed collaboratively with a partner or internally developed.

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.

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.

The timing and likelihood of payments to us under these agreements is dependent on our partners’ successful development and commercialization of the molecules created using our platform, which may be 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.

We rely and expect to continue to rely on third parties to conduct our preclinical studies and any eventual clinical trials.

We have relied and intend to rely in the future on third-party clinical investigators, CROs, and clinical data management organizations to conduct, supervise and monitor preclinical studies and any eventual clinical trials of our current or future internal asset programs.

Because we currently rely and intend to continue to rely on these third parties, we will have less control over the timing, quality and other aspects of preclinical studies and any eventual clinical trials than if we conducted them independently.

These parties are not, and will not be, our employees and we will have limited control over the amount of time and resources that they dedicate to our programs.

Additionally, such parties may have contractual relationships with other entities, some of which may be our competitors, which may draw time and resources from our programs.

Our reliance on these third parties for development activities will reduce our control over these activities.

Nevertheless, we will remain responsible for ensuring that each of our preclinical studies are conducted in accordance with good laboratory practices and that any eventual clinical trials are conducted in accordance with GCPs.

Moreover, our business may be significantly impacted if our CROs, clinical investigators or other third parties violate federal or state healthcare fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.

In the event we are required to repeat, extend, delay or terminate our preclinical or any eventual clinical development activities due to one or more third parties not successfully carrying out its contractual duties, meeting expected deadlines, or conducting development activities in accordance with regulatory requirements or our stated protocols, we may not be able to achieve, or may be delayed in achieving, product development milestones, including our internal timelines or certain regulatory requirements.

As a result, our results of operations and the commercial prospects for our internal asset programs would be harmed, our costs could increase, and our ability to generate revenue and platform validation could be delayed.

To the extent we are unable to successfully identify and manage the performance of third-party service providers in the future, our business may be materially and adversely affected.

In addition, from time to time we have relied upon, and may continue to rely upon, third parties that are based in jurisdictions outside the United States.

Legislative proposals are pending that, if enacted, could negatively impact U.S.

funding for certain biotechnology providers having relationships with foreign adversaries or which pose a threat to national security.

If any of the third parties upon whom we rely are impacted by these legislative proposals, the potential downstream adverse impacts are unknown but may include supply chain disruptions or delays.

If any of our relationships with these third parties terminate for any reason, including due to involuntary termination, regulatory or other compliance requirements, or strategic reprioritization, we may not be able to enter into alternative arrangements or do so on commercially reasonable terms.

Switching or adding additional contractors requires additional resources and demands management time and focus.

In addition, there is a natural transition period when a new third party commences work.

As a result, delays could occur, which could compromise our ability to meet our internal development timelines.

In addition, if an agreement with any of our partners terminates, our access to technology and intellectual property licensed to us by that partner may be restricted or terminate entirely, which may delay our continued development of our internal asset programs utilizing the partner’s technology or intellectual property or require us to stop development of those internal asset programs completely.

In addition, principal investigators for our clinical trials, if any, may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services.

Under certain circumstances, we may be required to report some of these relationships to the FDA.

The FDA may conclude that a financial relationship between us and/or a principal investigator has created a conflict of interest or otherwise affected interpretation of the study.

The FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized.

This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of regulatory approval of one or more of our product candidates, if any.

If we do not achieve our projected development goals in the timeframes we announce and expect, the commercialization of our programs and validation of our platform technology may be delayed and our expenses may increase and, as a result, our stock price may decline.

From time to time, we estimate the timing of the anticipated accomplishment of various scientific, clinical, regulatory and other product development goals, which we sometimes refer to as milestones.

These milestones may include the commencement or completion of preclinical studies and clinical trials, as well as the submission of regulatory filings.

From time to time, we may publicly announce the expected timing of achieving certain of these milestones.

All of these milestones are and will be based on numerous assumptions.

The actual timing of these milestones can vary dramatically compared to our estimates, in some cases for reasons beyond our control.

If we do not meet these milestones as publicly announced, or at all, the commercialization of our programs or the validation of our platform technologies based on anticipated achievement of these milestones, may be delayed or never achieved and, as a result, our stock price may decline.

Additionally, delays relative to our projected timelines are likely to cause overall expenses to increase, which may require us to raise additional capital sooner than expected and prior to achieving targeted development milestones.

Our future success significantly depends on the eventual approval and commercialization of biologic drugs developed under our partnerships for which we may have no control over the clinical development plan, regulatory strategy or commercialization efforts.

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.

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.

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.

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.

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.

Given the nature of our relationships with our partners and future partners, we often do not fully control the progression, clinical development, regulatory strategy or eventual commercialization, if approved, of these partnered product candidates.

As a result, our future success and the potential to receive milestones and royalties are significantly dependent on our partners’ efforts, over which we have little control.

not enable the further development, approval or commercialization of the product candidate, or if we cannot find a partner to advance an internal asset program 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.

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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.

In addition, we do not control the timing of disclosure by our partners of any milestones or other information related to any drug candidates generated using our platform.

In addition, we do not control the timing of disclosure by our partners of any milestones or other information related to drug candidates generated using our platform.

Any disclosure by us or our partners of data or other information regarding any such drug candidates that is perceived as negative may have a material adverse impact on our stock price or overall valuation.

Our stock price may also decline as a result of negative clinical trial results, including adverse safety events, involving any drug candidate that is subject to one of our partnerships.

Our stock price may also decline as a result of negative results from any eventual clinical trial, including adverse safety events, involving any drug candidate that is subject to one of our partnerships.

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.

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.

In the years ended December 31, 2023 and 2022, revenue from two partners accounted for 89% and three partners accounted for 98% of our technology development revenue, respectively.

The revenue attributable to these partnerships 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.

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.

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.

Our existing and potential future partners may have limited resources to initiate new programs, which could limit their adoption or scale of application of our technologies.

In addition, existing partners may choose to produce some or all of their requirements internally by using or internally developing their own capabilities or by using capabilities from acquisitions of assets or entities from third parties with such capabilities.

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.

We engage in discussions with other companies and institutions regarding potential technology development and license opportunities on an ongoing basis, which can be time consuming.

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.

We engage in discussions with other companies and institutions regarding potential drug creation, license, and asset sale opportunities on an ongoing basis, which can be time consuming.

There is no assurance that any of these discussions will result in a drug creation, asset sale, 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.

We target partnerships with biotechnology and pharmaceutical companies.

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.

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.

Our partners and future 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.

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.

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Any failure to increase penetration in our existing markets or new markets would adversely affect our ability to improve our operating results.

Our revenue under our technology development and other partner agreements for any particular period, or on an absolute basis, can be difficult to forecast.

Because of the complexities and long development timelines inherent in the biologic drug development business, it is difficult to predict the timing of payments under our technology development and other partner agreements.

In particular, payments under our technology development agreements are subject to the achievement of project milestones and our partners’ decisions to initiate or continue the technology development work, and any future downstream payments with respect to product candidates generated using our platform will be subject to our partners’ advancement of the product candidates, over which we have no control.

Our revenue under our drug creation and other partner agreements for any particular period, or on an absolute basis, can be difficult to forecast.

Because of the complexities and long development timelines inherent in the biologic drug development business, it is difficult to predict the timing of payments under our drug creation and other partner agreements.

In particular, payments under our drug creation agreements are subject to the achievement of project milestones and our partners’ decisions to initiate or continue the drug creation work, and any future downstream payments with respect to product candidates generated using our platform will be subject to our partners’ advancement of the product candidates, over which we have no control.

As a result, our revenue for any particular period can be difficult to forecast.

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Also, due to the limited probability of success for advancement of a clinical candidate by a partner at any given stage of development and the unpredictability of when a partner may choose to continue development of a product candidate and whether any milestone payments will be due to us, our revenue may be difficult to forecast on an absolute basis.

Additionally, we recognize revenue either as we perform our technology development, upon completion of performing our technology development or upon achieving certain licensing, clinical, regulatory, and commercialization milestones.

Additionally, we recognize revenue either as we perform our drug creation activities, upon completion of performing our drug creation activities or upon achieving certain licensing, clinical, regulatory, and commercialization milestones.

As a result, much of our revenue is generated from agreements entered into during previous periods.

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We expect to make significant investments in our continued research and development of new technology development and platform expansion, which may not be successful.

We are seeking to leverage our Integrated Drug Creation platform as a consolidated technology for simultaneous biologic drug discovery and cell line development.

We are seeking to expand our platform and the scope of our capabilities, which may or may not be successful.

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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.

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.

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, continue to require significant investment and long development times and may ultimately never fully materialize.

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.

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Failure can occur at any stage of the development.

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.

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.

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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As a result, our partners’ needs are rapidly evolving.

If we do not successfully innovate and invest in new technologies, including within the field of AI, our platform may become less competitive, and our partners could move to new technologies or engage in drug discovery themselves.

Without the timely introduction of technological advancements, our platform technologies will likely become less competitive over time, in which case our competitive position and results of operations could suffer.

Accordingly, we focus substantial resources on the development and identification of new technologies to further broaden and deepen our capabilities and expertise in AI-powered drug discovery and cell line development.

Accordingly, we focus substantial resources on the development and identification of new technologies to further broaden and deepen our capabilities and expertise in AI-powered drug creation.

To the extent we fail to timely introduce new and innovative technologies, adequately predict our partners’ needs or fail to obtain desired levels of market acceptance, our business may suffer and our results of operations could be adversely affected.

We may not be successful in our efforts to identify or discover internally-generated drug candidates.

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.

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.

We may not be successful in our efforts to identify or create internally-generated drug candidates.

We may make significant investments in proprietary drug candidates we seek to discover, and any drug creation and subsequent development efforts for such drug candidates may not be successful.

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.

The development of internal assets through preclinical or later validation requires financial and human resource investments in R&D.

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Similarly, a key element of our business plan is to continue to expand our Integrated Drug Creation platform through an increase in partnered programs.

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.

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.

Our business prospects and business development efforts could be limited if we are unable to validate aspects of our platform to create drug candidates for our own internal development.

Our efforts to develop internal asset programs may also limit the resources available for other programs and may be less successful than if we allocated those resources to a partnered program.

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.

The failure of our drug creation partners to meet their contractual obligations to us could adversely affect our business.

Our reliance on our partners poses a number of additional risks, including the risk that they may not perform their contractual obligations to us to our standards, in compliance with applicable legal or contractual requirements, in a timely manner or at all;

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Any failure by them to inform us when milestones are reached and make related payments to us could adversely affect our results of operations.

Moreover, some of our future partners may be located in markets subject to political and social risk, corruption and infrastructure problems, and could be subject to country-specific privacy and data security risk as well as burdensome legal and regulatory requirements.

Any of these factors could adversely impact their financial condition and results of operations, which could impair their ability to meet their contractual obligations to us and have a material adverse effect on our business, financial condition and results of operations.

Moreover, some of our future partners may be located in markets subject to political and social risk, armed conflict, corruption and infrastructure problems, and could be subject to country-specific privacy and data security risk as well as burdensome legal and regulatory requirements.

Any of these factors could adversely impact their financial condition and results of operations, which could impair their ability to meet their

contractual obligations to us and have a material adverse effect on our business, financial condition and results of operations.

Our partners may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, which could have an adverse impact on our business and our anticipated revenue.

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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.

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.

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.

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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Biologic drug development is inherently uncertain, and it is possible that our technology may not succeed in discovering appropriate molecules or producing cell lines.

We use our platform to identify biologic drug candidates and develop cell lines for the production of drug candidates for partners who are engaged in biologic drug discovery and development.

We use our platform to create biologic drug candidates for partners that are engaged in biologic drug discovery and development.

These partners include large pharmaceutical companies and smaller biotechnology companies, and may in the future include non-profit and government organizations.

While we receive payments for performing research activities and successfully completing technical program deliverables and milestones for our partners, we anticipate that the vast majority of the economic value of the contracts that we enter into with our partners will be in the downstream payments that would be payable if certain milestones are met by our partners with respect to product candidates identified and manufactured using bespoke cell lines developed by our Integrated Drug Creation platform and royalties on net sales if such product candidates are approved for marketing and successfully commercialized.

As a result, our future growth is dependent on the ability of our partners to successfully develop and commercialize therapies based on molecules generated using our platform.

Due to our reliance on our partners, the risks relating to product development, regulatory clearance, authorization or approval and commercialization apply to us indirectly through the activities of our partners.

Even if our platform is capable of identifying high quality biologic drug candidates, there can be no assurance that our partners will successfully develop, secure marketing approvals for and commercialize any drug candidates based on the proteins that we discover.

While we receive payments for performing drug creation activities and successfully completing technical program deliverables and milestones for our partners for many of our programs, we anticipate that the vast majority of the economic value of the contracts that we enter into with our partners will be in the downstream payments that would be payable if certain milestones are met by our partners with respect to product candidates generated utilizing our Integrated Drug Creation platform and royalties on net sales if such product candidates are approved for marketing and successfully commercialized.

These include internally generated asset programs that we may partner with during later stages of drug development.

As a result, our future growth is dependent on the ability of our partners to successfully develop and commercialize therapies based on product candidates generated using our platform.

Due to our reliance on our partners, the risks relating to product development, regulatory clearance, authorization or approval and commercialization

apply to us indirectly through the activities of our partners, whether the asset program was generated pursuant to a drug creation agreement or our own internal development efforts.

As a result, we may not realize the intended benefits of our partnerships.

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It is possible that none of these drug candidates will ever receive regulatory approval and, even if approved, such drug candidates may never be successfully commercialized.

Moreover, the results of preclinical studies and any clinical trials of our partnered or any internally developed product candidates may not be predictive of the results of later-stage clinical trials.

In addition, results in one indication may not be predictive of results to be expected for the same product candidate in another indication.

Differences in trial design between early-stage clinical trials and later-stage clinical trials make it difficult to extrapolate the results of earlier clinical trials to later clinical trials.

A number of companies in the biopharmaceutical industry have suffered significant setbacks in clinical trials due to lack of efficacy or unfavorable safety profiles, notwithstanding promising results in preclinical development or earlier trials.

We or our partners may be unable to establish clinical endpoints that applicable regulatory authorities would consider clinically meaningful.

Most product candidates that commence clinical trials are never approved as products and there can be no assurance that any of our partnered product candidates or any internally developed product candidates will ultimately be successful.

In addition, even if these drug candidates receive regulatory approval in the United States, our partners may never obtain approval or commercialize such drugs outside of the United States, which would limit their full market potential and therefore our ability to realize their potential downstream value.

In addition, regulatory authorities may approve any of the product candidates that we may develop for fewer or more limited indications than requested.

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.

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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.

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.

We may also in the future invest in advancing proprietary drug candidates through some or all clinical-stage development activities and regulatory filings for approval to commercialize such proprietary drug candidates.

If we were to do this, we would be subject to all of the risks of biologic drug development described in this ”Risk Factors” section, and our failure to effectively develop or commercialize such proprietary drug candidates could have a material adverse effect on our business, financial condition, results of operations and prospects, and cause the market price of our common stock to decline.

If our partners experience any of a number of possible unforeseen or negative events in connection with preclinical or clinical development, regulatory approval or commercialization of product candidates generated through our partnerships, this could negatively affect our revenue opportunity for that program, and/or have broader deleterious effects on our reputation and future partnership prospects.

Our partners may experience numerous unforeseen events during, or as a result of, preclinical studies or clinical trials that could delay or prevent their ability to conduct further development or obtain regulatory approval or licensure of, or commercialize, biologic drug candidates generated through our partnerships, including:

In addition, our efforts to successfully advance internal asset programs through preclinical or later validation, and license or co-develop such proprietary drug candidates with a partner for clinical development, depends 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.

We are working to advance certain of our drug candidates through some or all clinical-stage development activities and regulatory filings for approval to commercialize such proprietary drug candidates on our own.

As a result of the development of our internal pipeline, we are becoming subject to all of the risks of biologic drug development described in this ”Risk

Factors” section whether our internal asset program development is explicitly referenced, and our failure to effectively develop or commercialize such proprietary drug candidates could have a material adverse effect on our business, financial condition, results of operations and prospects, and cause the market price of our common stock to decline.

Preclinical development is uncertain.

To date we have not initiated any clinical trials for any product candidates.

We cannot guarantee that any clinical trials will be initiated or conducted as planned or completed on schedule, if at all.

We also cannot be sure that submission of an IND or a clinical trial application (CTA) will result in the FDA or other regulatory authority, as applicable, allowing clinical trials to begin in a timely manner, if at all.

Moreover, even if these trials begin, issues may arise that could suspend or terminate such clinical trials.

A failure of one or more clinical trials can occur at any stage of testing, and our future clinical trials may not be successful.

If our preclinical product candidates experience delays or never advance to clinical trials, it would have an adverse effect on our business.

In order to obtain FDA approval to market a new biological product we or our partners must demonstrate proof of safety, purity and potency or efficacy in humans.

To meet these requirements we or our partners will have to conduct adequate and well-controlled clinical trials.

Before we or our partners can commence clinical trials for a product candidate, we or our partners must complete extensive preclinical testing and studies that support our planned INDs in the United States.

All of our internal asset programs are in preclinical development.

We cannot be certain of the timely completion or outcome of our or our partners' preclinical testing and studies and cannot predict if the FDA will accept our or our partners' proposed clinical programs or if the outcome of our or our partners' preclinical testing and studies will ultimately support the further development of our product candidates.

As a result, we cannot be sure that we or our partners will be able to submit INDs or similar applications for our preclinical product candidates on the timelines we expect, if at all, and we cannot be sure that submission of INDs or similar applications will result in the FDA or other regulatory authorities allowing clinical trials to begin.

Conducting preclinical testing is a lengthy, time-consuming and expensive process.

The length of time may vary substantially according to the type, complexity and novelty of the program, and often can be several years or more per program.

Delays associated with programs for which we are directly conducting preclinical testing and studies may cause us or our partners to incur additional operating expenses.

The commencement and rate of completion of preclinical studies and clinical trials for a product candidate may be delayed by many factors, including, for example:

• inability to generate sufficient preclinical or other in vivo or in vitro data to support the initiation of clinical studies;

• delays in reaching a consensus with regulatory agencies on study design;

• the FDA not allowing us to rely on previous findings of safety and efficacy for other similar but approved products and published scientific literature;

• use of our product candidates could be associated with adverse side effects, adverse events or other properties or safety risks, which could delay or preclude approval, cause us or our partners to suspend or discontinue preclinical or clinical trials, abandon a product candidate, limit the commercial profile of an approved product or result in other significant negative consequences.

Moreover, even if clinical trials do begin for our preclinical product candidates, our or our partners' development efforts may not be successful, and clinical trials that we or our partners conduct or that third parties conduct on our or our partners' behalf may not demonstrate sufficient safety, purity and potency or efficacy to obtain the requisite regulatory approvals for any of product candidates we develop.

Even if we or our partners obtain positive results from preclinical studies or initial clinical trials, we or our partners may not achieve the same success in future trials.

If we or our partners experience any of a number of possible unforeseen or negative events in connection with preclinical or clinical development, regulatory approval or commercialization of product candidates generated through our platform, this could negatively affect our revenue

opportunity for that program, and/or have broader deleterious effects on our reputation and future partnership prospects.

We or our partners may experience numerous unforeseen events during, or as a result of, preclinical studies or any clinical trials that could delay or prevent the ability to conduct further development or obtain regulatory approval or licensure of, or commercialize, biologic drug candidates generated through our platform, including:

• preclinical studies designed to enable the submission of IND applications, or other preclinical development activities, by our partners may not result in data sufficient to support the advancement of the applicable product candidates into clinical development, or our partners may abandon development activities for such product candidates prior to any IND submission for a variety of reasons;

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• the outcome of our partners’ preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results;

• product candidates may be associated with negative or inconclusive results in clinical trials, and our partners may decide to deprioritize or abandon these product candidates, or regulatory authorities may require our partners to abandon them or may impose onerous changes or requirements, which could lead to de-prioritization or abandonment;

• product candidates may be associated with negative or inconclusive results in clinical trials, and our partners may decide to deprioritize or abandon these partnered product candidates, or regulatory authorities may require our partners to abandon them or may impose onerous changes or requirements, which could lead to de-prioritization or abandonment;

• product candidates may have undesirable side effects which could lead to serious adverse events, or other unexpected characteristics.

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• clinical trials may suggest or demonstrate that products are not safe and effective, or as safe and effective as competing therapies on the market or in development.

In addition, disruptions caused by the COVID-19 pandemic may increase the likelihood that our partners encounter such difficulties or delays in initiating, enrolling, conducting or completing their planned and ongoing clinical trials.

In addition, disruptions caused by a continued and prolonged public health emergency, such as the COVID-19 pandemic may increase the likelihood that our partners encounter such difficulties or delays in initiating, enrolling, conducting or completing their planned and ongoing clinical trials.

Delays of this nature could also allow competitors to bring products to market before our partners do, potentially impairing our partners’ abilities to successfully commercialize products generated in partnership with us and harming our business and results of operations.

Any delays in, or suspension of, the development of the product candidates developed by our partners generated using our technology may significantly harm our business, financial condition and prospects.

Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory clearance, authorization or approval of partnered products in development.

The biopharmaceutical platform technology market is highly competitive, and if we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue, or achieve and sustain profitability.

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Our technologies address therapeutic discovery and bioproduction challenges that are addressed by other platform technologies controlled by companies that have a variety of business models, including the development of internal pipelines of therapeutics, technology licensing, discovery screening, cell line generation and the sale of instruments and devices.

Potential competitors addressing certain steps in the target identification, biologic drug discovery and cell line development processes or adjacent aspects of these broad processes include the following:

• in the field of novel target identification, we may face competition from academic, pharmaceutical, and biotechnology research initiatives, as well as companies focused on novel methods for target identification, including Insitro, Inc., TScan Therapeutics, Inc.

and 3T Biosciences, Inc.;

• 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.

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.

and Adimab LLC;

• in the field of non-standard amino acid protein engineering, we may face competition from companies such as Ambrx Inc.

and Sutro Biopharma, Inc.

• in the field of cell line generation and single-cell screening, we may face competition from service providers, such as Lonza Group AG and Selexis SA, companies offering instrumentation, such as Berkeley Lights Inc., and companies with alternative protein production systems, such as Sutro.

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.

These companies may in the future pursue biopharmaceutical applications of their platforms that could compete with our technologies.

Potential competitors addressing certain steps in the target identification, biologic drug discovery, or adjacent aspects of these broad processes include the following:

• in the field of AI-guided drug design and discovery, we may face competition from companies attempting to use AI to design novel biologic drugs such as Generate Biomedicines, Inc., and Exscientia Limited, among others.

In addition, we may face competition in the future from companies currently offering adjacent technology (e.g.

AI-enabled small molecule design) that may seek to develop antibody design capabilities, such as Recursion Pharmaceuticals, Inc., Relay Therapeutics, Inc., Isomorphic Labs Limited, and Schrodinger, Inc., among others.

Moreover, other pharmaceutical and biotechnology companies seeking to develop AI capabilities for biologic drug design may also pose competition;

• in the field of novel target identification, we may face competition from academic, pharmaceutical, and biotechnology research initiatives, as well as private and publicly traded companies focused on novel methods for target identification, including GV20 Therapeutics, Alchemab Therapeutics, PrecisionLife, 3T Biosciences, Inc., and Immunome and in some cases may collaborate with such companies if synergies with our platform are identified;

• in the field of antibody therapeutic development, we may face competition from pharmaceutical and biotechnology companies developing treatments against the same target or same indication of assets currently in our pipeline;

• in the field of novel human/humanized antibody discovery, we may face competition from companies such as AbCellera Biologics Inc., Alloy Therapeutics, and Adimab LLC.

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.

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.

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.

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.

We face competition from entities that have made substantial investments into the rapid development of novel treatments for the therapeutic indications in which we are engaged in drug creation partnerships and internal asset programs, including large and specialty pharmaceutical and biotechnology companies.

The discovery and development of therapies is highly competitive.

Many of our competitors have significantly greater resources and experience than we do and we or our partners may not be able to successfully compete in therapeutic development.

We will likely face substantial competition from multiple sources, including large and specialty pharmaceutical and biotechnology companies, hospitals and clinics, academic research institutions and governmental agencies and public and private research institutions, some of which have more advanced product candidates.

We anticipate that we will continue to face increasing competition as new therapies and combinations thereof, and related data, emerge.

To compete successfully, our partners must demonstrate that the relative cost, method of administration, safety, tolerability or efficacy of the related product candidates provides a better alternative to existing and future therapies and, we must do the same with respect to any future internally developed product candidates.

Our commercial opportunity and likelihood of success will be reduced or eliminated if these product candidates are not ultimately demonstrated to be safer, more effective, more conveniently administered, or less expensive than the then current standard of care.

Furthermore, even if these product candidates demonstrate meaningful improvements in these attributes, acceptance of our products may be inhibited by the reluctance of physicians to switch from existing therapies to our products, or if physicians choose to reserve our products for use in limited circumstances.

The market for our platform, including potential partners and potential investors, may be skeptical of the viability and benefits of our technology platform because it is based on novel and complex synthetic biology and AI technologies.

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Even if coverage is provided, the approved reimbursement amount may not be high enough to allow our partners to establish or maintain pricing sufficient to realize an adequate return on their investment in such therapeutics, and may lead to discontinuation or deprioritization of development, marketing and sales efforts for such products.

Changes in the reimbursement landscape may occur, which are outside of our control, and may impact the commercial viability of our technology development services and/or therapeutics generated using our technology.

Changes in the reimbursement landscape may occur, which are outside of our control, and may impact the commercial viability of our drug creation services and/or therapeutics generated using our technology.

There is significant uncertainty related to the insurance coverage and reimbursement of newly cleared, authorized or approved therapeutics in the United States and other jurisdictions.

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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.

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;

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;

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;

extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations;

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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Our operations are currently not subject to direct regulation by the FDA or other regulatory bodies.

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.

However, if we advance internally-developed product candidates generated from our Integrated Drug Creation platform into clinical development, our business would become subject to more direct oversight by the FDA, or other domestic or international governmental and regulatory agencies.

In addition, we may become subject to evolving and variable regulations governing the production of genetically engineered organisms.

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Complying with such regulations may be expensive, time-consuming and uncertain, and our failure to obtain or comply with such approvals and clearances could have an adverse effect on our business, financial condition and operating results.

Inadequate funding for the FDA, the SEC and other government agencies, including from government shut downs, or other disruptions to these agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business .

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes.

Average review times at the agency have fluctuated in recent years as a result.

Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

For example, over the last several years the U.S.

government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities.

If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Risks Related to Our Operations

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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.

Fluctuations in the availability and price of laboratory materials and equipment could have an adverse effect on our ability to meet our drug creation goals with our partners and thus our results from operations as well as future partnership opportunities.

An interruption in our laboratory operations or technology transfer activities could occur if we encounter delays, quality issues or other difficulties in securing these consumables, equipment, reagents or other materials, and if we cannot then obtain an acceptable substitute.

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Any disruption in the supply chain for these products could materially affect our business.

While there are alternative types of

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.

While there are alternative types of 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.

Our success depends on, among other things, the market’s confidence that our platform is capable of substantially shortening the amount of time necessary to perform certain activities as compared to the use of legacy and other alternative technologies, and will enable more efficient or improved pharmaceutical and biotechnology product development and/or biomanufacturing.

There is no assurance that we will be able to meet our partners’ needs in the future, or at all.

There is no assurance that we will be able to fully accomplish this in the future, or at all.

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.

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There can be no guarantee that our platform will meet the expectations of pharmaceutical and biotechnology companies.

We will need to develop and expand our workforce, commercial infrastructure and laboratory operations to support anticipated growth in demand for our technology development programs, and we may encounter difficulties in managing this development and expansion.

We will need to expand our workforce, commercial infrastructure and laboratory operations to support anticipated growth in demand for our technology development programs.

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.

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.

We will need to develop and expand our workforce, commercial infrastructure and laboratory operations to support anticipated growth in demand for our drug creation programs, and we may encounter difficulties in managing this development and expansion.

We will need to expand our workforce, commercial infrastructure and laboratory operations to support anticipated growth in demand for our drug creation programs.

If we are unable to support fluctuations in the demand for our drug creation programs, including ensuring that we have adequate capacity to meet increased demand, our business could suffer.

We expect to continue to develop our employees and the scope of our operations as we continue to enhance 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.

Failure to manage this growth or transition could result in turnaround time delays, higher technology development costs, declining technology development quality, deteriorating alliance management success, and slower responses to competitive challenges.

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.

Failure to manage this growth or transition could result in turnaround time delays, higher research and development costs, declining drug creation program quality, deteriorating alliance management success, and slower responses to competitive challenges.

Moreover the successful execution of our programs requires ongoing integration amongst our employees who come from a variety of technical backgrounds.

As we increase the number of drug creation and internal asset programs, we must ensure alignment and effective collaboration between our wet-lab biologists and AI scientists which we may not achieve due to the challenge of integrating these disparate domains.

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.

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.

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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.

This may result in weaknesses in our infrastructure, operational mistakes, slower development of our drug creation partnered programs and internal asset programs, loss of business opportunities, loss of employees and reduced productivity among our employees.

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.

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.

We currently have a limited number of business development professionals.

We will need to expand our commercial organization in order to effectively market our platform capabilities to existing and new partners.

Competition for employees capable of negotiating and entering into partnerships with pharmaceutical and biotechnology companies is intense.

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.

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.

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.

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.

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.

If we are unable to realize anticipated cost savings from the reorganization, our operating results and financial condition may be adversely affected.

Furthermore, our corporate reorganization plan may be disruptive to our operations.

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.

Our workforce reductions may also harm our ability to attract and retain qualified personnel who are critical to our business.

Any failure to attract or retain qualified personnel could prevent us from successfully executing key technical initiatives.

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.

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.

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, Zachariah Jonasson, our Chief Financial Officer and Chief Business 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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While our executive officers are party to employment contracts with us, their employment with us is at-will, which means that either we or the executive may terminate their employment at any time, and we therefore cannot guarantee their retention for any period of time.

Our technology development programs and laboratory operations depend on our ability to attract and retain highly skilled personnel.

Our research and development activities depend on our ability to attract and retain highly skilled personnel.

We may not be able to attract or retain qualified personnel due to the intense competition for highly skilled scientists, including those focused on AI-powered biologic drug discovery and cell line development, as well as qualified business development and sales professionals, among life sciences companies.

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A key risk in the area of retention is that all of our employees are at-will.

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.

We expect that the integration processes for such acquisitions will require significant time and resources, and we may not be able to manage such processes successfully.

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.

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.

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.

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.

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.

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;

and (ii) potential unknown liabilities, liabilities that are significantly larger than we currently anticipate and unforeseen increased expenses or delays associated with the acquisition, including costs to integrate Denovium’s and Totient’s businesses that may exceed the costs that we currently anticipate.

Accordingly, the contemplated benefits of the Denovium acquisition or the Totient acquisition may not be realized fully, or at all, or may take longer to realize than expected.

We have made technology acquisitions and expect to acquire businesses or assets or make investments in other companies or technologies that could negatively affect our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.

Our organizational realignment and the associated workforce reduction announced in September 2023 may not result in the full anticipated savings and may disrupt operations.

In September 2023, we announced an organizational realignment to further focus on and allocate resources to our internal pipeline of drug discovery programs and our Integrated Drug Creation platform.

We may not fully realize the anticipated benefits, savings and improvements in our cost structure from our realignment efforts due to unforeseen difficulties, delays or unexpected costs.

If we are unable to realize anticipated cost savings from the realignment efforts, our operating results and financial condition may be adversely affected.

Furthermore, our realignment plans may be disruptive to our operations.

For example, our workforce reduction could lead to unanticipated consequences, such as turnover beyond planned reductions, increased difficulties in our day-to-day operations or claims of unlawful discharge.

Our workforce reduction may also harm our ability to attract and retain qualified personnel who are critical to our business.

Any failure to attract or retain qualified personnel could prevent us from successfully executing key technical initiatives.

We in the past have, and in the future may, make technology acquisitions, acquire businesses or assets, or make investments in other companies or technologies that could negatively affect our

operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.

We have made technology acquisitions and expect to pursue acquisitions of businesses and assets in the future.

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.

Although we have acquired other businesses or assets in the past, including our acquisitions of Denovium in January 2021 and Totient in June 2021, we may not be able to find suitable partners or acquisition or asset purchase candidates in the future, and we may not be able to complete such transactions on favorable terms, if at all.

Additionally, we intend to invest in certain wholly-owned preclinical and/or clinical development programs with the goal of licensing or selling them to partners for clinical development.

Although we have acquired other businesses or assets in the past, we may not be able to find suitable partners or acquisition or asset purchase candidates in the future, and we may not be able to complete such transactions on favorable terms, if at all.

The competition for partners or acquisition candidates may be intense, and the negotiation process will be time-consuming and complex.

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Any future acquisitions also could result in the incurrence of debt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

For example, in connection with our acquisition of Totient, Totient’s Class A common stockholders and noteholders are eligible to receive up to an additional $15 million in cash upon the achievement of certain milestones.

We cannot guarantee that we will be able to fully recover the costs of any acquisition.

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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.

Additional funds may not be available on terms that are favorable

to us, or at all.

Additional funds may not be available on terms that are favorable 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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we are unable to pay our debts as they become due;

or we default on contracts with third parties which would permit the third party to accelerate the maturity of such indebtedness or that could have a material adverse change on us.

We may not have enough available cash or be able to raise additional funds through equity or debt financings to repay such indebtedness at the time any such event of default occurs.

or we default on contracts with third parties which would

permit the third party to accelerate the maturity of such indebtedness or that could have a material adverse change on us.

We may not have enough available cash, cash equivalents and short-term investments or be able to raise additional funds through equity or debt financings to repay such indebtedness at the time any such event of default occurs.

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.

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Invoices issued to our partners are generally made on open credit terms.

While we have not experienced an inability to collect on accounts receivable from our partners historically, it may occur in the future.

While we have not experienced any significant challenges in collecting on accounts receivable from our partners historically, they may occur in the future.

Management assesses the need to maintain an allowance for potential credit losses each reporting period.

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If a major partner experiences, or a significant number of partners experience, financial difficulties, the effect on us could be material and have an adverse effect on our business, financial condition and results of operations.

If our operating facility becomes damaged or inoperable or we are required to vacate our facility, our ability to conduct and pursue our technology development efforts may be jeopardized.

If our operating facility becomes damaged or inoperable or we are required to vacate our facility, our ability to conduct and pursue our drug creation and internal research and development efforts may be jeopardized.

We currently operate primarily through a single facility located in Vancouver, Washington.

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.

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.

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, advance internal research and development activities, and develop updates, upgrades and other improvements to our technology and platform, advanced automation systems, and advanced application for some period of time.

We may be unable to execute on our drug creation and additional research and development activities if our facility is inoperable or suffers a loss of utilization for even a short period of time.

This may result in the loss of partners or harm to our reputation, which we may be unable to regain or repair in the future.

This may interrupt the development of our internal asset programs, which may delay our ability to monetize such programs.

Furthermore, our facility and the equipment we use to perform our drug creation work could be unavailable or costly and time-consuming to repair or replace.

It would be difficult, time-consuming and expensive to rebuild our facility, to locate and qualify a new facility or license or transfer our proprietary technology to a third party.

Even in the event we are able to find a third party to assist in technology development efforts, we may be unable to negotiate commercially reasonable terms to engage with the third party.

Even in the event we are able to find a third party to assist in drug creation efforts, we may be unable to negotiate commercially reasonable terms to engage with the third party.

Our current and future use of artificial intelligence (AI) present emerging risks and challenges related to this technology.

Our technology development activities depend on sophisticated artificial intelligence (AI) algorithms and computational systems to conduct drug discovery and development processes.

These activities require substantial computational resources, including high-performance computing systems and cloud computing services.

The availability of these resources is critical to our ability to efficiently process large datasets, perform complex simulations, and analyze vast amounts of genetic and molecular information.

Limited access to, or the inability to expand, these computational resources could pose significant risks to our business and operations in the following ways:

• Insufficient computational power could slow down our R&D activities, leading to delays in drug creation partnerships, internal asset programs and platform development activities.

This slowdown could adversely affect our ability to meet project milestones and delay program development;

• Relying on external providers for additional computational resources can significantly increase our operational costs.

Unexpected increases in these costs could impact our financial condition, especially if we are unable to pass these costs onto our customers or adequately budget for them;

• Our ability to remain competitive depends on our capacity to leverage cutting-edge AI technologies and computational methods.

Limited access to computational resources could hinder our ability to innovate and maintain our technological advantage;

• Limited computational resources may lead to operational bottlenecks, affecting our ability to process data and execute tasks efficiently.

This inefficiency could impair our productivity and operational effectiveness, impacting our overall business performance;

• Expanding our computational infrastructure or resorting to third-party cloud services to meet our computational needs could expose us to increased compliance and security risks.

Ensuring data protection and meeting regulatory requirements become more challenging as we scale our computational resources, potentially leading to financial penalties and reputational damage.

We continually assess our computational need s and strategically invest in our infrastructure to mitigate these risks.

However, there is no assurance that these measures will be sufficient to prevent the adverse effects associated with limited access to computational resources.

Our failure to effectively manage and scale our computational resources could have a material adverse effect on our business, financial condition, and operational results.

We depend on our information technology systems, and any failure of these systems could harm our business.

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.

We depend on information technology and telecommunications systems for significant elements of our business operations, including the operation of our AI models, 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.

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.

These implementations were expensive and required a significant effort in terms of both time and effort.

These implementations were expensive and required significant time and effort.

In addition to the aforementioned business systems, we intend to extend the capabilities of both our preventative and detective security controls by augmenting the monitoring and alerting functions, the network design and the automatic countermeasure operations of our technical systems.

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• financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our technologies, exposure to foreign currency exchange rate fluctuations and different tax jurisdictions;

• natural disasters, political and economic instability, including wars, terrorism and political unrest (particularly in light of potential escalating conflicts between Russia and Ukraine), outbreak of disease, boycotts, curtailment of trade, including as a result of tariffs, export controls and sanctions implemented by or against the United States in relation to other countries or jurisdictions, and other business restrictions;

• natural disasters, political and economic instability, including wars, terrorism and political unrest, such as Hamas’ attack against Israel and the ensuing war, and the ongoing conflict in Ukraine, outbreak of disease or other public health crises, such as the COVID-19 pandemic, boycotts, curtailment of trade, including as a result of tariffs, export controls and sanctions implemented by or against the United States in relation to other countries or jurisdictions, and other business restrictions;

• certain expenses, including expenses for travel, translation services, labor and employment costs and insurance;

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These laws are complex and far-reaching in nature, and, as a result, there is no certainty that all of our employees, agents or contractors will comply with such laws and regulations.

Any violations of these laws, or

allegations of such violations, could disrupt our operations, involve significant management distraction, involve significant costs and expenses, including legal fees, and could result in a material adverse effect on our business, financial condition, results of operations and prospects.

Any violations of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction, involve significant costs and expenses, including legal fees, and could result in a material adverse effect on

our business, financial condition, results of operations and prospects.

We could also suffer severe penalties, including criminal and civil penalties, disgorgement and other remedial measures.

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If we do not comply with applicable regulations, we may be subject to fines and penalties.

In addition, we cannot eliminate the risk of accidental injury or contamination from these materials or wastes, which could cause an interruption of our commercialization efforts, technology development programs and business operations, as well as environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations.

In addition, we cannot eliminate the risk of accidental injury or contamination from these materials or wastes, which could cause an interruption of our commercialization efforts, drug creation partnered programs and internal asset programs and business operations, as well as environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations.

In the event of contamination or injury, we could be liable for damages or penalized with fines in an amount exceeding our resources and our operations could be suspended or otherwise adversely affected.

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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.

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.

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.

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.

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:

As a result of public health crises, such as the COVID-19 pandemic, or, 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.

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.

Any of these factors could severely impact drug creation, internal program, manufacturing, other research and development activities, business operations and business development, or delay necessary interactions with local regulators, and other important contractors and partners.

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.

Limitations in this global cGMP manufacturing capacity could delay or prevent clinical development and/or commercialization efforts.

We rely and expect in the future to rely on a limited number of outside parties to perform the cGMP manufacturing for preclinical development, clinical development and commercialization of any biologic product candidates produced using our technology.

Limitations in this global cGMP manufacturing capacity could delay or prevent preclinical development, clinical development and/or commercialization efforts.

We develop manufacturing processes that are required to use our cell lines, but we do not currently have capabilities to manufacture products in accordance with cGMPs.

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Shortages in cGMP manufacturing capacity are difficult to predict and could hamper our operations and harm our business.

In addition, from time to time we have relied upon, and may continue to rely upon, third party CDMOs that are based in jurisdictions outside the United States.

Legislative proposals are pending that, if enacted, could negatively impact U.S.

funding for certain biotechnology providers having relationships with foreign adversaries or which potentially pose a threat to national security.

If any of our third party CDMOs are impacted by these legislative proposals, the potential downstream adverse impacts on us are unknown but may include supply chain disruptions or delays.

Risks Related to Our Intellectual Property

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.

If we are unable to obtain and maintain sufficient intellectual property protection for our technologies, including for 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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However, obtaining and enforcing patents in our industry is costly, time-consuming, and complex, and we may fail to apply for patents on important products and technologies in a timely fashion or at all, or we may fail to apply for patents in potentially relevant jurisdictions.

There can be no assurance that the claims of our patents (or any patent application that issues as a patent), will exclude others from making, using or selling our technology or technology that is substantially similar to ours.

There can be no assurance that the claims of our patents (or any patent application that is issued to us as a patent), will exclude others from making, using, or selling our technology or technology that is substantially similar to ours.

We also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

In countries where we have not sought and do not seek patent protection, third parties may be able to manufacture and sell our technology without our permission, and we may not be able to stop them from doing so.

We may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner.

We may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce, and license any patents that may issue from such

patent applications, at a reasonable cost or in a timely manner.

It is also possible that we will fail to identify patentable aspects of our technology development output before it is too late to obtain patent protection.

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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.

We own issued, or granted, patents and pending patent applications worldwide.

We own issued, or granted, patents and have pending patent applications worldwide, which include issued U.S.

patents and pending U.S.

patent applications.

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.

As another example, a European Unified Patent Court (UPC) is scheduled to come into force during 2023.

The UPC will be a common patent court to hear patent infringement and revocation proceedings effective for member states of the European Union.

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.

As another example, the European Unified Patent Court (UPC) came into force in June 2023.

The UPC is a common patent court to hear patent infringement and revocation proceedings effective for member states of the European Union.

Should we file under the UPC and have one or more issued patents through this new system we could be adversely affected.

A single forum 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 patents have previously been issued.

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.

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.

Moreover, the controlling laws and regulations of the UPC will develop over time and may adversely affect the breadth of patents filed thereunder, or our ability to defend any such patent and/or our ability to enforce our European patents or defend the validity thereof.

We may decide to opt out our European patents and patent applications from the UPC.

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.

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.

Likewise, at this point we cannot be certain that our European patents and patent applications will avoid falling under the jurisdiction of the UPC, even 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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Changes in either the patent laws or in interpretations of patent laws in the United States or other countries or regions may diminish the value of our intellectual property.

We cannot predict the breadth of claims that may be allowed or enforced in our patents or in third party patents.

We cannot predict the breadth of claims that

may be allowed or enforced in our patents or in third party patents.

We may not develop additional proprietary platforms, methods and technologies that are patentable.

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.

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.

On or after March 16, 2013, under the Leahy-Smith America Invents Act (America Invents Act) enacted on 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.

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.

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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.

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.

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.

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.

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.

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 licensing or acquisition of third party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third party intellectual property rights that we may consider attractive or necessary.

These established companies may have a competitive advantage over us due to their size, capital resources and greater technology development or commercialization capabilities.

These established companies may have a competitive advantage over us due to their size, capital resources and greater technological development or commercialization capabilities.

In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.

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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.

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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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.

In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technologies and the enforcement of intellectual property.

In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our

technologies and the enforcement of intellectual property.

Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

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However, trade secrets and know-how can be difficult to protect.

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.

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.

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.

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.

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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And, over the long-term, if we are unable to establish name recognition based on our trademarks, then our business development abilities may be materially adversely impacted.

We may pursue litigation, quasi-litigation, quasi-arbitral, or adversarial proceedings before trademark offices, courts, or other administrative tribunals or courts in order to enforce our trademark rights or to determine the scope, coverage and validity of our rights.

The outcome of any such action might not be favorable to us, and even if we were to prevail, such litigation or administrative ruling could result in substantial costs and diversion of resources and could have a material adverse effect on our business, operating results or financial condition.

We may be subject to claims challenging the inventorship of our patents and other intellectual property.

We or any future licensors may be subject to claims that former employees, partners or other third parties have an interest in our owned or any future in-licensed patents, trade secrets or other intellectual property as an inventor or co-inventor.

We or any future licensors may be subject to claims that former employees, partners or other third parties have an interest in our patents or any future in-licensed patents, trade secrets or other intellectual property as an inventor or co-inventor.

Litigation may be necessary to defend against these and other claims challenging inventorship of our or such licensors’ ownership of our owned or any future in-licensed patents, trade secrets or other intellectual property.

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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.

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.

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.

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.

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.

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.

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.

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.

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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In such an event, if we or any future licensors fail to maintain the patents and patent applications covering technologies our competitors may be able to enter the market with similar or identical products or technology without infringing our patents and this circumstance would have a material adverse effect on our business.

Patent terms may be inadequate to protect our competitive position on our technology for an adequate amount of time.

Patent terms may be inadequate to protect our competitive position with our technology for an adequate amount of time.

Patents have a limited lifespan.

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Some of our jointly owned or licensed patents are subject to the provisions of the Bayh-Dole Act.

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.

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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• our inability to establish additional partnerships or expand the scope of existing partnerships;

• departures of key personnel;

• the recruitment or departures of key personnel;

• announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;

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• changes in the regulatory landscape that subject us to additional regulatory and legal requirements;

• publication of research reports about us, our industry or our competitors, or biologic drug discovery or cell line development in particular, or positive or negative recommendations or withdrawal of research coverage by securities analysts;

• publication of research reports about us, our industry or our competitors, or biologic drug discovery in particular, or positive or negative recommendations or withdrawal of research coverage by securities analysts;

• release of unfavorable publicity about us, our partners, our competitors, or the biopharmaceutical industry, including through press coverage or social media;

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• other events or factors, many of which are beyond our control.

In addition, the stock market in general, and the Nasdaq Global Select Market and technology and life sciences companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

In addition, the stock market in general, and the Nasdaq Global Select Market and technology and life sciences companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated and/or disproportionate to the operating performance of these companies.

Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.

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.

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.

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.

We in the past have had, and in the future may have, a material weakness in our internal control over our financial reporting process.

If we are unable to remediate an identified material

weakness, we may not be able to accurately or timely report our financial condition or results of operations.

If we are unable to remediate an identified material 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.

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.

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.

As of December 31, 2022, this material weakness was remediated, see “Part II — Item 9A-Remediation of Material Weakness” in the 2022 Annual Report on Form 10-K.

Although we were able to remediate this past 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.

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.

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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.

Accordingly, we do not presently have sufficient information to make accurate predictions regarding our potential revenue and future financial performance.

Accordingly, we do not

presently have sufficient information to make accurate predictions regarding our potential revenue and future financial performance.

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.

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.

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.

As our business model has evolved to include the development of an internal drug candidate pipeline, we continue to evaluate our key business metrics and determine how to accurately measure the initiation, advancement, and overall progress of our internal asset programs.

We cannot guarantee that the business metrics we choose to disclose related to our internal asset programs will be effective in measuring the potential of our pipeline or accurately predict the future development progress of any of our current or future programs.

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.

Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall.

We expect that significant additional capital will be needed in the future to continue our planned operations, including expanded technology development activities and costs associated with operating as a public company.

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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.

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.

As of January 1, 2024 the aggregate number of shares of our common stock that may be issued pursuant to our 2021 Plan, 2021 ESPP, and 2023 Inducement Plan are 9,736,573 shares, 2,556,486 shares, and 2,500,000 shares, respectively.

The number of shares of common stock that may be issued pursuant to the 2021 Plan does not include outstanding equity awards.

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.

In addition, we have filed a universal shelf registration statement on Form S-3 (which allows us to offer and sell securities from time to time pursuant to one or more offerings at prices and terms to be determined at the time of sale) subject to an aggregate offering amount stated therein, as well as registration statements on Form S-8 registering all shares of common stock that we may issue under our equity compensation and equity inducement plans or pursuant to equity awards made to newly hired employees outside of equity compensation plans.

Such registered shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates.

We do not intend to pay dividends on our common stock, so any returns will be limited to the value of our common stock.

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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.

As of March 15, 2023, our executive officers, directors, and 5% stockholders beneficially owned greater than 50% of our common stock.

As of March 6, 2024, our executive officers, directors, and 5% stockholders beneficially owned over 40% of our common stock.

Therefore, these stockholders have the ability to influence us through this ownership position.

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We have filed a registration statement on Form S-3 with respect to potential future sales of our securities.

On March 1, 2024, we closed the sale of an aggregate of 19,205,000 shares of our common stock at $4.50 per share for net proceeds of $80.8 million under the registration statement on Form S-3.

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.

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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.

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.

An active trading market for our common stock may not be maintained.

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 such holders, by exercising their registration rights, sell a large number of shares, they could adversely affect the market price for our common stock.

Additionally, on June 16, 2023, we entered into a sales agreement (the Sales Agreement) with Cowen and Company, LLC (the Sales Agent), with respect to an “at the market offering” program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $100.0 million through the Sales Agent (the ATM).

We will pay the Sales Agent a commission up to 3.0% of the gross sales proceeds of any shares sold under the Sales Agreement.

Sales of a substantial number of shares of our common stock in the public market could occur at any time.

These sales, 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.

An active trading market for our common stock may not continue to be maintained.

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 continue maintaining 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.

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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.

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.

Among others, these provisions include that:

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• our stockholders may not act by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

• a special meeting of stockholders may be called only by the chair of the board of directors, the chief executive officer, or a majority of the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

• a special meeting of stockholders may be called only by the chairperson of the board of directors, the chief executive officer, or a majority of the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

• our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

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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.

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.

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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After securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrades our common stock or publishes inaccurate or unfavorable research about our business, our share price may decline.

If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our share price and trading volume to decline.

If one or more of these analysts ceases coverage of our company or fails to

publish reports on us regularly, demand for our stock could decrease, which might cause our share price and trading volume to decline.

Unfavorable U.S.

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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.

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

obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.

Although the U.S.

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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.

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.

projected business operations and results of operations and financial condition.

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.

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If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or grant licenses on terms unfavorable to us.

Additionally, pursuant to the ATM, the number of shares that are sold by Sales Agent, if any, after we request that sales be made will fluctuate based on the market price of our common stock during the sales period and limits we set with Sales Agent.

Therefore, it is not possible to predict the number of shares that will be ultimately issued and sold by us, if any, pursuant to the Sales Agreement, but any such sales will cause immediate dilution to our then existing stockholders.

Our employees, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, and insider trading.

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Such misconduct could result in legal or regulatory sanctions and cause serious harm to our reputation.

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.

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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Moreover, insurance coverage is becoming increasingly expensive and in the future we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses.

A successful liability claim or series of claims in which judgments exceed our insurance coverage could adversely affect our business, financial condition, results of operations and prospects, including preventing or limiting the use of our platform to generate products.

Operating as a public company makes it more difficult and more expensive for us to maintain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.

A successful liability claim or series of claims in which judgments exceed our

insurance coverage could adversely affect our business, financial condition, results of operations and prospects, including preventing or limiting the use of our platform to generate products.

As a result, it may be more difficult for us to attract and retain qualified people to serve on our board of directors, our board committees or as executive officers.

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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.

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.

In the ordinary course of our business, we generate and store confidential and sensitive data, including research data, intellectual property and proprietary business information owned or controlled by ourselves or our employees, partners and other third parties upon which we rely.

We manage and maintain our applications and data utilizing a combination of on-site systems and cloud-based data centers.

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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.

Further, to the extent our employees may work remotely, additional risks may arise as a result of depending on the networking and security put into place by the employees.

This risk extends to the third party vendors, subcontractors and partners we use to manage this sensitive data or otherwise process it on our behalf.

Further, to the extent our employees may work remotely, additional risks may arise as a result of depending on the networking and security put into place by the employees and where they choose to work, including at home, while in transit or in other public locations.

The secure processing, storage, maintenance and transmission of this critical information are vital to our operations and business strategy, and we devote significant resources to protecting such information.

Although we take reasonable measures to protect sensitive data from unauthorized access, use or disclosure, no security measures can be perfect and our information technology and infrastructure may be vulnerable to attacks by hackers or infections by viruses or other malware or breached due to employee erroneous actions or inactions by our employees or contractors, malfeasance or other malicious or inadvertent disruptions.

Any such breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, publicly disclosed, lost or stolen.

Any such access, breach, or other loss of information could result in legal claims or proceedings.

Unauthorized access, loss or dissemination could also disrupt our operations and damage our reputation, any of which could adversely affect our business.

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.

Although we seek to take reasonable measures to protect confidential and sensitive data from unauthorized access, use or disclosure, no security measures can be perfect and our information technology systems and infrastructure, and those of our vendors, subcontractors, and partners upon which we rely, are vulnerable to cyberattacks, computer viruses, bugs, worms, or other malicious codes, malware (including as a result of advanced persistent threat intrusions), and other attacks by computer hackers, cracking, application security attacks, social engineering (including through phishing attacks, ransomware, and extortion events), supply chain attacks and vulnerabilities through our third-party service providers, denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, and other similar threats by hackers or breaches or compromises caused by employee erroneous actions or inactions by our employees, consultants, third parties or their contracted service providers, malfeasance or other malicious or inadvertent disruptions.

Any such breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, publicly disclosed, lost, or misused,or stolen.

Any such access, breach, or other loss of information could result in legal claims or proceedings and related legal exposure and liabilities, including fines and penalties.

Unauthorized access, loss, misuse, or dissemination could also disrupt our operations and damage our reputation, any of which could adversely affect our business.

The activities of cyber threat actors and other third parties, including nation-state actors directly and indirectly associated with with military geopolitical conflicts and defense activities have been increasing on number and sophistication.

During times of war and other major conflicts, we, the third parties upon which we rely, and our partners may be vulnerable to a heightened risk of such cyber-attacks, including retaliatory cyberattacks, that could materially disrupt our systems and operations, supply chain, and ability to develop our programs.

In the event we experience a cyber-attack or other security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization, which could be used to undermine our competitive advantage or market position.

The costs related to security incidents, breaches, disruptions or other security events could be significant and cause reputational damage and loss of existing and future business and could cause us to incur substantial fines and related expenses and legal exposure.

If the information technology systems of our partners, contractors or consultants become subject to disruptions or security incidents, we may have insufficient recourse against such third parties and we may have to expend significant resources in connection with our efforts to mitigate the impact of such events, and to develop and implement processes and other remedial measures to address future impacts to our business.

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.

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.

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.

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.

Additionally, our cybersecurity insurance coverage is unlikely to cover indirect or consequential damages, such as reputational harm or loss of current or future business relationships as a result of a security incidents or cyber-attack.

Natural and man-made disasters, including cyber-attacks 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.

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.

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.

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.

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.

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, which could have a material adverse impact on our business.

Social media platforms present new risks and challenges to our business.

9 unchanged sentences

We could be an emerging growth company for up to five years following the year in which we completed our IPO, although circumstances could cause us to lose that status earlier.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the closing of our IPO, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which requires the market value of our common stock that are held by non-affiliates to exceed $700.0 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

filer, which requires the market value of our common stock that are held by non-affiliates to exceed $700.0 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

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.

This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply

to private companies.

This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply 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.

19 unchanged sentences

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.

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.

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.

7 unchanged sentences

We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Significant assumptions and estimates used in preparing our consolidated financial statements include the estimated variable consideration included in the transaction price in our contracts with partners, stock-based compensation, purchase price allocations for recent acquisitions, and valuation of our common stock.

Significant assumptions and estimates used in preparing our consolidated financial statements include the estimated variable consideration included in the transaction price in our contracts with partners, contingent consideration, goodwill impairment, and long-lived asset impairment evaluations.

Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock.

9 unchanged sentences

Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.

Unresolved Staff Comments

Not applicable.

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.

What changed 10-K

Item 1A. Risk Factors