What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-03-06 · 69 added, 93 removed, 210 unchanged (44% of the section changed)

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This is in contrast to products based on alpha beta T cells, which either must be manufactured for each patient from his or her own T cells, or require significant gene editing to manufacture if the T cells are derived from donors that are unrelated to the patient.

Our lead product candidate, ADI-001, a first-in-class allogeneic gamma delta T cell therapy expressing a CAR targeting CD20, is being developed for the potential treatment of autoimmune diseases.

We are also pursuing ADI-270, an armored gamma delta CAR T cell product candidate designed to address multiple CD70+ solid tumor and hematological malignancies indications, with renal cell carcinoma (RCC) as the initial indication.

Our pipeline has several additional internal gamma delta T cell therapy programs in discovery and preclinical development for both hematological malignancies and solid tumors.

We expect to continue to develop product candidates in autoimmune diseases and cancer based on our gamma delta T cell platform using either previously validated antigens or those that we identify and target using CAR and other technology.

We plan to file one new Investigational New Drug (IND) application every 12-18 months.

Our lead product candidate, prula-cel, a first-in-class allogeneic gamma delta T cell therapy expressing a CAR targeting CD20, is being developed for the potential treatment of autoimmune diseases.

We are also pursuing ADI-212, a next-generation gene-edited and armored clinical candidate designed to target prostate-specific membrane antigen (PSMA).

ADI-212 is engineered to express a novel CAR binder designed to support enhanced tolerability and tumor-specific recognition.

It integrates membrane-tethered IL-12 armoring and CRISPR/Cas9 mediated disruption of subunit 12 of the mediator complex (MED12) to enhance potency in solid tumors and to deliver multiple anti-tumor mechanisms of action to the tumor microenvironment.

We aim to submit a new regulatory submission, such as an Investigational New Drug (IND) application or equivalent every 12-18 months.

In December 2023, the U.S.

Food and Drug Administration (FDA) cleared our IND application for ADI-001 in lupus nephritis (LN).

In August 2024, we expanded our ADI-001 autoimmune clinical development program to include systemic lupus erythematosus (SLE), systemic sclerosis (SSc) and anti-neutrophil cytoplasmic autoantibody associated vasculitis (AAV).

In September 2024, we activated sites for our Phase 1 clinical trial of ADI-001 in autoimmune diseases and opened enrollment for patients with LN.

In October 2024, we received clearance for our IND amendment to evaluate ADI-001 in idiopathic inflammatory myopathies (IIM) and stiff person syndrome (SPS) as part of our Phase 1 clinical trial in autoimmune diseases.

We expect to initiate enrollment for patients with SLE, SSc, IIM and SPS in the second quarter of 2025, and for patients with AAV in the second half of 2025.

We believe the favorable safety profile, cellular kinetics and B cell depletion in peripheral blood and secondary lymphoid tissue demonstrated with ADI-001 clinical experience to date is favorable for development in autoimmune diseases.

We believe the potential market opportunity for ADI-001 in B cell mediated autoimmune diseases is substantial based on the prevalence in the U.S., EU5, China and Japan of greater than 1.7 million patients with autoimmune diseases where CAR-T cell therapy has demonstrated clinical proof-of-concept, including SLE (which includes LN), SSc, IIM and SPS.

In June 2024, the FDA granted Fast Track Designation to ADI-001 for the potential treatment of relapsed/refractory class III or class IV LN.

In February 2025, the FDA granted Fast Track Designation to ADI-001 for the potential treatment of adult patients with refractory SLE with extrarenal involvement and for SSc.

In November 2024, we dosed our first LN patient, and in February 2025, reported that we have dosed a total of three LN patients, in our Phase 1 clinical trial of ADI-001 in autoimmune diseases.

We plan to report preliminary LN clinical data from this trial in the first half of 2025, and data for other autoimmune diseases in the second half of 2025, subject to study site initiation and patient enrollment.

Due to the prioritization of ADI-001 in autoimmune indications, patient enrollment in the Phase 1 clinical study of ADI-001 in mantle cell lymphoma has been closed.

ADI-270 is an investigational allogeneic gamma delta CAR T cell therapy targeting CD70 via the CD27-ligand for the treatment of RCC and with potential in other solid tumor and hematological malignancies indications.

ADI-270 is designed to home to solid tumors, with a highly specific targeting moiety for CD70 and an armoring technology of transforming growth factor beta dominant-negative receptor to address immunosuppressive factors in the tumor microenvironment.

Building on gamma delta 1 tissue tropism to solid tumors and three mechanisms of anti-tumor activity (CAR, innate and adaptive), CAR gamma delta 1 T cells may be well positioned to address solid tumors.

In June 2024, we received FDA clearance for our IND application for ADI-270 in RCC.

In July 2024, we also received FDA Fast Track Designation for ADI-270 for the potential treatment of patients with metastatic/advanced clear cell RCC (ccRCC).

In December 2024, we dosed our first RCC patient, and in February 2025 reported that we have enrolled a total of three RCC patients, in our Phase 1 multicenter, open-label clinical trial to assess the safety and anti-tumor activity of ADI-270.

We plan to share preliminary clinical data in the first half of 2025.

Food and Drug Administration (FDA) cleared our IND application for prula-cel in lupus nephritis (LN).

In August 2024, we expanded our prula-cel autoimmune clinical development program to include systemic lupus erythematosus (SLE), systemic sclerosis (SSc) and anti-neutrophil cytoplasmic autoantibody associated vasculitis (AAV).

In September 2024, we activated sites for our Phase 1 clinical trial of prula-cel in autoimmune diseases and opened enrollment for patients with LN.

In October 2024, we received clearance for our IND amendment to evaluate prula-cel in idiopathic inflammatory myopathies (IIM) and stiff person syndrome (SPS) as part of our Phase 1 clinical trial in autoimmune diseases.

We believe the favorable safety profile, cellular kinetics and B cell depletion in peripheral blood and secondary lymphoid tissue demonstrated with prula-cel clinical experience to date is favorable for development in autoimmune diseases.

We believe the potential market opportunity for prula-cel in B cell mediated autoimmune diseases is substantial based on the prevalence in the U.S., EU5, China and Japan of greater than 1.7 million patients with autoimmune diseases where CAR-T cell therapy has demonstrated clinical proof-of-concept, including SLE (which includes LN), SSc, IIM and SPS.

In June 2024, the FDA granted Fast Track Designation to prula-cel for the potential treatment of relapsed/refractory class III or class IV LN.

In February 2025, the FDA granted Fast Track Designation to prula-cel for the potential treatment of adult patients with refractory SLE with extrarenal involvement and for SSc.

In April 2025, we expanded enrollment to include patients with SLE for our Phase 1 clinical trial evaluating prula-cel in autoimmune diseases and in July 2025, we reported that the first SSc patient has been dosed in the second cohort of the Phase 1 clinical trial.

In October 2025, we announced positive preliminary results from seven SLE and LN patients dosed in our ongoing Phase 1 trial of prula-cel in autoimmune diseases as of the August 31, 2025 data cut-off date.

We plan to meet with the FDA in the second quarter of 2026 to inform potential pivotal trial design.

Subject to regulatory clearance to proceed, we expect to initiate a potential pivotal study in LN or LN and SLE patients in the second half of 2026.

In November 2025, we reached alignment with the FDA to allow LN and SLE patients to be dosed with prula-cel in the outpatient setting in ongoing and future clinical trials.

Phase 1 enrollment is ongoing and we expect to provide a clinical update for this trial in LN, SLE and SSc patients in the first half of 2026, with a plan to provide an additional update in the second half of 2026.

We also reported in October 2025 that the first patient was dosed in a Phase 1 clinical trial of prula-cel in patients with treatment-refractory rheumatoid arthritis (RA).

The study will evaluate two conditioning regimens:

cyclophosphamide alone and cyclophosphamide with fludarabine, to explore the potential to reduce the need for conditioning.

The next clinical update on this trial is expected in the second half of 2026.

We are advancing ADI-212, a next-generation gene-edited and armored clinical candidate designed to target prostate-specific membrane antigen.

ADI-212 is engineered to express a novel CAR binder designed to support enhanced tolerability and tumor-specific recognition.

It integrates membrane-tethered IL-12 (mbIL-12) armoring and CRISPR/Cas9 mediated disruption of subunit 12 of the mediator complex (MED12) to enhance potency in solid tumors and deliver multiple anti-tumor mechanisms of action within the tumor microenvironment.

We expect to submit a regulatory filing for ADI-212 for the treatment of metastatic castration-resistant prostate cancer (mCRPC) in the third quarter of 2026.

Subject to regulatory clearance to proceed with a clinical trial, we expect to initiate patient enrollment in the fourth quarter of 2026.

We believe the potential market opportunity for ADI-212 in mCRPC is significant based on the prevalence in the U.S., EU5, China and Japan of approximately 75,000 patients with second or third line advanced disease.

Due to the prioritization of prula-cel in autoimmune indications and ADI-212 in mCRPC, we have discontinued the development of ADI-270 and closed enrollment in the Phase 1 clinical trial in patients with metastatic/advanced clear renal cell carcinoma.

Recent Developments

Termination of the Loan and Security Amendment

On November 27, 2024, Adicet Therapeutics, Inc.

(Adicet Therapeutics), a Delaware corporation and our wholly-owned subsidiary, and Banc of California executed a payoff letter (the Payoff Letter) to repay in full all outstanding indebtedness and terminate all commitments and obligations, subject to certain exceptions, under that certain Loan and Security Agreement (the Loan Agreement), dated as of April 28, 2020, as amended.

Under the Payoff Letter, we agreed to pay Banc of California approximately $10,000 in administrative fees and establish cash collateral accounts and execute pledge and security agreements to secure ancillary services provided by Banc of California.

As of December 31, 2024, we have $2.9 million of restricted cash held in cash collateral accounts.

No termination penalty was paid in connection with the Payoff Letter.

Research and Development Activities in China

In May 2024, we initiated research and development activities in China through a series of contractual agreements entered into and among Shanghai Adicet Biotechnology Co., Ltd.

(the Adicet VIE), Adicet (Shanghai) Biotechnology Co., Ltd.

(Adicet Shanghai), a wholly owned subsidiary of Adicet Therapeutics, and the shareholders of the Adicet VIE.

We are the primary beneficiary of the Adicet VIE, which is considered a consolidated entity under accounting principles generally accepted in the United States of America (U.S.

At-the-Market (ATM) Offering

On March 22, 2024, we entered into an Open Market Sales Agreement SM (the Jefferies Sales Agreement) with Jefferies to sell shares of our common stock, from time to time, through an ATM equity offering program under which Jefferies will act as sales agent or principal (the Jefferies ATM Program).

As of December 31, 2024, no shares of common stock have been sold under the Jefferies Sales Agreement.

Reverse Stock Split

On December 30, 2025, our 1-for-16 reverse stock split (Reverse Stock Split) was effective following approval by our stockholders at our special meeting in December 2025.

As a result, every 16 shares of our issued common stock were combined into one share of our common stock.

No fractional shares of our common stock were issued as a result of the Reverse Stock Split.

Stockholders who would otherwise be entitled to receive fractional shares were automatically entitled to receive cash in lieu of such fractional share.

The shares of our common stock retained a par value of $0.0001 per share.

Trading of the common stock on the Nasdaq Capital Market commenced on a split-adjusted basis at market open on December 30, 2025, under the existing trading symbol “ACET.”

Financial Operations Overview

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• establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;

• expenses incurred in connection with our license and collaboration agreements, including license payments, program expenses and milestone obligations payable by us;

• commercializing product candidates, if and when approved, whether alone or in collaboration with others;

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We anticipate that our general and administrative expenses will increase for the foreseeable future due to expenses related to operating as a public company, including expenses related to personnel costs, expanded infrastructure and higher consulting, legal and accounting services costs associated with complying with the applicable Nasdaq and SEC requirements, investor relations costs and director and officer insurance premiums.

Goodwill Impairment

Goodwill represents the excess of the purchase price over the fair value of net tangible and identified intangible assets acquired in our merger with resTORbio, Inc.

in September 2020.

Goodwill is not amortized but is evaluated at least annually for impairment or when a change in facts and circumstances indicate that the fair value of the goodwill may be below the carrying value.

If the fair value of the reporting unit is less than the carrying value, we measure the amount of impairment loss, if any, as the excess of the carrying value over the fair value of the reporting unit.

This amount is recognized as a goodwill impairment charge for the period.

The Company performed an interim test for goodwill impairment in the year ended December 31, 2023 and determined that the entire balance of goodwill was impaired.

Interest Income

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Interest Expense

Interest expense consists primarily of the non-cash amortization of costs incurred in connection with the Loan Agreement (as defined in our Liquidity and Capital Resources section below).

Interest expense consists primarily of interest on finance lease liabilities.

Other Expense, Net

Other expense, net primarily consists of state franchise and capital taxes not related to income.

Other expense, net primarily consists of state franchise and capital taxes not related to income and losses on disposal of fixed assets.

Results of Operations

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General and administrative

Goodwill impairment

Total operating expenses

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(2) Allocated facility-related costs, such as rent, utilities, insurance, repairs and maintenance, depreciation and amortization, information technology costs and general support services.

Research and development expenses decreased by $6.7 million, or 6%, during the year ended December 31, 2024 compared to the year ended December 31, 2023.

The decrease in research and development expenses was primarily due to a $7.7 million decrease in expenses related to CDMOs.

This decrease was partially offset by a $0.6 million increase in lab expenses as well as a $0.5 million increase in professional fees.

Research and development expenses decreased by $0.2 million, or less than 1%, during the year ended December 31, 2025 compared to the year ended December 31, 2024.

The decrease in research and development expenses was primarily due to a $5.1 million decrease in payroll and personnel expenses related to lower headcount and a $0.7 million decrease in lab supplies and materials.

This decrease was partially offset by a net $5.6 million increase in contracted research and development costs primarily related to CRO costs associated with autoimmune studies.

General and Administrative

General and administrative expenses increased by $1.8 million, or 7%, during the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase in general and administrative expenses was primarily due to a $0.9 million increase in professional fees for the period.

There was also a $0.4 million increase in payroll and personnel expenses, which includes an increase in salaries and benefits of $0.5 million and stock-based compensation of $0.4 million, partially offset by a decrease of $0.3 million in recruiting fees.

The increase was also due to a $0.3 million increase in depreciation expense as well as a $0.2 million increase in allocated facility expense for the period.

Goodwill Impairment

Goodwill impairment charges decreased by $19.5 million, or 100%, during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Beginning in the third quarter of 2023, we experienced a significant decline in our stock price.

We concluded that the decrease in stock price was sustained and that it was more likely than not that the fair value of our single reporting unit was less than its carrying amount.

Therefore, we performed an interim goodwill impairment test in the third

quarter of 2023.

Based on our interim impairment test, we recorded a goodwill impairment charge of $19.5 million during the year ended December 31, 2023, representing the entire balance of goodwill.

General and administrative expenses decreased by $5.3 million, or 19%, during the year ended December 31, 2025 compared to the year ended December 31, 2024.

The decrease in general and administrative expenses was primarily due to a decrease in payroll and personnel expenses primarily related to a decrease in stock-based compensation of $3.6 million, a decrease in recruiting and employee travel expenses of $0.3 million, decreases in rent, office related expenses and allocated facility expense of $1.5 million and a decrease of $0.2 million related to corporate insurance and property taxes.

This decrease was partially offset by a $0.3 million increase in professional fees.

Interest Income

Interest income increased by $0.7 million, or 7%, during the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase was primarily due to higher cash balances, investments in treasury securities, and higher interest rates for the period.

Interest income decreased by $4.9 million, or 46%, during the year ended December 31, 2025 compared to the year ended December 31, 2024.

The decrease was primarily due to lower interest rates and lower cash balances for the period.

Other Expense, Net

Other expense, net decreased by $0.4 million, or 62%, during the year ended December 31, 2024 compared to the year ended December 31, 2023.

This was due to a decrease in franchise taxes and realized losses related to foreign exchange rates.

Other expense, net increased by $0.2 million, or 98%, during the year ended December 31, 2025 compared to the year ended December 31, 2024.

This was primarily due to a loss on disposal of assets related to furniture and equipment located in 1200 Bridge Parkway, due to expiration of lease in June 2025.

Income Tax Benefit

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We may receive nominal proceeds, if any, from the exercise of the pre-funded warrants.

On October 7, 2025, we entered into an underwriting agreement related to an underwritten registered direct offering (the 2025 Offering) of 4,375,062 shares (the 2025 Shares) of Common Stock, and, in lieu of Common Stock to an investor, pre-funded warrants (the 2025 Pre-Funded Warrants) to purchase 625,000 shares of Common Stock (the 2025 Warrant Shares).

The 2025 Shares were sold at a price of $16.00 per share and the 2025 Pre-Funded Warrants were sold at a price of $15.9984 per underlying share, which represents the per share offering price of each share of common stock minus the $0.0016 per share exercise price for each pre-funded warrant.

The purchase price paid by the Underwriters to us was $15.04 per 2025 Share and $15.03856 per 2025 Pre-Funded Warrant, representing a discount to the Underwriters of 6.0%.

We received net proceeds from the 2025 Offering, after deducting the underwriting discount and commissions and other estimated offering expenses, of approximately $74.8 million.

We may receive nominal proceeds, if any, from the exercise of the 2025 Pre-Funded Warrants.

As of December 31, 2025, we had cash, cash equivalents and short-term investments of $158.5 million and restricted cash of $2.9 million.

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As of December 31, 2025, we had cash, cash equivalents, and short-term investments of $158.5 million.

We believe that our cash, cash equivalents and short-term investments will be sufficient for us to fund our operations for at least twelve months from the issuance date of our consolidated financial statements as of, and for the year ended, December 31, 2024 included elsewhere in this Annual Report on Form 10-K.

We believe that our cash, cash equivalents and short-term investments will be sufficient for us to fund our operations for at least twelve months from the issuance date of our consolidated financial statements for the year ended December 31, 2025 included elsewhere in this Annual Report on Form 10-K.

We have based these estimates on assumptions that may prove to be wrong, and we could deplete our available capital resources sooner than we expect.

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Financing activities

Net decrease in cash and cash equivalents

Net decrease in cash, cash equivalents and restricted cash

Cash Flows from Operating Activities

Net cash used in operating activities was $94.6 million for the year ended December 31, 2025.

Cash used in operating activities consisted of net loss offset by non-cash adjustments of $20.1 million and a net increase in operating assets and liabilities of $1.5 million.

Non-cash items primarily included stock-based compensation expense of $14.3 million, depreciation and amortization of $6.4 million and non-cash lease expense of $3.4 million.

The net increase in assets and liabilities was primarily due to an increase of $1.9 million in accrued and other current and non-current liabilities, an increase of $1.7 million in prepaid expenses and other current assets, an increase in accounts payable of $1.0 million and an increase of $0.3 million in other non-current assets.

The increase was partially offset by a decrease of $3.4 million in operating lease liability.

Net cash used in operating activities was $92.4 million for the year ended December 31, 2024.

Cash used in operating activities consisted of net loss offset by non-cash adjustments of $30.3 million and a net decrease in operating assets and liabilities of $5.5 million.

Non-cash items primarily included stock-based compensation expense of $22.2 million, depreciation and amortization of $6.5 million and non-cash lease expense of $3.2 million.

The net decrease in assets and liabilities was primarily due to a decrease of $3.7 million in operating lease liability, a decrease of $2.0 million in accrued and other current and non-current liabilities and a decrease of $1.3 million in prepaid expenses and other current assets.

The net decrease in assets and liabilities was primarily due to a decrease of $3.7 million in operating lease liability, a decrease of $2.0 million in accrued expenses and other current and non-current liabilities, and a decrease of $1.3 million in prepaid expenses and other current assets.

The decrease was partially offset by an increase in accounts payable of $1.1 million and an increase in other non-current assets of $0.4 million.

Net cash used in operating activities was $93.7 million for the year ended December 31, 2023.

Cash used in operating activities consisted of net loss offset by non-cash adjustments of $48.7 million and a net increase in operating assets and liabilities of $0.3 million.

Non-cash items primarily included goodwill impairment of $19.5 million, stock-based compensation expense of $20.3 million, depreciation and amortization of $6.1 million and non-cash lease expense of $2.8 million.

The net increase in assets and liabilities was primarily due to an increase of $0.9 million in prepaid expenses and other current assets

and an increase of $0.4 million in other non-current assets accounts.

There was also an increase in accrued and other current and non-current liabilities of $0.8 million.

The increase was partially offset by a decrease in accounts payable of $1.7 million.

Cash Flows from Investing Activities

Net cash provided by investing activities was $2.4 million for the year ended December 31, 2025, which consisted of $145.0 million related to maturities of short-term treasury securities, net of $140.9 million of purchases of short-term treasury securities and $1.7 million of purchases of lab equipment for our GMP cell processing suite at 1000 Bridge Parkway.

Net cash used in investing activities was $119.2 million for the year ended December 31, 2024, which consisted of $129.1 million of purchases of short-term treasury securities and $1.1 million of purchases of lab equipment for our GMP cell processing suite at 1000 Bridge Parkway.

We received $11.0 million related to the maturities of short-term treasury securities.

Net cash used in investing activities was $4.5 million for the year ended December 31, 2023, which consisted of purchases of property and equipment related to the construction of our facilities in Redwood City, California.

Cash Flows from Financing Activities

Net cash provided by financing activities was $75.2 million for the year ended December 31, 2025, which included approximately $75.2 million in net proceeds from the issuance of our common stock and pre-funded warrants in the 2025 Offering and $0.3 million in net proceeds from the issuance of common stock in connection with our employee stock purchase plan.

This was partially offset by $0.1 million cash paid for taxes withheld on the net share settlement of equity awards and $0.2 million cash paid for the principal payment on finance leases.

Net cash provided by financing activities was $111.3 million for the year ended December 31, 2024, which included approximately $91.7 million in net proceeds from the issuance of our common stock and pre-funded warrants in the Offering and approximately $19.3 million in net proceeds from the issuance of our common stock under the JonesTrading ATM Program.

Net cash provided by financing activities was $0.2 million for the year ended December 31, 2023, which was primarily related to $0.4 million in net proceeds from the issuance of common stock in connection with our employee stock purchase plan.

This was partially offset by $0.2 million of cash paid for taxes withheld on the net share settlement of equity awards.

Critical Accounting Policies, Significant Judgments and Use of Estimates

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting practices (GAAP).

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in our consolidated financial statements.

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets,

liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in our consolidated financial statements.

Actual results may differ from these estimates under different assumptions or conditions and could have a material impact on our reported results.

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Changes in these assumptions can materially affect the estimate of the fair value of stock-based compensation:

Goodwill represents the excess of the purchase price over the fair value of net tangible and identified intangible assets acquired in a business combination.

Goodwill is not amortized but is evaluated at least annually for impairment or when a change in facts and circumstances indicate that the fair value of the goodwill may be below the carrying value.

Goodwill is tested for impairment at the reporting unit level annually in the fourth quarter, or more frequently when events or changes in circumstances indicate that the asset might be impaired.

Examples of such events or circumstances include, but are not limited to, a significant adverse change in legal or business climate, an adverse regulatory action or unanticipated competition.

We have determined that we operate in a single operating segment and have a single reporting unit.

Prior to performing the impairment test, we assess qualitative factors to determine whether the existence of events or circumstances would indicate that it is more likely than not that the fair value of the reporting unit was less than the carrying amount.

If after assessing the totality of events or circumstances, we were to determine that it is more likely than not that the fair value of the reporting unit is less than the carrying amount, we would perform a quantitative impairment test.

The quantitative impairment test involves comparing the fair value of the reporting unit to the carrying value.

If the fair value of the reporting unit exceeds the carrying value of the net assets, goodwill is not impaired, and no further testing is required.

We performed an interim test for goodwill impairment in the third quarter of the fiscal year ended December 31, 2023 and determined that goodwill was impaired.

Smaller Reporting Company

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Because of their liquidity, these assets are not directly affected by inflation.

Since we intend to retain and continue to use our equipment, furniture, fixtures and office equipment, computer hardware and software and leasehold improvements, we

believe that the incremental inflation related to replacement costs of such items will not materially affect our operations.

Since we intend to retain and continue to use our equipment, furniture, fixtures and office equipment, computer hardware and software and leasehold improvements, we believe that the incremental inflation related to replacement costs of such items will not materially affect our operations.

Inflation generally affects us by increasing our cost of labor, clinical trial and manufacturing costs.

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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 7. Management’s Discussion and Analysis