Investing in our common stock involves a high degree of risk.
−Removed: Before deciding to invest in shares of our common stock, you should carefully consider the risks described below, together with the other information contained in this Annual Report on Form 10-K, including in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our audited financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.
+Added: Before deciding to invest in shares of our common stock, you should carefully consider the risks described below, together with the other information contained in this Annual Report on Form 10-K, including in the section titled “Management’s Discussion and Analysis of Financial Condition and
+Added: Results of Operations” and in our audited consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.
We cannot assure you that any of the events discussed below will not occur.
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If that were to happen, the trading price of our common stock could decline, and you could lose all or part of your investment.
−Removed: Risk Factors Related to the Merger
−Removed: The Merger may not be completed on the terms or timeline currently contemplated, or at all.
−Removed: Our stockholders will be subject to a number of material risks if the Merger is not completed on the terms or timeline currently contemplated, or at all.
−Removed: The consummation of the Merger is subject to numerous conditions, including (1) the approval by the ACELYRIN stockholders of the proposal to adopt the Merger Agreement (the “ACELYRIN merger proposal”), (2) the approval by our stockholders of our share issuance proposal, (3) the effectiveness of the Registration Statement on Form S-4 to be filed by us with the SEC, and (4) other customary closing conditions.
−Removed: If the Merger is not completed for any reason, the price of our common stock and/or the price of ACELYRIN common stock may decline to the extent that the market price thereof reflects or previously reflected positive market assumptions that the Merger would be completed, and the benefits of the Merger would be realized.
−Removed: In addition, we and ACELYRIN have expended and will continue to expend significant management time and resources and have incurred and will continue to incur significant expenses due to legal, advisory, printing and financial services fees related to the Merger.
−Removed: These expenses must be paid regardless of whether the Merger is consummated.
−Removed: If the Merger is not consummated, we may be
−Removed: required under certain circumstances to pay ACELYRIN a termination fee of $10.0 million and ACELYRIN may be required under certain circumstances to pay us a termination fee of $10.0 million.
−Removed: There is no assurance that the Merger will be consummated.
−Removed: If the Merger is not timely completed, we and ACELYRIN may have to materially alter our respective business plans, including pausing and/or terminating our current and planned clinical trials and the development of our respective product candidates.
−Removed: For example, we will require substantial additional financing to achieve our goals and failure to obtain additional capital when needed, at all or on acceptable terms to us, could cause us to delay, limit, reduce, or terminate its product development or future commercialization efforts.
−Removed: Further Alumis may suffer negative reactions from our respective employees, partners and vendors in the event the Merger is not consummated.
−Removed: In addition, if the Merger is not completed, we could become subject to litigation related to any failure to complete the Merger or to perform their respective obligations under the Merger Agreement.
−Removed: If the Merger is not completed, we cannot assure our stockholders that these risks will not materialize and will not materially affect the business, financial results and our stock prices.
−Removed: Litigation relating to the Merger, if any, could result in an injunction preventing the completion of the Merger and/or substantial costs to us.
−Removed: Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger or other business combination agreements like the Merger Agreement.
−Removed: Even if such a lawsuit is without merit, defending against such claims can result in substantial costs and divert management time and resources.
−Removed: An adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financial condition.
−Removed: Lawsuits that may be brought against us, ACELYRIN or our respective directors and officers could also seek, among other things, injunctive relief or other equitable relief, including a request to rescind parts of the Merger Agreement already implemented and to otherwise enjoin us and ACELYRIN from consummating the Merger.
−Removed: One of the conditions to the closing of the Merger (the “Closing”) is that no injunction by any governmental entity having jurisdiction over us, ACELYRIN or Merger Sub has been entered and continues to be in effect and no law has been adopted, in either case, that prohibits the Closing.
−Removed: If a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, that injunction may delay or prevent the Merger from being completed within the expected time frame or at all, which may adversely affect our business, financial position and results of operations.
−Removed: There can be no assurance that any defendants will be successful in the outcome of any potential future lawsuits.
−Removed: The defense or settlement of any lawsuit or claim that remains unresolved at the time the Merger is completed may adversely affect the combined company’s business, financial condition, results of operations and cash flows.
−Removed: The Merger Agreement contains provisions that could discourage a potential competing acquiror of us or could result in any competing proposal being at a lower price than it might otherwise be.
−Removed: The Merger Agreement contains “no-shop” provisions that, subject to limited exceptions, restrict ACELYRIN’s and our ability to solicit, encourage, facilitate or discuss competing third-party proposals to acquire all or a significant part of our company.
−Removed: In addition, each party generally has an opportunity to offer to modify the terms of the Merger in response to any competing acquisition proposals that may be made before the other party’s board of directors may withdraw or qualify its recommendation regarding the proposals described herein.
−Removed: In specified circumstances, we may be required to pay a termination fee to the other party due to the termination of the Merger Agreement.
−Removed: These provisions could discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of us from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher value than the market value proposed to be received or realized in the Merger, or might result in a potential competing acquiror proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee under the Merger Agreement or expenses that may become payable in certain circumstances.
−Removed: If the Merger Agreement is terminated and we attempt to seek another business combination, there is no assurance that we will be able to negotiate a transaction with another party on terms comparable or better than the terms of the Merger.
−Removed: The pendency of the Merger could adversely affect our business and operations of us and ACELYRIN.
−Removed: In connection with the Merger, our existing or prospective partners may delay or defer decisions or reduce their level of business with either or both of the companies, any of which could negatively affect our business and financial results, regardless of whether the Merger is completed.
−Removed: ACELYRIN intends to delay the initiation of its previously announced Phase 3 LONGITUDE program for the evaluation of subcutaneous lonigutamab in thyroid eye disease, which may adversely impact the combined company’s ability to develop lonigutamab.
−Removed: In addition, due to operating covenants in the Merger Agreement, we may be unable, during the pendency of the Merger, to pursue strategic transactions, undertake significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions without the consent of the other party or as otherwise discussed elsewhere in these risk factors, even if such actions would prove beneficial.
−Removed: Our employees may experience uncertainty about their future roles with the combined company, which might adversely affect each company’s ability to retain and hire key managers and other employees.
−Removed: Moreover, the pursuit of the Merger and the preparation for the integration of the companies may place a significant burden on the management and personnel of both companies, and the attention of the combined company’s management may continue to be diverted to such matters even after consummation of the Merger.
−Removed: The diversion of management’s attention away from operating the companies in the ordinary course could adversely affect our financial results and the advancement of their respective product candidates.
−Removed: Any of these effects could adversely affect our business prior to the completion of the Merger.
−Removed: The Merger may be completed even if one of the parties is subject to material and adverse impacts that are excluded from the definition of material adverse effect in the Merger Agreement.
−Removed: In general, neither we nor ACELYRIN is obligated to complete the Merger if there is a material adverse effect affecting the other party between February 6, 2025, the date of the Merger Agreement, and the consummation of the Merger.
−Removed: However, certain types of changes are excluded from the concept of a “material adverse effect.” Such exclusions include, but are not limited to:
−Removed: ● changes or conditions generally affecting the industries in which we or ACELYRIN, as applicable, operate;
−Removed: ● general economic or political conditions or securities, credit, financial or other capital markets conditions, in each case in the United States or any foreign jurisdiction;
−Removed: ● any failure, in and of itself, by us or ACELYRIN, as applicable, to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period;
−Removed: ● the public announcement or pendency of the transactions contemplated hereby (including the impact on the relationships, contractual or otherwise, of such party or any of its subsidiaries with employees, labor unions, suppliers or partners);
−Removed: ● any change, in and of itself, in the market price or trading volume of us or ACELYRIN’s, as applicable, securities or in its credit ratings;
−Removed: ● any change in applicable law, regulation or with accounting principles generally accepted in the United States of America;
−Removed: ● geopolitical conditions, the outbreak or escalation of hostilities, any acts of war, sabotage or terrorism, or any escalation;
−Removed: ● any hurricane, tornado, flood, earthquake or other natural disaster;
−Removed: ● any epidemic, pandemic or disease outbreak (including COVID-19) and any action by a governmental entity in response thereto;
−Removed: ● any litigation arising from allegations of a breach of fiduciary duty or other violation of applicable law relating to the Merger Agreement or the transactions contemplated thereby;
−Removed: ● any adverse effects, AEs or safety observations or reports of new side effects, AEs or safety observations with respect to our or ACELYRIN’s, as applicable, product candidates;
−Removed: ● any regulatory, manufacturing or clinical effect or other action resulting from any non-clinical (including internal and external research and discovery) or clinical studies (including compassionate use studies) sponsored by us or ACELYRIN, as applicable, or any competitor of such party;
−Removed: ● any results of meetings with the FDA or other governmental body (including any communications from any governmental body in connection with such meetings), or any increased incidence or severity of any previously identified side effects, adverse effects, AEs or safety observations or reports of
−Removed: ● new side effects, AEs or safety observations with respect to our or ACELYRIN’s, as applicable, product candidates or any competitor’s product candidates;
−Removed: ● any taking of any action required pursuant to the Merger Agreement, or not required by the Merger Agreement but taken at the written request or with the prior written consent of the other party.
−Removed: If any such adverse changes occur and we and ACELYRIN consummate the Merger, the stock price of the combined company may suffer.
−Removed: This in turn may reduce the value of the Merger to the stockholders of us, ACELYRIN or both.
−Removed: Our current stockholders will have a reduced ownership interest and voting power in the combined company after the Merger.
−Removed: Immediately following the Merger, our pre-Merger stockholders are expected to hold approximately 55% of the combined company’s common stock and the pre-Merger stockholders of ACELYRIN are expected to hold approximately 45% of the combined company’s common stock, in each case, calculated on a fully diluted basis as of January 31, 2025.
−Removed: Alumis stockholders and ACELYRIN stockholders currently have the right to vote for their respective directors and on certain other matters affecting their respective companies.
−Removed: If and when the Merger occurs, each Alumis stockholder will remain a stockholder of Alumis with a percentage ownership of Alumis that will be smaller than the stockholder’s percentage of Alumis prior to the Merger (without considering such stockholder’s current ownership of ACELYRIN shares, if any).
−Removed: Correspondingly, each ACELYRIN stockholder who receives shares of Alumis common stock will become an Alumis stockholder with a percentage ownership of Alumis that will be smaller than the stockholder’s percentage ownership of ACELYRIN (without considering such stockholder’s current ownership of our common stock, if any).
−Removed: Our stockholders will have less voting power in Alumis than they currently have, and former ACELYRIN stockholders will have less voting power in us than they now have in ACELYRIN.
−Removed: Our pre-Merger stockholders will be able to exercise less influence over the management and policies of the combined company following the consummation of the Merger than they are able to exercise over Alumis or ACELYRIN, as applicable, immediately prior to the consummation of the Merger.
−Removed: Directors and executive officers of us and ACELYRIN have interests in the Merger that may be different from, or in addition to, those of other our stockholders and ACELYRIN stockholders, which could have influenced their decisions to support or approve the Merger.
−Removed: In considering whether to approve the proposals at our virtual special meeting and the ACELYRIN virtual special meeting, as applicable, our and ACELYRIN stockholders should recognize that directors and executive officers of us and ACELYRIN have interests in the Merger that may differ from, or that are in addition to, their interests as our stockholders and stockholders of ACELYRIN.
−Removed: Colowick, M.D., M.P.H.
−Removed: and Patrick Machado are members of each company’s board of directors and will continue as directors of the combined company after the effective time of the Merger (the “Effective Time”), and, following the Closing, will be eligible to be compensated as non-employee directors of the combined company pursuant to our amended and restated non-employee director compensation policy that is expected to
−Removed: remain in place following the Effective Time.
−Removed: Certain of ACELYRIN’s directors have options, subject to vesting, to purchase shares of ACELYRIN common stock which, after the Effective Time, will be converted into and become options to purchase shares of the common stock of the combined company and all of ACELYRIN’S directors are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement.
−Removed: In addition, the directors and executive officers of ACELYRIN have other interests, which include, among others, severance benefits, continued indemnification and the right to accelerated vesting.
−Removed: For example, ACELYRIN’s severance policy provides employees with cash severance payments, certain health insurance coverage and the acceleration of outstanding equity awards in the event of an involuntary termination in connection with a change of control of ACELYRIN.
−Removed: Our board of directors, with Dr.
−Removed: Colowick and Mr.
−Removed: Machado recused and the ACELYRIN board of directors, with Dr.
−Removed: Colowick and Mr.
−Removed: Machado recused were aware of these interests at the time each approved the Merger Agreement.
−Removed: These interests may cause our and ACELYRIN’s directors and executive officers to view the Merger differently than you may view it as a stockholder.
−Removed: Financial projections regarding us and ACELYRIN may not prove accurate.
−Removed: In connection with the Merger, we and ACELYRIN prepared and considered internal financial forecasts for us and ACELYRIN.
−Removed: These financial projections are based on several assumptions, including regarding future operating cash flows, expenditures and income of us and ACELYRIN, including benefits to be realized from the Merger.
−Removed: These financial projections were not prepared with a view to public disclosure, are subject to significant economic, competitive, industry and other uncertainties and may not be achieved in full, within projected timeframes or at all.
−Removed: The failure of Alumis and ACELYRIN to achieve projected results could have a material adverse effect on the price of each company’s common stock prior to consummation the Merger and the combined company’s financial position after the consummation of the Merger.
−Removed: The combined company may fail to realize the anticipated benefits of the Merger.
−Removed: The success of the Merger will depend on, among other things, the combined company’s ability to combine our and ACELYRIN’s businesses in a manner that realizes anticipated synergies and meets or exceeds the forecasted cash balances and expense levels anticipated by each company.
−Removed: On a combined basis, the combined company expects to benefit from each of our and ACELYRIN’s product pipelines and the potential market opportunity for each company’s product candidates, if approved.
−Removed: If the combined company is not able to successfully achieve these objectives, then the anticipated benefits of the Merger may not be realized fully or at all or may take longer to realize than expected.
−Removed: The failure to successfully integrate the businesses and operations of us and ACELYRIN in the expected time frame may adversely affect the combined company’s future results.
−Removed: We and ACELYRIN have operated and, until the completion of the Merger, will continue to operate independently.
−Removed: There can be no assurances that their businesses can be integrated successfully.
−Removed: It is possible that the integration process could result in the loss of our key employees or key ACELYRIN employees, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated.
−Removed: Specifically, the following issues, among others, must be addressed in integrating the operations of us and ACELYRIN in order to realize the anticipated benefits of the Merger so the combined company performs as expected:
−Removed: ● combining the companies’ operations and corporate functions;
−Removed: ● reducing additional and unforeseen expenses such that integration costs more than anticipated;
−Removed: ● avoiding delays in connection with the Merger or the integration process;
−Removed: ● integrating personnel from the two companies and minimizing the loss of key employees;
−Removed: ● identifying and eliminating redundant and underperforming functions and assets;
−Removed: ● harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;
−Removed: ● maintaining existing agreements with distributors, providers and vendors and avoiding delays in entering into new agreements with distributors, providers and vendors;
−Removed: ● addressing possible differences in business backgrounds, corporate cultures and management philosophies;
−Removed: ● consolidating the companies’ administrative and information technology infrastructure and financial systems.
−Removed: In addition, at times the attention of certain members of either company’s or both companies’ management and resources may be focused on completion of the Merger and the integration of the businesses of the two companies and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt each company’s ongoing business and the business of the combined company.
−Removed: Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the Merger.
−Removed: The success of the Merger will depend in part on the retention of personnel critical to the business and operations of the combined company due to, for example, their technical skills or management expertise.
−Removed: Competition for qualified personnel can be intense.
−Removed: Current and prospective employees of us and ACELYRIN may experience uncertainty about their future role with us, ACELYRIN or the combined company until strategies with regard to these employees are announced or executed, which may impair our and ACELYRIN’s ability to attract, retain and motivate key management, sales, marketing, technical and field personnel, prior to and following the Merger.
−Removed: Employee retention may be particularly challenging during the pendency of the Merger, as employees of our and ACELYRIN may experience uncertainty about their future roles with us.
−Removed: If we and ACELYRIN are unable to retain personnel, including our and ACELYRIN’s key management, who are critical to the successful integration and future operations of the companies, we and ACELYRIN could face disruptions in their operations, loss of key information, expertise or know-how, and unanticipated additional recruitment and training costs.
−Removed: In addition, the loss of key personnel could diminish the anticipated benefits of the Merger.
−Removed: If key employees of us or ACELYRIN depart, the integration of the companies may be more difficult and Alumis’ business following the Merger may be harmed.
−Removed: Furthermore, we may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent relating to the business of each of us and ACELYRIN, and the combined company’s ability to realize the anticipated benefits of the Merger may be adversely affected.
−Removed: In addition, there could be disruptions to or distractions for the workforce and management associated with integrating employees into our business.
−Removed: No assurance can be given that, following completion of the Merger, Alumis will be able to attract or retain key employees of us and ACELYRIN to the same extent that those companies have been able to attract or retain their own employees in the past.
Risks Related to Our Financial Position and Need for Capital
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It entails substantial upfront capital expenditures and significant risk that any product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval or become commercially viable.
−Removed: Our most advanced candidate is ESK-001, an oral, small molecule allosteric inhibitor of TYK2.
−Removed: We are currently conducting two parallel Phase 3 clinical trials of ESK-001 in PsO and a Phase 2b clinical trial of ESK-001 in SLE.
−Removed: In addition, we are advancing A-005, an investigational CNS penetrant allosteric inhibitor of TYK2 that has a potential application in MS and other neuroinflammatory and neurodegenerative diseases, currently in Phase 1 clinical development.
−Removed: Our ability to achieve profitability in the future is dependent upon obtaining regulatory approval for and successfully commercializing our most advanced candidate, ESK-001, either alone or with third parties.
−Removed: However, our operations may not be profitable even if ESK-001 is successfully developed, approved and thereafter commercialized.
+Added: Our most advanced candidate is envu, an oral, small molecule allosteric inhibitor of TYK2.
+Added: We are currently conducting a Phase 2 open-label extension trial, as well as a Phase 3 LTE trial of envu in PsO and a Phase 2b clinical trial of envu in SLE.
+Added: In addition, we are advancing A-005, an investigational CNS penetrant allosteric inhibitor of TYK2 that has a potential application in multiple sclerosis and other neuroinflammatory and neurodegenerative diseases, currently in Phase 1 clinical development.
+Added: Our ability to achieve profitability in the future is dependent upon obtaining regulatory approval for and successfully commercializing our most advanced candidate, envu, either alone or with third parties.
+Added: However, our operations may not be profitable even if envu is successfully developed, approved and thereafter commercialized.
We have and will continue to incur significant development and other expenses related to our research and clinical development programs and ongoing operations.
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We expect to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our development of our product candidates.
−Removed: Likewise, we expect to incur substantial costs and expenses in connection with completing the Merger and integrating ACELYRIN’s business.
−Removed: While we expect that a certain level of transaction and integration costs and expenses would be incurred, there are a number of factors beyond our control that could affect the total amount or the timing of its integration costs and expenses, including any ACELYRIN liabilities that arise, or become known, following the Closing.
−Removed: Many of the costs and expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time.
−Removed: Due to these factors, the transaction and integration costs and expenses could be greater or could be incurred over a longer period of time than we currently expect.
We anticipate that our expenses will increase substantially if, and as, we:
−Removed: ● conduct preclinical studies and clinical trials for ESK-001, A-005, and other programs;
+Added: ● conduct preclinical studies and clinical trials for envu, A-005, and potential future programs;
● identify additional product candidates and acquire rights from third parties to those product candidates through licenses or other acquisitions, and conduct development activities, including preclinical studies and clinical trials;
● procure the manufacturing of preclinical, clinical and commercial supply of our current and future product candidates;
−Removed: ● seek regulatory approvals for our current or any future product candidates;
−Removed: ● commercialize our current or any future product candidates, if approved;
+Added: ● seek regulatory approvals for our product candidates or any future product candidates;
+Added: ● commercialize our current product candidates or any future product candidates, if approved;
● take steps toward our goal of being an integrated biopharma company capable of supporting commercial activities, including establishing sales, marketing and distribution infrastructure;
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The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue or raise additional capital.
−Removed: Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity (deficit) and our working capital.
+Added: Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and our working capital.
We could also encounter delays if a clinical trial is suspended, put on clinical hold or terminated by us, the IRBs or ethics committees of the institutions in which such trials are being conducted, the FDA, or other comparable foreign regulatory authorities, or if a clinical trial is recommended for suspension or termination by the Data Safety Monitoring Board for such trial.
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Clinical trials may also be delayed or terminated as a result of ambiguous or negative interim results.
−Removed: For example, we discontinued our proof-of-concept Phase 2a clinical trial of ESK-001 in patients with non-infectious uveitis in June 2024 based on the efficacy results of a data analysis prepared for a scheduled monitoring committee meeting, which efficacy results did not meet our clinical threshold for success despite safety results consistent with ESK-001’s safety profile in psoriasis patients.
+Added: For example, we discontinued our proof-of-concept Phase 2a clinical trial of envu in patients with non-infectious uveitis in June 2024 based on the efficacy results of a data analysis prepared for a scheduled monitoring committee meeting, which efficacy results did not meet our clinical threshold for success despite safety results consistent with envu’s safety profile in psoriasis patients.
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 approval of our product candidates.
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Any delays or increase in costs in our clinical development programs may harm our business, financial condition, results of operations and prospects.
−Removed: Enrollment and retention of participants in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control, including difficulties in identifying patients, the availability of competitive products, and significant competition for recruiting participants in clinical trials.
−Removed: Participant enrollment, a significant factor in the timing of clinical trials, is affected by many conditions, including the size and nature of the patient population, the number and location of clinical sites we enroll, the proximity of participants to clinical sites, the eligibility and exclusion criteria for the trial, the design of the clinical trial, the inability to obtain and maintain participant consents, the risk that enrolled participants will drop out before completion, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation
−Removed: to other available therapies, including any new drugs or biologics that may be approved for the indications being investigated by us.
−Removed: Risks related to patient enrollment are heightened in longer clinical trials, including the 48-week trial period contemplated by our ongoing Phase 2b clinical trial of ESK-001 in SLE.
+Added: Enrollment and retention of participants in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control, including difficulties in identifying
+Added: patients, the availability of competitive products and significant competition for recruiting participants in clinical trials.
+Added: Participant enrollment, a significant factor in the timing of clinical trials, is affected by many conditions, including the size and nature of the patient population, the number and location of clinical sites we enroll, the proximity of participants to clinical sites, the eligibility and exclusion criteria for the trial, the design of the clinical trial, the inability to obtain and maintain participant consents, the risk that enrolled participants will drop out before completion, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs or biologics that may be approved for the indications being investigated by us.
+Added: Risks related to patient enrollment are heightened in longer clinical trials, including the 48-week trial period contemplated by our ongoing Phase 2b clinical trial of envu in SLE.
In particular, this trial has been and may continue to be challenging to enroll due to the fact that patients must be experiencing active disease at the time of screening to be eligible for enrollment.
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We have in the past experienced and expect to continue to experience participant withdrawals or discontinuations from our trials.
−Removed: For example, as long-term treatment with ESK-001 continues to be evaluated in our STRIDE OLE, ONWARD3 LTE study and LUMUS Part B OLE, we expect to see discontinuation rates rise over time.
+Added: For example, as long-term treatment with envu continues to be evaluated in our STRIDE OLE, ONWARD3 LTE study and LUMUS Part B OLE, we expect to see discontinuation rates rise over time.
Withdrawal of participants from our clinical trials may compromise the quality of our data.
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Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including potential collaborations, licenses and other similar arrangements.
−Removed: To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a holder of our common stock.
+Added: For example, in March 2026, we entered into a Controlled Equity Offering SM Sales Agreement (as amended from time to time, the “Sales Agreement”) with Cantor Fitzgerald & Co.
+Added: (“Cantor”), pursuant to which we may offer and sell, from time to time through Cantor, at our option, shares of our common stock having an aggregate offering price of up to $300.0 million.
+Added: To the extent that we raise additional capital through the sale of equity or convertible debt securities, including pursuant to sales under the Sales Agreement, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a holder of our common stock.
Any future debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making capital expenditures, declaring dividends or encumbering our assets to secure future indebtedness.
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We could also be required to seek collaborators for product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to product candidates in markets where we otherwise would seek to pursue development or commercialization ourselves.
−Removed: As a result of our recurring losses from operations and recurring negative cash flows from operations, our management concluded that there is a substantial doubt about our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt about our ability to continue as a going concern.
−Removed: See the risk factor below titled, “As a result of our history of losses and negative cash flows from operations, our consolidated financial statements contain a statement regarding a substantial doubt about our ability to continue as a going concern.” Based on our current operating plan, we will need to raise additional financing to continue our products’ development for the foreseeable future, and until we become profitable.
+Added: Based on our current operating plan, we will need to raise additional financing to continue our products’ development for the foreseeable future, and until we become profitable, if ever.
Any additional fundraising efforts may divert our management from our day-to-day activities, which may adversely affect our ability to develop and commercialize product candidates.
We cannot be certain that additional funding will be available on acceptable terms, or at all.
−Removed: If we are unable to obtain funding when and as needed on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate, or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
+Added: If we are unable to obtain funding when and as needed on a timely basis, we may be required to significantly curtail, delay or discontinue
+Added: one or more of our research or development programs or the commercialization of any product candidate, or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline.
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The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials and results in one indication may not be predictive of results to be expected for the same product candidate in another indication.
−Removed: For example, notwithstanding extensive preclinical testing demonstrating that A-005 can penetrate the CNS, our clinical trials of A-005 may show that it cannot penetrate the human CNS as fully as was observed in preclinical testing.
+Added: For example, while we plan to continue to evaluate the development program for lonigutamab, which was ACELYRIN’s lead product candidate, and its potential differentiation in a capital efficient manner, lonigutamab’s potential to improve on the safety and side-effect profile of the sole currently-approved therapy in the United States for the treatment of TED is unproven.
+Added: In particular, if lonigutamab is shown to have similar adverse events or side effects as the existing therapy, or other safety or tolerability concerns, such as hearing impairment, then our opportunity to disrupt the current standard of care in TED will be limited or precluded altogether.
+Added: In this regard, ACELYRIN observed certain adverse events in its Phase 2 clinical trial of lonigutamab including, without limitation, headache, tinnitus and injection site reactions.
+Added: If we determine that, whether due to emerging clinical data or otherwise, any of our drug candidates will be unable to improve on the current standard of care in the indications we are pursuing, we may decide to modify, suspend or abandon such development program.
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 advanced clinical trials due to lack of efficacy or unfavorable safety profiles, notwithstanding promising results in earlier trials, and we have experienced and may experience setbacks in our programs in the future.
−Removed: For example, we discontinued our proof-of-concept Phase 2a clinical trial of ESK-001 in patients with non-infectious uveitis in June 2024 based on the efficacy results of a data analysis prepared for a scheduled monitoring committee meeting, which efficacy results did not meet our clinical threshold for success despite safety results consistent with ESK-001’s safety profile in psoriasis patients.
+Added: For example, we discontinued our proof-of-concept Phase 2a clinical trial of envu in patients with non-infectious uveitis in June 2024 based on the efficacy results of a data analysis prepared for a scheduled monitoring committee meeting, which efficacy results did not meet our clinical threshold for success despite safety results consistent with envu’s safety profile in psoriasis patients.
Moreover, clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless failed to obtain regulatory approval of such product candidates.
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There is typically a high rate of failure of product candidates proceeding through clinical trials, and failure can occur at any time during the clinical trial process.
−Removed: Most product candidates that commence clinical trials are never approved as products and there can be no assurance that any of our current or future clinical trials will ultimately be successful or support the approval of our current or any future product candidates.
+Added: Most product candidates that commence
+Added: clinical trials are never approved as products and there can be no assurance that any of our current or future clinical trials will ultimately be successful or support the approval of our current or any future product candidates.
We expect to continue to rely on our CROs and clinical trial sites to ensure the proper and timely conduct of our clinical trials, including the participant enrollment process, and we have limited influence over their performance.
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● regulators, such as the FDA or comparable foreign regulatory authorities, may disagree with the design or implementation of our clinical trials;
−Removed: ● regulators, such as the FDA or comparable foreign regulatory authorities, IRBs, or ethics committees may impose additional requirements before permitting us to initiate a clinical trial, may not allow us or our investigators to commence or conduct a clinical trial at a prospective trial site, may not allow us to amend trial protocols, or regulators may require that we modify or amend our clinical trial protocols;
+Added: ● regulators, such as the FDA or comparable foreign regulatory authorities, IRBs, or ethics committees may impose additional requirements before permitting us to initiate a clinical trial, may not allow us or our investigators to commence or conduct a clinical trial at a prospective trial site, may not allow us to amend trial protocols, or may require that we modify or amend our clinical trial protocols;
● we may experience delays in reaching, or fail to reach, agreement on acceptable terms with trial sites and CROs, the terms of which can be subject to extensive negotiation and may vary significantly;
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● the number of participants required for clinical trials may be larger than we anticipate, enrollment in clinical trials may be slower than we anticipate or participants may drop out or fail to return for post-treatment follow-up at a higher rate than we anticipate;
−Removed: ● the cost of clinical trials may be greater than we anticipate, or we may have insufficient funds to initiate or complete a clinical trial or to pay the substantial user fees required by the FDA upon the submission of a New Drug Application or comparable marketing authorization application in another jurisdiction;
+Added: ● the cost of clinical trials may be greater than we anticipate, or we may have insufficient funds to initiate or complete a clinical trial or to pay the substantial user fees required by the FDA upon the submission of an NDA or comparable marketing authorization application in another jurisdiction;
● the quality or quantity of data relating to our product candidates or other materials necessary to conduct our clinical trials may be inadequate to initiate or complete a given clinical trial;
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● our CROs or clinical trial sites may fail to perform in accordance with GCP requirements or other applicable regulations, rules or guidelines;
−Removed: ● we may be unable to manufacture our product candidates from our contract manufacturing organizations (“CMOs”) in accordance with current Good Manufacturing Practice (“cGMP”) regulations or other applicable requirements in sufficient quantities for use in our clinical trials;
−Removed: ● SAEs may occur in our clinical trials or in trials of the same class of agents conducted by other companies that could be considered similar to our product candidates;
+Added: ● we may be unable to manufacture our product candidates from our contract manufacturing organizations
+Added: (“CMOs”) in accordance with cGMP regulations or other applicable requirements in sufficient quantities for use in our clinical trials;
+Added: ● SAEs may occur in trials of the same class of agents conducted by other companies that could be considered similar to our product candidates;
● we may select clinical endpoints that require prolonged periods of clinical observation or extended analysis of the resulting data;
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● third parties may be unwilling or unable to satisfy their contractual obligations to us in a timely manner.
−Removed: In addition, we have historically leveraged our extensive analyses of immune-relevant genome-wide association study results from both the public domain and the UK Biobank biomedical resource to identify the right therapeutic target on which to focus our preclinical and clinical development efforts.
+Added: In addition, we have historically leveraged our extensive analyses of immune-relevant GWAS results from both the public domain and the UK Biobank biomedical resource to identify the right therapeutic target on which to focus our preclinical and clinical development efforts.
If our access to GWAS results from the public domain or the UK Biobank biomedical resource were to be restricted, including as a result of any potential future legislative policies or regulations that may seek to restrict the sharing of genetic data, our ability to efficiently identify additional therapeutic targets may be limited.
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Since this date, all new or ongoing trials are subject to the provisions of the CTR.
−Removed: It is currently unclear to what extent the UK, will seek to align its regulations with the EU in the future.
−Removed: The UK regulatory framework in relation to clinical trials is derived from existing legislation (as implemented into UK law, through secondary legislation).
−Removed: On January 17, 2022, the MHRA launched an eight-week consultation on reframing the UK legislation for clinical trials.
−Removed: The UK government published its response to the consultation outcome on March 21, 2023, confirming that it would bring forward changes to the legislation and such changes were laid in parliament on December 12, 2024.
−Removed: These resulting legislative amendments will, if implemented in their current form, bring the UK into closer alignment with the CTR.
−Removed: Failure of the UK to closely align its regulations with the EU may have an effect on the cost of conducting clinical trials in the UK as opposed to other countries and/or make it harder to seek a marketing authorization for our product candidates on the basis of clinical trials conducted in the UK.
−Removed: Our clinical trials may reveal SAEs and AEs and may result in a safety or tolerability profile that could delay or prevent regulatory approval or market acceptance of ESK-001, A-005 or any future product candidates.
+Added: Moreover, following a public consultation that began in 2022, the United Kingdom government has enacted new legislation to overhaul the clinical trials regulatory framework.
+Added: In April 2025, the UK adopted an amendment to the Medicines for Human Use (Clinical Trials) Regulations 2004 intended to support a more streamlined and flexible regulation of clinical trials, remove unnecessary administrative burdens on trial sponsors, and protect the interests of trial participants.
+Added: It also intends to bring the UK regulatory framework for clinical trials into closer alignment with the CTR.
+Added: The amendment will become applicable on April 28, 2026 following a one-year transition period.
+Added: While these changes introduce efficiencies and align with some principles of the EU’s CTR, divergence between the United Kingdom and EU regulatory systems remains.
+Added: Any significant divergence could affect the cost and complexity of conducting clinical trials in the United Kingdom and may impact the acceptability of United Kingdom-based trial data for seeking marketing authorizations in the EU, and vice versa.
+Added: Our clinical trials may reveal SAEs and AEs and may result in a safety or tolerability profile that could delay or prevent regulatory approval or market acceptance of envu, A-005 or any future product candidates.
Undesirable or clinically unmanageable side effects observed in our clinical trials for our product candidates could occur and cause us or regulatory authorities to interrupt, delay or halt our clinical trials and could result in a more restrictive labeling or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities.
−Removed: We have observed SAEs and AEs in our trials of ESK-001, and as more patients become exposed to ESK-001 over longer periods of time, we expect to see additional SAEs and AEs emerge.
−Removed: Further, long term treatment with ESK-001 continues to be evaluated in an OLE trial, and additional AEs and SAEs will continue to accumulate.
−Removed: Certain conditions occur more frequently in patients with psoriasis compared to the general population.
+Added: We have observed SAEs and AEs in our trials of envu, and as more patients become exposed to envu over longer periods of time, we expect to see additional SAEs and AEs emerge.
+Added: Further, long term treatment with envu continues to be evaluated in an OLE trial, and additional AEs and SAEs will continue to accumulate.
+Added: Certain conditions occur more
+Added: frequently in patients with psoriasis compared to the general population.
Examples include obesity, cardiovascular disease, psoriatic arthritis and depression.
−Removed: Immune modulating treatments including ESK-001 may result in increasing susceptibility to various infections, including serious or life-threatening infections, and there is a theoretical risk with immune-modulating agents that dampening immune responses could increase the risk of malignancies.
+Added: Immune modulating treatments including envu may result in increasing susceptibility to various infections, including serious or life-threatening infections, and there is a theoretical risk with immune-modulating agents that dampening immune responses could increase the risk of malignancies.
Other TYK2 inhibitors, such as deucravacitinib (marketed as Sotyktu), which is approved for the treatment of adults with PsO, have shown AEs such as hypersensitivity reactions, infections, tuberculosis, malignancy and rhabdomyolysis.
The label for deucravacitinib includes a warning concerning the potential for JAK-related AEs, such as cardiovascular and thrombotic events.
−Removed: We have observed, and expect that additional AEs and SAEs consistent with known side effects of TYK2 inhibition may emerge, in our ongoing and future clinical trials of ESK-001.
−Removed: The most common AEs observed in our Phase 2 STRIDE and OLE PsO trials that were considered related to ESK-001 treatment by the principal investigator include headaches, upper respiratory tract infections, nasopharyngitis, rash and nausea.
−Removed: As of December 31, 2024, there were four SAEs from the STRIDE OLE trial that were considered related to
−Removed: ESK-001 treatment by the investigator:
−Removed: one serious infection case (peritonsillar abscess), two malignancy cases (non-small cell lung cancer, renal cell carcinoma), and one arthritis case.
−Removed: We continue to evaluate the safety profile of ESK-001 in our ongoing Phase 2 OLE and Phase 3 trials .
+Added: We have observed, and expect that additional AEs and SAEs consistent with known side effects of TYK2 inhibition may emerge, in our ongoing and future clinical trials of envu.
+Added: The most common AEs observed in our Phase 2 STRIDE and OLE PsO trials that were considered related to envu treatment by the principal investigator include headaches, upper respiratory tract infections, nasopharyngitis, rash and nausea.
+Added: We continue to evaluate the safety profile of envu in our ongoing Phase 2 OLE and Phase 3 trials .
If AEs, SAEs or other side effects are observed in any of our ongoing or future clinical trials that are atypical of, or more severe than, the known side effects of the respective class of agents that each of our product candidates are a part of, we may have difficulty recruiting participants to our clinical trials, participants may drop out of our trials, or we may be required to abandon those trials or our development efforts of one or more product candidates altogether.
−Removed: If such effects are more severe or less reversible than we expect, or not reversible at all, we may decide or be required to perform additional studies or to halt or delay further clinical development of ESK-001, A-005 or any future product candidates, which could result in the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities.
−Removed: If ESK-001 fails to demonstrate an acceptable benefit/risk profile, versus current approved therapies or others in clinical development, then our opportunity to disrupt the current standard of care may be limited.
−Removed: AEs and SAEs that emerge during clinical investigation of or treatment with ESK-001, A-005, or any future product candidates have in the past been and may in the future be deemed to be related to our product candidates.
−Removed: This may require longer and more extensive clinical development, or regulatory authorities may increase the amount of data and information required to approve, market, or maintain ESK-001, A-005 or any future product candidates and could result in warnings and precautions in our product labeling or a restrictive REMS or comparable foreign strategies.
−Removed: This may also result in an inability to obtain approval of ESK-001, A-005 or any future product candidates.
+Added: If such effects are more severe or less reversible than we expect, or not reversible at all, we may decide or be required to perform additional studies or to halt or delay further clinical development of envu, A-005 or any future product candidates, which could result in the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities.
+Added: If envu fails to demonstrate an acceptable benefit/risk profile, versus current approved therapies or others in clinical development, then our opportunity to disrupt the current standard of care may be limited.
+Added: AEs and SAEs that emerge during clinical investigation of or treatment with envu, A-005, or any future product candidates have in the past been and may in the future be deemed to be related to our product candidates.
+Added: This may require longer and more extensive clinical development, or regulatory authorities may increase the amount of data and information required to approve, market, or maintain envu, A-005 or any future product candidates and could result in warnings and precautions in our product labeling or a restrictive REMS or comparable foreign strategies.
+Added: This may also result in an inability to obtain approval of envu, A-005 or any future product candidates.
We, the FDA or other comparable foreign regulatory authorities, or an IRB or ethics committee, may suspend clinical trials of a product candidate at any time for various reasons, including a belief that participants in such trials are being exposed to unacceptable health risks or adverse side effects.
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The acceptance of data from clinical trials conducted outside the United States or another jurisdiction by the FDA or comparable foreign regulatory authorities may be subject to certain conditions or may not be accepted at all.
−Removed: In cases where data from foreign clinical trials are intended to serve as the sole basis for regulatory approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S.
+Added: In cases where data from foreign clinical trials are intended to serve as the sole basis for
+Added: regulatory approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S.
population and U.S.
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In addition, such foreign trials are subject to the applicable local laws of the foreign jurisdictions where the trials are conducted.
−Removed: There can be no assurance that the FDA or any comparable foreign regulatory authority will accept
−Removed: data from trials conducted outside of the United States or the applicable jurisdiction.
+Added: There can be no assurance that the FDA or any comparable foreign regulatory authority will accept data from trials conducted outside of the United States or the applicable jurisdiction.
If the FDA or any comparable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which could be costly and time-consuming, and which may result in current or future product candidates that we may develop being delayed or not receiving approval for commercialization in the applicable jurisdiction.
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It is possible that a third-party payor may consider our product candidates, if approved, as substitutable and only be willing to cover the cost of the alternative product.
−Removed: Even if we show improved efficacy, safety or improved convenience of administration with ESK-001, A-005 or any of our future product candidates, if approved, pricing of competitive products may limit the amount we will be able to charge for our product candidates, if approved.
+Added: Even if we show improved efficacy, safety or improved convenience of administration with envu, A-005 or any of our future product candidates, if approved, pricing of competitive products may limit the amount we will be able to charge for our product
+Added: candidates, if approved.
Third-party payors may deny or revoke the reimbursement status of a given product or establish prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return on our investment in our product candidates.
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In addition, some EU member states may require the completion of additional studies that compare the cost-effectiveness of a particular medicinal product candidate to currently available therapies.
−Removed: This Health Technology Assessment, process is the procedure according to which the assessment of the public health impact, therapeutic impact and the economic and societal impact of use of a given medicinal product in the national healthcare systems of the individual country is conducted.
+Added: This HTA process is the procedure according to which the assessment of the public health impact, therapeutic impact and the economic and societal impact of use of a given medicinal product in the national healthcare systems of the individual country is conducted.
The outcome of HTA regarding specific medicinal products will often influence the pricing and reimbursement status granted to these medicinal products by the competent authorities of individual EU member states.
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Individual EU member states continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technologies, and making decisions on pricing and reimbursement.
−Removed: Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our products.
+Added: Further, the containment of health care costs also has become a priority of federal, state and foreign governments and the prices of products have been a focus in this effort.
+Added: For example, the HHS imposes rebates on many Medicare Part B and Medicare Part D products to penalize price increases that outpace inflation on an annual basis.
+Added: HHS has also been
+Added: empowered to negotiate the price of certain single-source drugs that have been on the market for at least seven years and biologics that have been on the market for at least 11 years covered under Medicare as part of the Medicare Drug Price Negotiation Program.
+Added: Each year up to 20 products will be selected by HHS for the Medicare Drug Price Negotiation Program.
+Added: Products subject to the Medicare Drug Price Negotiation Program are expected to experience a significant reduction in reimbursement from the Medicare program on a per unit basis.
+Added: Such increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our products.
We expect to experience pricing pressures in connection with the sale of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes.
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There can be no assurance that any country that has reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products, if approved in those countries.
+Added: In the event Most-Favored-Nation pricing for pharmaceutical products is implemented and applicable to any of product candidates that may receive regulatory approval, our revenue opportunities may be adversely affected, as our U.S.
+Added: pricing would have to be reduced to the lowest price paid for the applicable product outside of the United States.
+Added: In such event, we may choose to forgo the ex-U.S.
+Added: market to preserve more favorable U.S.
We face competition from entities that have made substantial investments into the rapid development of competitor treatments for immunological indications, including large and specialty pharmaceutical and biotechnology companies, many of which already have approved therapies in our current indications.
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Our current product candidates initially under development for treatment of patients with immune-mediated diseases, if approved, would face competition from existing approved immunological treatments, many of which have achieved commercial success.
−Removed: For example, we are currently developing ESK-001 for the treatment of PsO and SLE.
+Added: For example, we are currently developing envu for the treatment of PsO and SLE.
Other emerging and established life sciences companies have been focused on similar therapeutics and indications.
−Removed: If approved, ESK-001 would compete with several currently approved or late-stage oral clinical therapeutics in each such indication as well as other drugs used to treat such patients.
+Added: If approved, envu would compete with several currently approved or late-stage oral clinical therapeutics in each such indication as well as other drugs used to treat such patients.
We are also developing A-005, which has potential applications in MS and other neuroinflammatory and neurodegenerative diseases.
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Risks Related to Our Business and Operations
−Removed: Our business is highly dependent on the success of our most advanced product candidate, ESK-001, and we cannot guarantee that ESK-001 will successfully complete development, receive regulatory approval or be successfully commercialized.
+Added: We are subject to various risks related to the acquisition of ACELYRIN.
+Added: We completed the acquisition of ACELYRIN on May 21, 2025.
+Added: Risks, contingencies and other uncertainties that could adversely affect our business, financial condition and results of operations following the acquisition, and any anticipated benefits of the acquisition, include:
+Added: ● the effect of the ACELYRIN Merger on our ability to attract, motivate, retain and hire key personnel and maintain our relationships with suppliers, collaboration partners and others with whom we do business, or on our respective operating results and business generally;
+Added: ● the diversion of our management’s attention from our ongoing business operations;
+Added: ● the risk that the anticipated benefits of the ACELYRIN Merger may otherwise not be fully realized;
+Added: ● risks that costs and charges and other liabilities may be greater than anticipated or incurred in different periods than anticipated.
+Added: Our business is highly dependent on the success of our most advanced product candidate, envu, and we cannot guarantee that envu will successfully complete development, receive regulatory approval or be successfully commercialized.
If we are unable to develop, receive regulatory approval for, and ultimately successfully commercialize our product candidates, or if we experience significant delays in doing so, our business will be materially harmed.
We currently have no products approved for commercial sale or for which regulatory approval to market has been sought.
−Removed: We have invested a significant portion of our efforts and financial resources in the development of our most advanced product candidate, ESK-001, which is still in clinical development, and expect that we will continue to invest heavily in ESK-001, as well as our second product candidate, A-005, and any future product candidates we may develop.
−Removed: Additionally, in connection with the anticipated consummation of the Merger, we will be evaluating the development program for lonigutamab, ACELYRIN’s lead product candidate, and its potential differentiation in a capital efficient manner.
+Added: We have invested a significant portion of our efforts and financial resources in the development of our most advanced product candidate, envu, which is still in clinical development, and expect that we will continue to invest heavily in envu, as well as our second product candidate, A-005, and any future product candidates we may develop.
+Added: Additionally, we are evaluating the development program for lonigutamab, ACELYRIN’s lead product candidate, and its potential differentiation in a capital efficient manner.
Our business and our ability to generate revenue, which we do not expect will occur for many years, if ever, are substantially dependent on our ability to develop, obtain regulatory approval for, and then successfully commercialize our product candidates, which may never occur.
−Removed: Our product candidates will require substantial additional preclinical and clinical development time, regulatory approval, commercial manufacturing arrangements, establishment of a commercial organization, significant marketing efforts, and further investment before we can generate any revenue from product sales.
+Added: Our product candidates will require substantial additional preclinical and clinical development time, regulatory approval, commercial manufacturing arrangements, establishment of a commercial organization, significant marketing efforts, and
+Added: further investment before we can generate any revenue from product sales.
We currently generate no revenue, and we may never be able to develop or commercialize any products.
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Our product candidates are susceptible to the risks of failure inherent at any stage of product development, including the appearance of unexpected AEs or failure to achieve primary endpoints in clinical trials.
−Removed: For example, we discontinued our proof-of-concept Phase 2a clinical trial of ESK-001 in patients with non-infectious uveitis in June 2024 based on the efficacy results of a data analysis prepared for a scheduled monitoring committee meeting, which efficacy results did not meet our clinical threshold for success despite safety results consistent with ESK-001’s safety profile in psoriasis patients.
−Removed: Additionally, we may in the future advance ESK-001, A-005 or future product candidates into clinical trials and terminate such trials prior to their completion.
+Added: For example, we discontinued our proof-of-concept Phase 2a clinical trial of envu in patients with non-infectious uveitis in June 2024 based on the efficacy results of a data analysis prepared for a scheduled monitoring committee meeting, which efficacy results did not meet our clinical threshold for success despite safety results consistent with envu’s safety profile in psoriasis patients.
+Added: Additionally, we may in the future advance envu, A-005 or future product candidates into clinical trials and terminate such trials prior to their completion.
Even if our product candidates are successful in clinical trials, we are not permitted to market or promote our product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive sufficient regulatory approval that will allow us to successfully commercialize any product candidates.
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We have not previously submitted an NDA or similar marketing application to the FDA or comparable foreign regulatory authorities for any product candidate, and we cannot be certain that our current or any future product candidates will be successful in clinical trials or receive regulatory approval.
+Added: Although we plan to submit an NDA for envu for PsO in the second half of 2026, we will need to meet with the FDA and they may raise concerns or requirements that delay submission beyond our anticipated timeline.
The FDA may also consider its approvals of competing products, which may alter the treatment landscape concurrently with their review of any NDA we may submit, and which may lead to changes in the FDA’s review requirements that have been previously communicated to us and our interpretation thereof, including changes to requirements for clinical data or clinical study design.
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The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of our product candidates are subject to extensive regulation by the FDA in the United States and by comparable foreign regulatory authorities in foreign markets.
−Removed: In the United States, we are not permitted to market our product candidates until we receive regulatory approval of an NDA from the FDA.
+Added: In the United States, we are not permitted to market our product candidates until we receive regulatory approval of an NDA or BLA from the FDA.
Similar approvals are required in order to market product candidates in foreign countries.
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We cannot guarantee that any current or future clinical trials will be conducted as planned or completed on schedule, if at all, or that our product candidates will receive regulatory approval.
−Removed: Our Phase 3 pivotal trials of ESK-001 in PsO, even if successfully completed, may not be sufficient for approval of ESK-001 in that disease.
+Added: Even though our topline data readout of our Phase 3 pivotal trials of envu in PsO were positive, they may not be sufficient for approval of envu in that disease, and our Phase 3 LTE trial in PsO remains ongoing.
Although we have discussed and intend to further discuss our Phase 3 clinical trial design and overall development plan with the FDA to align on its sufficiency to support an NDA submission, the feedback is typically non-binding and dependent on the strength of the ultimate clinical data and the FDA’s perspective on the benefit-risk profile of the treatment in the intended population.
−Removed: For example, the Committee for Medicinal Products for Human Use in the EU provided comments on the length of our two pivotal 24-week Phase 3 trials, and we plan to address their feedback with our
−Removed: comparator trials.
+Added: For example, the Committee for Medicinal Products for Human Use in the EU provided comments on the length of our two pivotal 24-week Phase 3 trials, and we plan to address their feedback with our comparator trials.
These modifications could delay our development timelines for EU regulatory approval and require substantially more resources.
Phase 3 clinical trials typically involve hundreds of patients, have significant costs and take years to complete.
−Removed: In addition to our Phase 3 program in PsO, which we announced in July 2024 had commenced patient dosing, we have initiated the first of potentially two pivotal Phase 2 trials of ESK-001 in SLE.
+Added: In addition, we have initiated a Phase 2b trial of envu in SLE.
Even as these trials progress, issues may arise that could require us to suspend or terminate such clinical trials or could cause the results of one cohort to differ from a prior cohort.
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To the extent that the results of the clinical trials are not satisfactory to the FDA or comparable foreign regulatory authorities for support of a marketing application, we may be required to expend significant resources, which may not be available to us, to conduct additional clinical trials in support of potential approval of our product candidates.
−Removed: In addition, if the FDA or comparable foreign regulatory authorities grant approval for our product candidates, then, as a condition for approval, the FDA or comparable foreign regulatory authorities may require us to perform costly post-marketing testing, including Phase 4 clinical trials or surveillance to monitor the effects of the marketed product.
+Added: In addition, if the FDA or comparable foreign regulatory authorities grant approval for our product candidates, then, as a condition for approval, the FDA or comparable foreign regulatory authorities may require us to perform costly post-
+Added: marketing testing, including Phase 4 clinical trials or surveillance to monitor the effects of the marketed product.
Our clinical trial results may also not support approval.
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In addition, FDA and foreign regulatory authorities may change their policies and new regulations may be enacted.
−Removed: For instance, on April 26, 2023, the European Commission adopted a proposal for a new Directive and Regulation to revise the existing pharmaceutical legislation and on April 10, 2024, the parliament adopted its related position.
−Removed: The proposed revisions remain to be agreed and adopted by the European Council.
−Removed: Moreover, on December 1, 2024, a new European Commission took office.
−Removed: The proposal could, therefore, still be subject to revisions.
−Removed: If adopted in the form proposed, the European Commission proposals to revise the existing EU laws governing authorization of medicinal products may result in a number of changes to the regulatory framework governing medicinal products, including a decrease in data and market exclusivity opportunities for our product candidates in the EU and make them open to generic or biosimilar competition earlier than is currently the case with a related reduction in reimbursement status.
−Removed: Disruptions at the FDA and other government agencies or comparable foreign regulatory authorities caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, prevent new or modified products from being developed, review, approved or commercialized in a timely manner or at all, which could negatively impact our business.
−Removed: The ability of the FDA and comparable foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s or comparable foreign regulatory authorities’ ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s or comparable foreign regulatory authorities’ ability to perform routine functions.
+Added: For instance, on December 11, 2025, the European Commission, the Parliament and the European Council reached a political agreement on a comprehensive overhaul of EU pharmaceutical legislation (the “Pharma Package”).
+Added: The reform has been under negotiation since the European Commission submitted its proposal in April 2023.
+Added: This package—comprised of a new directive and regulation to replace existing legislation—aims to modernize the EU framework.
+Added: The political agreement is still subject to formal approval by the European Parliament and Council.
+Added: If approved in the form proposed, the Pharma Package will, among other changes, reduce the baseline market protection period by one year, with limited opportunities for extensions;
+Added: reshape the incentives regime for orphan medicinal products;
+Added: and expand the Bolar
+Added: A decrease in market exclusivity opportunities for our product candidates in the EU, combined with the expanded Bolar exemption, could open them to generic or biosimilar competition earlier than under the current regime, potentially impacting reimbursement status and the commercial prospects of our product candidates.
+Added: Disruptions at the FDA and other government agencies or comparable foreign regulatory authorities caused by funding shortages, government shutdowns or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, prevent new or modified products from being developed, reviewed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
+Added: The ability of the FDA and comparable foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, government shutdowns, statutory, regulatory, and policy changes, the FDA’s or comparable foreign regulatory authorities’ ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s or comparable foreign regulatory authorities’ ability to perform routine functions.
In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
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Even though the FDA has since resumed standard inspection operations, any resurgence of the virus or emergence of new variants may lead to inspectional or administrative delays.
−Removed: If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other comparable foreign regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other comparable foreign regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
−Removed: There is substantial uncertainty regarding the new administration’s initiatives and how these might impact the FDA, its implementation of laws, regulations, policies and guidance and its personnel.
−Removed: Similar initiatives may also be directed toward other government agencies.
−Removed: These initiatives could prevent, limit or delay development and regulatory approval of our product candidates, which would adversely affect our business.
−Removed: FDA-regulated industries, such as ours, face substantial uncertainty with regard to the regulatory environment we will face as we proceed with research and development, and possibly in the future commercialization, efforts following the inauguration of President Trump in January 2025.
−Removed: Some of these efforts have manifested to date in the form of personnel measures that could impact the FDA’s ability to hire and retain key personnel, which could result in delays or limitations
−Removed: on our ability to obtain guidance from the FDA on our product candidates in development and obtain the requisite regulatory approvals in the future.
−Removed: Moreover, the new administration has proposed action to freeze or reduce the budget of the National Institute of Health (“NIH”) as related to its funding for medical research, which could decrease the ability of facilities that rely on NIH funding to enroll and conduct clinical trials or increase the costs to us of conducting clinical trials.
−Removed: There remains general uncertainty regarding future activities.
−Removed: The new administration could issue or promulgate executive orders, regulations, policies or guidance that adversely affect us or create a more challenging or costly environment to pursue the development of new therapeutic products.
−Removed: Alternatively, state governments may attempt to address or react to changes at the federal level with changes to their own regulatory frameworks in a manner that is adverse to our operations.
−Removed: If we become negatively impacted by future governmental orders, regulations, policies or guidance as a result of the new administration, there could be a material adverse effect on us and our business.
+Added: If a prolonged government shutdown occurs, such as the U.S.
+Added: government shutdown in the fourth quarter of 2025, or if global health concerns prevent the FDA or other comparable foreign regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other comparable foreign regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If our product candidates, if approved, do not achieve broad market acceptance, the revenue that we generate from their sales will be limited.
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Because we have limited financial and managerial resources, we focus our development efforts on certain selected product candidates in certain selected indications.
−Removed: For example, we are initially focused on our most advanced product candidate, ESK-001, currently in development for the treatment of PsO and SLE, and our second product candidate, A-005, currently in development for the treatment of neuroinflammatory and neurodegenerative diseases.
+Added: For example, we are initially focused on our most advanced product candidate, envu, currently in development for the treatment of PsO and SLE, and our second product candidate, A-005, currently in development for the treatment of neuroinflammatory and neurodegenerative diseases.
As a result, we may forgo or delay pursuit of opportunities with other product candidates, or other indications for our existing product candidates that later prove to have greater commercial potential.
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Our spending on current and future development programs and product candidates for specific indications may not yield any commercially viable product candidates.
−Removed: For example, we discontinued our proof-of-concept Phase 2a clinical trial of ESK-001 in patients with non-infectious uveitis in June 2024 based on the efficacy results of a data analysis prepared for a scheduled monitoring committee meeting, which efficacy results did not meet our clinical threshold for success despite safety results consistent with ESK-001’s safety profile in psoriasis patients.
−Removed: If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.
+Added: For example, we discontinued our proof-of-concept Phase 2a clinical trial of envu in patients with non-infectious uveitis in June 2024 based on the efficacy results of a data analysis prepared for a scheduled monitoring committee meeting, which efficacy results did not meet our clinical threshold for success despite safety results consistent with envu’s safety profile in psoriasis patients.
+Added: If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in
+Added: cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.
We will need to grow our organization, and we may experience difficulties in managing our growth and expanding our operations, which could adversely affect our business.
−Removed: As of December 31, 2024, we had 168 full-time employees.
−Removed: As our development and commercialization plans and strategies develop, we expect to expand our employee base for managerial, operational, financial and other resources, including in connection with the Merger.
−Removed: See “—Risks Related to the Merger—Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the Merger.” In addition, we have limited experience in manufacturing and commercialization.
+Added: As of December 31, 2025, we employed 221 full-time and 3 part-time employees.
+Added: As our development and commercialization plans and strategies develop, we expect to expand our employee base for managerial, operational, financial and other resources.
+Added: In addition, we have limited experience in manufacturing and commercialization.
As our product candidates enter and advance through preclinical studies and clinical trials, we expect to continue to expand our development and regulatory capabilities and contract with other organizations to provide manufacturing and other capabilities for us.
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We may not be able to implement improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls.
−Removed: inability to successfully manage our growth and expand our operations could adversely affect our business, financial condition, results of operations and prospects.
+Added: Our inability to successfully manage our growth and expand our operations could adversely affect our business, financial condition, results of operations and prospects.
We are dependent on the services of our management team and other clinical and scientific personnel, and if we are not able to retain these individuals or recruit additional management or clinical and scientific personnel, our business will suffer.
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If we obtain FDA approval for our product candidates and begin commercializing those products in the United States, our potential exposure under these laws will increase significantly, and our costs associated with compliance with these laws are likely to increase.
−Removed: In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices.
+Added: In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and
+Added: regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements.
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If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a material and adverse effect on our business, financial condition, results of operations and prospects, including the imposition of significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, the curtailment or restructuring of our operations, loss of eligibility to obtain approvals from the FDA or comparable foreign regulatory authorities, exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid or comparable foreign programs, integrity oversight and reporting obligations, or reputational harm.
+Added: International trade policies, including tariffs, sanctions and trade barriers may adversely affect our business, financial condition, results of operations and growth prospects.
+Added: We conduct business globally and our operations, including third-party suppliers, span numerous countries outside the United States.
+Added: There is inherent risk, based on the complex relationships among the United States and the countries in which we conduct our business, that political, diplomatic, and national security factors can lead to global trade restrictions and changes in trade policies and export regulations that may adversely affect our business and operations.
+Added: The current international trade and regulatory environment is subject to significant ongoing uncertainty.
+Added: The ongoing trade tensions between the United States and other jurisdictions have resulted in multiple rounds of tariffs and potential tariffs affecting pharmaceuticals and pharmaceutical ingredients, including finished drug products, manufacturing equipment and related supplies.
+Added: In April 2025, the U.S.
+Added: government imposed a 10% baseline global tariff and in August 2025, the U.S.
+Added: government imposed higher “reciprocal” tariffs on numerous other territories, including EU member states and South Korea.
+Added: While the U.S.
+Added: Supreme Court recently issued a ruling invalidating tariffs imposed by the Trump administration under the International Emergency Economic Powers Act, other tariffs imposed by the U.S.
+Added: government remain in place, including the 10% global tariff imposed by the Trump administration under Section 122 of the Trade Act of 1974 following the U.S.
+Added: Supreme Court decision.
+Added: Moreover, the Bureau of Industry and Security, U.S.
+Added: Department of Commerce, has initiated an investigation to determine whether pharmaceutical ingredients, including finished drug product, manufactured outside the United States pose a national security risk and should be subject to additional tariffs.
+Added: We do not own or operate, and currently have no plans to establish, any manufacturing facilities.
+Added: We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for clinical testing, as well as for manufacture of any products that we may commercialize, if approved.
+Added: Currently, most of our suppliers are located outside of the United States, and our principal suppliers of critical raw materials are located in India and in Taiwan.
+Added: We also rely on precursor compounds, other materials, and manufacturing services sourced from multiple countries, including the European Union and South Korea, to advance our research and development and manufacturing efforts.
+Added: Current or future tariffs will result in increased research and development expenses, including with respect to increased costs associated with APIs, raw materials, laboratory equipment and research materials and components.
+Added: In addition, such tariffs will increase our supply chain complexity and could also potentially disrupt our existing supply chain.
+Added: Unlike consumer goods, pharmaceuticals face unique regulatory constraints that make rapid supply chain adjustments particularly difficult and costly.
+Added: Trade restrictions affecting the import of materials necessary for clinical trials could result in delays to our development timelines.
+Added: Increased development costs and extended development timelines could place us at a competitive disadvantage compared to companies operating in regions with more favorable trade relationships and could reduce investor confidence, negatively impacting our ability to secure additional financing on favorable terms or at all.
+Added: In addition, as we advance toward commercialization, tariffs and trade restrictions could hinder our ability to establish cost-effective production capabilities, negatively impacting our growth prospects.
+Added: The complexity of announced or future tariffs may also increase the risk that we or our customers or suppliers may be
+Added: subject to civil or criminal enforcement actions in the U.S.
+Added: or foreign jurisdictions related to compliance with trade regulations.
+Added: Foreign governments may also adopt non-tariff measures, such as procurement preferences or informal disincentives to engage with, purchase from or invest in U.S.
+Added: entities, which may limit our ability to compete internationally and attract non-U.S.
+Added: investment, employees, customers and suppliers.
+Added: Foreign governments may also take other retaliatory actions against U.S.
+Added: entities, such as decreased intellectual property protection, increased enforcement actions, or delays in regulatory approvals, which may result in heightened international legal and operational risks.
+Added: In addition, the U.S.
+Added: and other governments have imposed and may continue to impose additional sanctions, such as trade restrictions or trade barriers, which could restrict us from doing business directly or indirectly in or with certain countries or parties and have imposed and may continue to impose additional costs and complexity to our business.
+Added: Trade disputes, tariffs, restrictions and other political tensions between the U.S.
+Added: and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns.
+Added: The ultimate impact of current or future tariffs and trade restrictions remains uncertain and could materially and adversely affect our business, financial condition, and prospects.
+Added: While we actively monitor these risks, any prolonged economic downturn, escalation in trade tensions, or deterioration in international perception of U.S.-based companies could materially and adversely affect our business, ability to access the capital markets or other financing sources, results of operations, financial condition and growth prospects.
+Added: In addition, tariff and other trade developments have and may continue to heighten the risks related to the other risk factors described elsewhere in this Annual Report on Form 10-K.
Our future growth may depend, in part, on our ability to operate in foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.
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If we succeed in marketing products, such claims could result in FDA or other regulatory authority investigation of the safety and effectiveness of our future product candidates, our manufacturing processes and facilities or our marketing programs and potentially a recall of our products or more serious enforcement action, limitations on the approved indications for which they may be used or suspension, variation or withdrawal of approvals.
−Removed: Regardless of the merits or eventual outcome, liability claims may also result in decreased demand for our product candidates, termination of clinical trial sites or entire trial programs, withdrawal of clinical trial participants, injury to our reputation and significant negative media attention, significant costs to defend the related litigation, a diversion of management’s time and our resources from our business operations, substantial monetary awards to trial participants or patients, loss of revenue, the inability to commercialize and products that we may develop, and a decline in our stock price.
+Added: Regardless of the merits or eventual outcome, liability claims may also result in decreased demand for our product candidates, termination of clinical trial sites or entire trial programs, withdrawal of clinical trial participants, injury to our reputation and significant negative media attention, significant costs to defend the related litigation, a diversion of management’s time and our resources from our business operations, substantial monetary awards to trial participants or patients, loss of revenue, the inability to commercialize and products that we may develop, and a
+Added: decline in our stock price.
We may need to obtain higher levels of product liability insurance for later stages of clinical development or marketing of our product candidates.
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Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our business, financial condition, results of operations and prospects.
−Removed: We have engaged in and may in the future engage in strategic transactions in the future, which could impact our liquidity, increase our expenses and present significant distractions to our management.
−Removed: We have in the past and may continue to enter into strategic transactions, including acquisitions of companies, asset purchases and in-licensing of intellectual property with the potential to acquire and advance new assets or product
−Removed: candidates where we believe we are well qualified to optimize the development of promising therapies.
−Removed: For example, we were founded in January 2021, and subsequently acquired ESK-001 via a stock purchase of FronThera U.S.
+Added: We have engaged in, and may in the future engage in, strategic transactions, which could impact our liquidity, increase our expenses, dilute our stockholders and present significant distractions to our management.
+Added: We have in the past and may continue to enter into strategic transactions, including acquisitions of companies, asset purchases and in-licensing of intellectual property with the potential to acquire and advance new assets or product candidates where we believe we are well qualified to optimize the development of promising therapies.
+Added: For example, we were founded in January 2021, and subsequently acquired envu via a stock purchase of FronThera U.S.
Holdings, Inc.
and its wholly owned subsidiary, FronThera U.S.
−Removed: Pharmaceuticals LLC (the “FronThera Acquisition”).
−Removed: Additionally, we have entered into a Merger Agreement in connection with our planned merger with ACELYRIN.
+Added: Pharmaceuticals LLC.
+Added: Additionally, we consummated the ACELYRIN Merger in May 2025 and acquired lonigutamab.
Additional potential transactions that we may consider in the future include a variety of business arrangements, including strategic partnerships, in-licensing or out-licensing of product candidates, strategic collaborations, joint ventures, restructurings, divestitures, business combinations and investments.
−Removed: Any such transactions, including the proposed Merger with ACELYRIN, could increase our near and long-term expenditures, result in potentially dilutive issuances of our equity securities, including our common stock, or the incurrence of debt, contingent liabilities, amortization expenses or acquired in-process research and development expenses, any of which could affect our financial condition, liquidity and results of operations.
−Removed: For more information regarding the risks related to the Merger, see Item 1A.
−Removed: “—Risks Related to the Merger.”
+Added: Any such transactions could increase our near and long-term expenditures, result in potentially dilutive issuances of our equity securities, including our common stock, or the incurrence of debt, contingent liabilities, amortization expenses or acquired in-process research and development expenses, any of which could affect our financial condition, liquidity and results of operations.
Future acquisitions may also require us to obtain additional financing, which may not be available on favorable terms or at all.
These transactions may never be successful and may require significant time and attention of our management.
−Removed: In addition, the integration of any business that we may acquire, including the ACELYRIN business, may disrupt our existing business and may be a complex, risky and costly endeavor for which we may never realize the full benefits of the acquisition.
−Removed: Accordingly, although there can be no assurance that we will undertake or successfully complete any additional transactions of the nature described above, any additional transactions that we do complete could adversely affect our business, financial condition, results of operations and prospects.
+Added: Even if we are able to successfully identify and acquire complementary products, technologies or businesses, we cannot assure you that we will be able to successfully manage the risks associated with integrating acquired products, technologies or businesses or the risks arising from anticipated and unanticipated problems in connection with an acquisition or in-licensing transaction.
+Added: For example, as a result of the ACELYRIN Merger, we now operate our historical core business along with the acquired ACELYRIN business as one combined organization utilizing common information and communication systems, operating procedures, financial controls and human resources practices.
+Added: There may be difficulties, costs and delays involved in the integration of our historical core business with the acquired ACELYRIN business, including as a result of challenges relating to the diversion of management’s attention, the possibility of faulty assumptions underlying expectations regarding the integration process, retaining and attracting business and operational relationships, eliminating duplicative operations and inconsistent standards and procedures and increased or unforeseen liabilities or costs relating to the ACELYRIN Merger or the acquired ACELYRIN business.
+Added: We have also incurred substantial expenses in connection with and as a result of completing the ACELYRIN Merger and may incur additional expenses as we continue to finalize integration of the businesses, operations, policies and procedures of the combined company.
+Added: Further, while we seek to mitigate risks and liabilities of potential acquisitions and in-licensing transactions through, among other things, due diligence, there may be risks and liabilities that such due diligence efforts fail to discover, that are not disclosed to us, or that we inadequately assess.
+Added: Any failure in identifying and managing these risks, liabilities and uncertainties effectively, including in connection with the ACELYRIN Merger, could have a material adverse effect on our business and adversely affect our results of operations and financial condition.
+Added: Additionally, we may not realize the anticipated benefits of such transactions, including the possibility that expected synergies and accretion will not be realized or will not be realized within the expected time frame.
+Added: Accordingly, although there can be no assurance that we will undertake or successfully complete any additional transactions of the nature described above, any additional transactions
+Added: that we do complete could adversely affect our business, financial condition, results of operations and prospects.
Our ability to use our net operating loss carryforwards and certain other tax attributes to offset taxable income or taxes may be limited.
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federal net operating losses arising in tax years beginning after December 31, 2017, will not expire and may be carried forward indefinitely, but the deductibility of such U.S.
−Removed: federal net operating losses is limited to no more than 80% of current year taxable income.
+Added: federal net operating losses in a taxable year is limited to 80% of taxable income in such year.
In addition, under Sections 382 and 383 of the Internal Revenue Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.
−Removed: As of December 31, 2024, we completed a Section 382 analysis which did not result in any expiration of U.S.
−Removed: federal net operating losses and credits before utilization.
−Removed: However, there may be ownership changes in the future, some of which may be outside of our control.
+Added: As of December 31, 2025, we completed a Section 382 analysis which indicated that we have experienced an ownership change and resulted in the expiration of U.S.
+Added: federal net credits before utilization and, as such, we recognized a reduction of deferred tax assets.
+Added: There may be additional ownership changes in the future, some of which may be outside of our control.
If we undergo an ownership change, and our ability to use our pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset our post-change income or taxes (if any) is limited, such limitation could harm our future results of operations by effectively increasing our future tax obligations.
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Changes in tax laws, regulations or rulings, or changes in interpretations of existing laws and regulations, could materially adversely affect our company.
−Removed: For example, the JOBS Act, the Coronavirus Aid, Relief, and Economic Security Act, and the IRA enacted many significant changes to the U.S.
+Added: The OBBBA enacted in July 2025, the Inflation Reduction Act (“IRA”) enacted in 2022, the Coronavirus Aid, Relief, and Economic Security Act enacted in 2020, and the Tax Cuts and Jobs Act enacted in 2017 made many significant changes to the U.S.
+Added: For example, the Tax Cuts and Jobs Act required taxpayers to capitalize and amortize U.S.-based and non-U.S.-based research and experimental (“R&E”) expenditures over five and fifteen years, respectively.
+Added: The OBBBA restores the deductibility of domestic R&E expenditures in the year incurred for tax years beginning after December 31, 2024, but retains the capitalization and amortization requirement for foreign R&E expenditures.
+Added: In addition, the IRA includes provisions that impact the U.S.
+Added: federal income taxation of certain corporations, including a 15% minimum tax on the book income of certain large corporations and a 1% excise tax on certain corporate stock repurchases that is imposed on the corporation repurchasing such stock.
Future guidance from the Internal Revenue Service and other tax authorities with respect to such legislation may affect us, and certain aspects thereof could be repealed or modified in future legislation, possibly with retroactive effect.
−Removed: For example, the IRA includes provisions that will impact the U.S.
−Removed: federal income taxation of certain corporations, including imposing a 15% minimum tax on the book income of certain large corporations and an excise tax on certain corporate stock
−Removed: repurchases that would be imposed on the corporation repurchasing such stock.
−Removed: In addition, many countries in Europe, as well as a number of other countries and organizations (including the Organization for Economic Cooperation and Development and the European Commission), have proposed, recommended, or (in the case of countries) enacted or otherwise become subject to changes to existing tax laws or new tax laws that could significantly increase our tax obligations in the countries where we do business or require us to change the manner in which we operate our business.
+Added: Additionally, many countries in Europe, as well as a number of other countries and organizations (including the Organization for Economic Cooperation and Development and the European Commission), have proposed, recommended, or (in the case of countries) enacted changes to existing tax laws or new tax laws that could significantly increase our tax obligations in the countries where we do business or require us to change the manner in which we operate our business.
If our information technology systems, or those used by our CROs, CMOs, clinical sites or other third parties with whom we work, or our data are or were compromised, become unavailable or suffer security breaches, loss or leakage of data or other disruptions, we could suffer material adverse consequences resulting from such compromise, including but not limited to, operational or service interruption, harm to our reputation, regulatory investigations or actions, litigation, fines, penalties and liability, and other adverse consequences to our business, results of operations, and financial condition.
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To alleviate the negative impact of a ransomware attack, it may be preferable to make extortion payments, but we may be unwilling or unable to do so (including, for example, if applicable laws or regulations prohibit such payments).
+Added: Threat actors may also gain access to other networks and systems after a compromise of our networks and systems.
+Added: For example, threat actors may use an initial compromise of one part of our environment to gain access to other parts of our environment, or leverage a compromise of our networks or systems to gain access to the networks or systems of third parties with whom we work, such as through phishing or supply chain attacks.
Some actors also now engage and are expected to continue to engage in cyberattacks, including without limitation nation-state actors, for geopolitical reasons and in conjunction with military conflicts and defense activities.
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Additionally, remote work has become more common and has increased risks to our information technology systems and data, as more of our personnel utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations.
−Removed: Furthermore, future or past business transactions (such as the proposed Merger or other acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
−Removed: Additionally, we may discover security
−Removed: issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate acquired entities into our information technology environment and security program.
+Added: Furthermore, future or past business transactions (such as the ACELYRIN Merger or other acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
+Added: Additionally, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate acquired entities into our information technology environment and security program.
We have in the past and may in the future expend significant resources and modify our business activities to try to protect against security incidents.
−Removed: While we take steps designed to anticipate, detect and remediate threats and vulnerabilities, because the threats and techniques used to exploit such vulnerabilities and gain unauthorized access to, to sabotage or otherwise compromise systems change frequently, are often sophisticated in nature, and are often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement and maintain adequate preventative measures.
−Removed: Therefore, such vulnerabilities have and could be exploited but may not be detected until after a security incident has occurred.
+Added: While we take steps designed to anticipate, detect and remediate threats and vulnerabilities, because the threats and techniques used to exploit such vulnerabilities and gain unauthorized access to, to sabotage or otherwise compromise systems change frequently, are often sophisticated in nature, and are often not recognized until launched against a target, we may be unable to anticipate these techniques or implement and maintain adequate preventative measures.
+Added: Therefore, such vulnerabilities have and could be exploited but may not be detected until after a
+Added: security incident has occurred.
We may also experience security breaches that may remain undetected for an extended period.
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If the information technology systems of our CROs, CMOs, clinical sites and other third parties become subject to disruptions or security incidents, we may have insufficient recourse against such third parties and we may have to expend significant resources to mitigate the impact of such an event, and to develop and implement protections to prevent future events of this nature from occurring.
+Added: Our contracts may not contain liability limitations and, even where they do, there can be no assurance that such limitations are sufficient to protect us from liabilities, damages or claims related to our data privacy and security obligations.
Further, our cyber liability insurance coverage may not be sufficient to cover the financial, legal, business reputational or other losses that may result from an interruption or breach.
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Such disclosures and related actions can be costly, and the disclosure or the failure to comply with such applicable requirements could lead to adverse consequences.
−Removed: Security incidents (or perceived security incidents), may result in material adverse consequences such as legal claims or proceedings, liability including litigation exposure, penalties and fines under relevant legal obligations, enforcement actions and investigations by regulatory authorities, additional reporting requirements or oversight, restrictions on processing sensitive information (including personal information), indemnification obligations, monetary fund diversions, diversion of management attention, other financial loss, and damage to our reputation and a loss of confidence in us and our ability to conduct clinical trials, which could delay the clinical development of our product candidates, and of which may adversely affect our business, results of operations or financial condition.
−Removed: Our operations are concentrated in one location, and we or the third parties upon whom we depend may be adversely affected by a wildfire, earthquake or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
+Added: Security incidents (or perceived security incidents), may result in material adverse consequences such as legal claims or proceedings, liability including litigation exposure, penalties and fines under relevant legal obligations, enforcement
+Added: actions and investigations by regulatory authorities, additional reporting requirements or oversight, restrictions on processing sensitive information (including personal information), indemnification obligations, monetary fund diversions, diversion of management attention, other financial loss, and damage to our reputation and a loss of confidence in us and our ability to conduct clinical trials, which could delay the clinical development of our product candidates, and of which may adversely affect our business, results of operations or financial condition.
+Added: Our operations are predominantly concentrated in one location, and we or the third parties upon whom we depend may be adversely affected by a wildfire, earthquake or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
Our current operations are predominantly located in California.
−Removed: Any unplanned event, such as flood, wildfire, explosion, earthquake, extreme weather condition, medical epidemic including the COVID-19 pandemic, power shortage, telecommunication failure or other natural or manmade accidents or incidents that result in us being unable to fully utilize our facilities may have a material and adverse effect on our ability to operate our business, particularly on a daily basis, and have significant negative consequences on our financial and operating conditions.
+Added: Any unplanned event, such as flood, wildfire, explosion, earthquake, extreme weather condition, medical epidemic, power shortage, telecommunication failure or other natural or manmade accidents or incidents that result in us being unable to fully utilize our facilities may have a material and adverse effect on our ability to operate our business, particularly on a daily basis, and have significant negative consequences on our financial and operating conditions.
Any similar impacts of natural or manmade disasters on our third-party service providers, such as our CMOs and CROs located globally, could cause delays in our clinical trials and may have a material and adverse effect on our ability to operate our business and have significant negative consequences on our financial and operating conditions.
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The number of patients in the United States and other major markets and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our product candidates or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our business, financial condition, results of operations and prospects.
−Removed: even if we obtain significant market share for our product candidates, because some of our potential target populations are very small, we may never achieve profitability despite obtaining such significant market share.
+Added: Further, even if we obtain significant market share for our product candidates, because some of our potential target populations are very small, we may never achieve profitability despite obtaining such significant market share.
Our cash and cash equivalents may be exposed to failure of our banking institutions.
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For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (the “FDIC”) as receiver.
−Removed: Similarly, on March 12, 2023, Signature Bank was also swept into receivership.
+Added: Similarly, on March 12,
+Added: 2023, Signature Bank was also swept into receivership.
Department of Treasury, the Federal Reserve Board (the “Federal Reserve”), and the FDIC released a statement that indicated that all depositors of SVB would have access to all of their funds, including funds held in uninsured deposit accounts, after only one business day of closure.
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AEs in our clinical trials, even if not ultimately attributable to our product candidates, and the resulting publicity could result in withdrawal of clinical trial participants, increased governmental regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.
−Removed: In addition, side effects generally associated with TYK2 or JAK inhibitors may negatively impact public perception of us or ESK-001 and A-005.
+Added: In addition, side effects generally associated with TYK2 or JAK
+Added: inhibitors may negatively impact public perception of us or envu and A-005.
More restrictive government regulations or negative public opinion could have an adverse effect on our business, financial condition, results of operations and prospects, and may delay or impair the development and, if approved, commercialization of our product candidates or demand for any products we may develop.
+Added: The future impairment of acquired in-process research and development (“IPR&D”) intangible assets related to the ACELYRIN Merger may negatively affect our results of operations and financial position.
+Added: As of December 31, 2025, we had $51.0 million of acquired IPR&D intangible assets related to the ACELYRIN Merger.
+Added: In-process research and development assets are subject to an impairment analysis whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable.
+Added: Additionally, indefinite-lived assets are subject to an impairment test at least annually.
+Added: Events giving rise to impairment are an inherent risk in the pharmaceutical industry and cannot be predicted.
+Added: Our results of operations and financial position in future periods could be negatively impacted should future impairments of acquired IPR&D intangible assets occur.
Risks Related to Intellectual Property
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Composition of matter patents for pharmaceutical product candidates often provide a strong form of intellectual property protection for those types of products, as such patents provide protection without regard to any method of use.
−Removed: However, we cannot be certain that the claims in our pending patent applications directed to composition of matter of our product candidates will be considered patentable by the USPTO or by patent offices in foreign countries, or that the claims in any
−Removed: of our issued patents will be considered valid and enforceable by courts in the United States or foreign countries.
+Added: However, we cannot be certain that the claims in our pending patent applications directed to composition of matter of our product candidates will be considered patentable by the USPTO or by patent offices in foreign countries, or that the claims in any of our issued patents will be considered valid and enforceable by courts in the United States or foreign countries.
Method of use patents protect the use of a product for the specified method.
−Removed: This type of patent does not prevent a competitor from making and marketing a product that is identical to our product candidates for an indication that is outside the scope of the patented method.
+Added: This type of patent does not prevent a competitor from making and marketing a product that is identical to our product candidates for an indication that is outside the scope of the
+Added: patented method.
Moreover, even if competitors do not actively promote their product for our targeted indications, clinicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement of method of use patents, the practice is common and such infringement is difficult to prevent or prosecute.
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Any failure to obtain or maintain patent protection with respect to our product candidates or their uses could adversely affect our business, financial condition, results of operations and prospects.
−Removed: We cannot ensure that patent rights relating to inventions described and claimed in our or any future licensors pending patent applications will issue or that patents based on our or any future licensors patent applications will not be challenged and rendered invalid and/or unenforceable.
−Removed: The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or any potential future licensors or collaborators will be successful in protecting our product candidates by obtaining and
−Removed: defending patents.
+Added: We cannot ensure that patent rights relating to inventions described and claimed in our or any current or future licensors and licensees pending patent applications will issue or that patents based on our or any current or future licensors and licensees patent applications will not be challenged and rendered invalid and/or unenforceable.
+Added: The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or any of our current or future licensors, licensees or collaborators will be successful in protecting our product candidates by obtaining and defending patents.
We have several pending United States and foreign patent applications in our portfolio.
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● whether the patent applications that we own will result in issued patents with claims that cover our product candidates or uses thereof in the United States or in other foreign countries.
−Removed: ● whether, if the COVID-19 pandemic continues to spread around the globe, we may experience patent office interruption or delays to our ability to timely secure patent coverage to our product candidates.
−Removed: We cannot be certain that the claims in our or any future licensors’ pending patent applications directed to our product candidates will be considered patentable by the USPTO or by patent offices in foreign countries.
+Added: We cannot be certain that the claims in our or any current or future licensors’ pending patent applications directed to our product candidates will be considered patentable by the USPTO or by patent offices in foreign countries.
There can be no assurance that any such patent applications will issue as granted patents.
−Removed: One aspect of the determination of patentability of our or any future licensors’ inventions depends on the scope and content of the “prior art,” information that was or is deemed available to a person of skill in the relevant art prior to the priority date of the claimed invention.
−Removed: There may be prior art of which we are not aware that may affect the patentability of our or any future licensors’ patent claims or, if issued, affect the validity or enforceability of a patent claim.
−Removed: Even if the patents do issue based on our or any future licensors’ patent applications, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable.
−Removed: Furthermore, even if they are unchallenged, patents in our or any future licensors’ portfolio may not adequately exclude third parties from practicing relevant technology or prevent others from designing around our claims.
+Added: One aspect of the determination of patentability of our or any current or future licensors’ inventions depends on the scope and content of the “prior art,” information that was or is deemed available to a person of skill in the relevant art prior to the priority date of the claimed invention.
+Added: There may be prior art of which we are not aware that may affect the patentability of our or any current or future licensors’ patent claims or, if issued, affect the validity or enforceability of a patent claim.
+Added: Even if the patents do issue based on our or any current or future licensors’ patent applications, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable.
+Added: Furthermore, even if they are unchallenged, patents in our or any current or future licensors’ portfolio may not adequately exclude third parties from practicing relevant technology or prevent others from designing around our claims.
If the breadth or strength of our intellectual property position with respect to our product candidates is threatened, it could dissuade companies from collaborating with us to develop and threaten our ability to commercialize our product candidates.
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In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States, even in jurisdictions where we do pursue patent protection.
−Removed: Consequently, we may not be able to prevent third parties from practicing our or any future licensors’ inventions in all countries outside the United States, even in jurisdictions where we or any future licensors do pursue patent protection, or from selling or importing products made using our or any future licensors’ inventions in and into the United States or other jurisdictions.
−Removed: Competitors may use our or any future licensors’ technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we or any future licensors have patent protection, but enforcement is not as strong as that in the United States.
−Removed: These competitor products may compete with our product candidates, and our or any future licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
+Added: Consequently, we may not be able to prevent third parties from practicing our or any current or future licensors’ inventions in all countries outside the United States, even in jurisdictions where we or any current or future licensors do pursue patent protection, or from selling or importing products made using our or any current or future licensors’ inventions in and into the United States or other jurisdictions.
+Added: Competitors may use our or any current or future licensors’ technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we or any current or future licensors have patent protection, but enforcement is not as strong as that in the United States.
+Added: These competitor products may compete with our product candidates, and our or any current or future licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Various companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
−Removed: The legal systems of many countries do not favor the enforcement of patents and other intellectual property protection, particularly those relating to pharmaceuticals, which could make it difficult for us to stop the infringement of our or any future licensors’ patents or marketing of competing products in violation of our proprietary rights.
+Added: The legal systems of many countries do not favor the enforcement of patents and other intellectual property protection, particularly those relating to pharmaceuticals, which could make it difficult for us to stop the infringement of our or any current or future licensors’ patents or marketing of competing products in violation of our proprietary rights.
Certain countries outside the United States have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties.
In addition, many countries limit the enforceability of patents against government agencies or government contractors.
−Removed: As a result, a patent owner may have limited remedies in certain circumstances, which could materially diminish the value of such patent.
−Removed: If we or any future licensors are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.
+Added: As a result, a patent owner may have limited remedies in certain circumstances, which could
+Added: materially diminish the value of such patent.
+Added: If we or any current or future licensors are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.
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 in the future.
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The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage.
−Removed: ● others may be able to make product candidates that are similar to ours but that are not covered by the pending patent applications that we own or any patents or patent applications that we may in-license in the future;
−Removed: ● we or any future licensors or collaborators might not have been the first to make the inventions covered by the pending patent application that we own or may in-license in the future;
−Removed: ● we or any future licensors or collaborators might not have been the first to file patent applications covering certain of our or their inventions;
+Added: ● others may be able to make product candidates that are similar to ours but that are not covered by the pending patent applications that we own or any patents or patent applications that we currently in-license or may in-license in the future;
+Added: ● we or any current or future licensors or collaborators might not have been the first to make the inventions covered by the pending patent application that we own or may in-license in the future;
+Added: ● we or any current or future licensors or collaborators might not have been the first to file patent applications covering certain of our or their inventions;
● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing or otherwise violating our owned intellectual property rights or any patent applications that we may license in the future;
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● we may not develop additional proprietary technologies that are patentable;
−Removed: ● we cannot predict the scope of protection of any patent issuing based on our or any future licensors’ patent applications, including whether the patent applications that we own, or, in the future, in-license will result in issued patents with claims directed to our product candidates or uses thereof in the United States or in other foreign countries;
+Added: ● we cannot predict the scope of protection of any patent issuing based on our or any current or future licensors’ patent applications, including whether the patent applications that we own, or, in the future, in-license will result
+Added: in issued patents with claims directed to our product candidates or uses thereof in the United States or in other foreign countries;
● there may be significant pressure on the United States government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns;
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Numerous United States and foreign patents and pending patent applications exist in our market that are owned by third parties.
−Removed: Our competitors in both the United States and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or
−Removed: may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use and sell our product candidates.
+Added: Our competitors in both the United States and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use and sell our product candidates.
We do not always conduct independent reviews of pending patent applications and patents issued to third parties.
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In addition, patent applications in the United States and elsewhere can be pending for many years before issuance, or unintentionally abandoned patents or applications can be revived.
−Removed: Furthermore, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our product candidates or the use of our product candidates.
+Added: Furthermore, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could
+Added: cover our product candidates or the use of our product candidates.
As such, there may be applications of others now pending or recently revived patents of which we are unaware.
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Competitors or other third parties may infringe our patents, trademarks or other intellectual property.
−Removed: To counter infringement or unauthorized use, we or any future licensors may be required to file infringement claims, which can be expensive and time consuming and divert the time and attention of our management and scientific personnel.
−Removed: Our or any future licensors’ pending patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent issues from such applications.
−Removed: Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents, in addition to counterclaims asserting that our patents or any future licensors’ patents are invalid or unenforceable, or both.
+Added: To counter infringement or unauthorized use, we or any current or future licensors may be required to file infringement claims, which can be expensive and time consuming and divert the time and attention of our management and scientific personnel.
+Added: Our or any current or future licensors’ pending patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent issues from such applications.
+Added: Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents, in addition to counterclaims asserting that our patents or any current or future licensors’ patents are invalid or unenforceable, or both.
In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.
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The outcome following legal assertions of invalidity and unenforceability is unpredictable.
−Removed: In any patent infringement proceeding, there is a risk that a court will decide that a patent of ours or any future licensors is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue.
−Removed: There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our or any future licensors’ patent claims do not cover the invention, or decide that the other party’s use of our or any future licensors’ patented technology falls under the safe harbor to patent infringement under 35 U.S.C.
−Removed: An adverse outcome in a litigation or proceeding involving our or any future licensors’ patents could limit our ability to assert our or any future licensors’ patents against those parties or other competitors and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products.
+Added: In any patent infringement proceeding, there is a risk that a court will decide that a patent of ours or any current or future licensors is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue.
+Added: There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our or any current or future licensors’ patent claims do not cover the invention, or decide that the other party’s use of our or any current or future licensors’ patented technology falls under the safe harbor to patent infringement under 35 U.S.C.
+Added: An adverse outcome in a litigation or proceeding involving our or any current or future licensors’ patents could limit our ability to assert our or any current or future licensors’ patents against those parties or other competitors and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products.
Any of these occurrences could adversely affect our competitive position, and our business, financial condition, results of operations and prospects.
−Removed: Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have
−Removed: asserted trademark infringement has superior rights to the marks in question.
+Added: Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question.
In this case, we could ultimately be forced to cease use of such trademarks.
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Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation.
−Removed: There could also be public announcements of the results of hearings, motions or other interim proceedings or developments.
+Added: There could also be public announcements
+Added: of the results of hearings, motions or other interim proceedings or developments.
If securities analysts or investors perceive these results to be negative, it could adversely affect the price of shares of our common stock.
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Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources.
−Removed: In addition, any uncertainties resulting from the initiation and continuation of
−Removed: any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations or could otherwise have a material adverse effect on our business, results of operations, financial condition and prospects.
+Added: In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations or could otherwise have a material adverse effect on our business, results of operations, financial condition and prospects.
Third parties may assert that we are employing their proprietary technology without authorization.
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While we may believe that patent claims or other intellectual property rights of a third party would not have a materially adverse effect on the commercialization of our product candidates, we may be incorrect in this belief, or we may not be able to prove it in litigation.
−Removed: In this regard, patents issued in the United States by law enjoy a presumption of validity that can be rebutted only with evidence that is “clear and convincing,” a heightened standard of proof.
+Added: In this regard, patents issued in the United States by law enjoy a presumption of validity that
+Added: can be rebutted only with evidence that is “clear and convincing,” a heightened standard of proof.
There may be issued third-party patents of which we are currently unaware with claims to compositions, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates.
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The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary.
−Removed: These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization
−Removed: capabilities.
+Added: These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and 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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If we are unable to successfully obtain rights to required third-party intellectual property rights or maintain the existing intellectual property rights we have obtained, we may have to abandon development of the relevant program or product candidate, which could adversely affect our business, financial condition, results of operations and prospects.
−Removed: We may enter into license agreements in the future with others to advance our existing or future research or allow commercialization of our existing or future product candidates, if approved.
+Added: We may enter into license agreements in the future with others to advance our existing or future research or allow
+Added: commercialization of our existing or future product candidates, if approved.
These licenses may not provide exclusive rights to use such intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our technology and product candidates in the future.
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We cannot provide any assurances that third-party patents do not exist which might be enforced against our current manufacturing methods, product candidates, or future methods or product candidates resulting in either an injunction prohibiting our manufacture or future sales, or, with respect to our future sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties, which could be significant.
−Removed: We may become subject to claims challenging the inventorship or ownership of our or any future licensors’ patents and other intellectual property.
−Removed: We may be subject to claims that former employees, collaborators or other third parties have an interest in our or any future licensors’ patents or other intellectual property as an inventor or co-inventor.
+Added: We may become subject to claims challenging the inventorship or ownership of our or any current or future licensors’ patents and other intellectual property.
+Added: We may be subject to claims that former employees, collaborators or other third parties have an interest in our or any current or future licensors’ patents or other intellectual property as an inventor or co-inventor.
The failure to name the proper inventors on a patent application can result in the patents issuing thereon being unenforceable.
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Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
−Removed: Any future licensors may have relied on third-party consultants or collaborators or on funds from third parties, such as the United States government, such that these licensors are not the sole and exclusive owners of the patents we in-licensed.
+Added: Any current or future licensors may have relied on third-party consultants or collaborators or on funds from third parties, such as the United States government, such that these licensors are not the sole and exclusive owners of the patents we in-licensed.
If other third parties have ownership rights or other rights to our in-licensed patents, they may be able to license such patents to our competitors, and our competitors could market competing products and technology.
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Such claims could adversely affect our business, financial condition, results of operations and prospects.
−Removed: We may form or seek collaborations or strategic alliances or enter into licensing arrangements in the future, and we may neither enter into, nor realize the benefits of, such alliances or licensing arrangements.
−Removed: Any future collaborations that we enter into may not be successful and we may not enter into such collaborations at all.
+Added: We have and may continue to form or seek collaborations or strategic alliances or enter into licensing arrangements in the future, and we may neither enter into, nor realize the benefits of, such alliances or licensing arrangements.
+Added: The current, and any future, collaborations that we enter into may not be successful and we may not enter into such collaborations at all.
The success of our collaboration arrangements will depend heavily on the efforts and activities of any future collaborators.
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● collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations;
−Removed: ● collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities;
+Added: ● collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors,
+Added: such as a business combination that diverts resources or creates competing priorities;
● collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates;
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● a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws, resulting in civil or criminal proceedings.
−Removed: If we fail to comply with our obligations in agreements under which we in-license or acquire development or commercialization rights to product candidates, or data from third parties, we could lose such rights that are important to our business.
−Removed: We may in the future in-license or otherwise acquire development or commercialization rights to product candidates or data from third parties, and any future licensors may rely upon third-party companies, consultants or collaborators, or on funds from third parties such that licensors are not the sole and exclusive owners of the patents we in-license.
−Removed: If any future licensors fail to prosecute, maintain, enforce, and defend such patents, or lose rights to those patents, the rights we have licensed may be reduced or eliminated, and our right to develop and commercialize future product candidates that may be subject of such licensed rights could be adversely affected.
−Removed: In spite of our efforts, any future licensors might conclude that we are in material breach of obligations under our license agreements and may therefore have the right to terminate the license agreements, thereby removing our ability to develop and commercialize product candidates and technology covered
−Removed: by such license agreements.
−Removed: If such in-licenses are terminated, or if the underlying patents fail to provide the intended exclusivity, our competitors will have the freedom to seek regulatory approval of, and to market, products identical to our product candidates and the licensors to such in-licenses could prevent us from developing or commercializing product candidates that rely upon the patents or other intellectual property rights which were the subject matter of such terminated agreements.
+Added: If we fail to comply with our obligations in the agreements under which we in-license or acquire development or commercialization rights to product candidates, or data from third parties, we could lose such rights that are important to our business.
+Added: We are heavily reliant upon licenses to certain patent rights and other intellectual property for the development of lonigutamab.
+Added: For example, we depend on licenses from Pierre Fabre for certain intellectual property relating to the development and commercialization of lonigutamab, respectively, in specific territories.
+Added: Pierre Fabre may have relied upon, and any future licensors may rely upon, third-party companies, consultants or collaborators, or on funds from third parties such that our licensors are not the sole and exclusive owners of the patents we in-licensed.
+Added: If our licensors, including Pierre Fabre, fail to prosecute, maintain, enforce, and defend such patents, or lose rights to those patents, the rights we have licensed may be reduced or eliminated, and our right to develop and commercialize lonigutamab could be adversely affected.
+Added: Further development and commercialization of lonigutamab and development of any other future product candidates may require us to enter into additional license or collaboration agreements.
+Added: For example, our licensors or other third parties may develop intellectual property covering lonigutamab which we have not licensed.
+Added: Our future licenses may not provide us with exclusive rights to use the licensed patent rights and other intellectual property licensed thereunder, or may not provide us with exclusive rights to use such patent rights and intellectual property in all relevant fields of use and in all territories in which we wish to develop or commercialize lonigutamab or our other product candidates in the future.
+Added: In spite of our efforts, licensors such as Pierre Fabre might conclude that we are in material breach of obligations under our license agreements and may therefore have the right to terminate the license agreements, thereby removing our ability to develop and commercialize product candidates and technology covered by such license agreements.
+Added: If such in-licenses are terminated, or if the underlying patents fail to provide the intended exclusivity, our competitors would have the freedom to seek regulatory approval of, and to market, products identical to our product candidates and the licensors to such in-
+Added: licenses could prevent us from developing or commercializing product candidates that rely upon the patents or other intellectual property rights which were the subject matter of such terminated agreements.
+Added: In addition, we may seek to obtain additional licenses from our licensors and, in connection with obtaining such licenses, we may agree to amend our existing licenses in a manner that may be more favorable to the licensors, including by agreeing to terms that could enable third parties (potentially including our competitors) to receive licenses to a portion of the intellectual property that is subject to our existing licenses and compete with our existing product candidates.
Any of these events could adversely affect our business, financial condition, results of operations, and prospects.
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● our diligence obligations under the license agreement and what activities satisfy those obligations;
−Removed: ● the inventorship or ownership of inventions and know-how resulting from the joint creation or use of intellectual property by any future licensors and us and our partners;
+Added: ● the inventorship or ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners;
● the priority of invention of patented technology.
−Removed: In addition, any future license agreements are likely to be complex, and certain provisions in such agreements may be susceptible to multiple interpretations.
+Added: In addition, our license agreements are, and any future license agreements are likely to be, complex, and certain provisions in such agreements may be susceptible to multiple interpretations.
The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could adversely affect our business, financial condition, results of operations, and prospects.
−Removed: Moreover, if disputes over intellectual property that we may license in the future prevent or impair our ability to maintain future licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could adversely affect our business, financial condition, results of operations, and prospects.
−Removed: Any license agreements we enter into in the future may be subject to certain rights retained by third parties.
−Removed: Any future licensors may retain certain rights under the relevant agreements with us, including the right to use the underlying product candidates for academic and research use, to publish general scientific findings from research related to the product candidates, to make customary scientific and scholarly disclosures of information relating to the product candidates, or to develop or commercialize the licensed product candidates in certain regions.
+Added: Moreover, if disputes over intellectual property that we have licensed or may license in the future prevent or impair our ability to maintain our current or future licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could adversely affect our business, financial condition, results of operations, and prospects.
+Added: We have entered into, and may in the future enter into, license agreements that subject us to certain rights retained by third parties.
+Added: We have entered into a regional collaboration and license agreement (the “Kaken Collaboration Agreement”) with Kaken Pharmaceutical Co., Ltd.
+Added: (“Kaken”) pursuant to which we have granted Kaken an exclusive license to develop, manufacture and commercialize envu for dermatology indications in Japan.
+Added: Under the Kaken Collaboration Agreement, Kaken has options to expand the license into rheumatological and gastrointestinal indications in Japan, and Kaken is responsible for the clinical development, regulatory approvals and commercialization of envu in Japan in dermatology and other indications for which Kaken has exercised its option.
+Added: We retain global rights to envu outside of those granted to Kaken.
+Added: In addition, any future licensors may retain certain rights under the relevant agreements with us, including the right to use the underlying product candidates for academic and research use, to publish general scientific findings from research related to the product candidates, to make customary scientific and scholarly disclosures of information relating to the product candidates, or to develop or commercialize the licensed product candidates in certain regions.
In addition, the United States federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act (the “Bayh-Dole Act”).
−Removed: The federal government retains a “nonexclusive, nontransferable, irrevocable, paid-up license” for its own benefit.
+Added: The federal government retains a
+Added: “nonexclusive, nontransferable, irrevocable, paid-up license” for its own benefit.
The Bayh-Dole Act also provides federal agencies with “march-in rights.” March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a “nonexclusive, partially exclusive, or exclusive license” to a “responsible applicant or applicants.” If the patent owner refuses to do so, the government may grant the license itself.
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While we do not currently engage, and it is our policy to avoid engaging, university partners in projects in which there is a risk that federal funds may be commingled, we cannot be sure that any co-developed intellectual property will be free from government rights pursuant to the Bayh-Dole Act.
−Removed: Although none of our licenses to date are subject to march-in rights, if, in the future, we co-own or license in technology which is critical to our business that is developed in whole or in part with
−Removed: federal funds subject to the Bayh-Dole Act, our ability to enforce or otherwise exploit patents covering such technology may be adversely affected.
+Added: If, in the future, we co-own or license technology which is critical to our business that is developed in whole or in part with federal funds subject to the Bayh-Dole Act, our ability to enforce or otherwise exploit patents covering such technology may be adversely affected.
Changes in patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
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Further, because of a lower evidentiary standard in these USPTO post-grant proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.
−Removed: Accordingly, a third party may attempt to use the USPTO procedures to invalidate our or any future licensors’ patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action.
−Removed: Thus, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our or any future licensors’ patent applications and the enforcement or defense of our or any future licensors’ future issued patents, all of which could adversely affect our business, financial condition, results of operations and prospects.
+Added: Accordingly, a third party may attempt to use the USPTO procedures to invalidate our or any current or future licensors’ patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action.
+Added: Thus, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our or any current or future licensors’ patent applications and the enforcement or defense of our or any current or future licensors’ future issued patents, all of which could adversely affect our business, financial condition, results of operations and prospects.
After March 2013, under the Leahy-Smith Act, the United States transitioned to a first inventor to file system in which, assuming that the other statutory requirements 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.
−Removed: A third party that files a patent application in the USPTO after March 2013, but before we file an application covering the same invention, could therefore be awarded a patent covering an invention of ours or any future licensors even if we had made the invention before it was made by such third party.
+Added: A third party that files a patent application in the USPTO after March 2013, but before we file an application covering the same invention, could therefore be awarded a patent covering an invention of ours or any current or future licensors even if we had made the invention before it was made by such third party.
This will require us to be cognizant going forward of the time from invention to filing of a patent application.
−Removed: Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or any future licensors were the first to either (i) file any patent application related to our product candidates and other proprietary technologies we may develop or (ii) invent any of the inventions claimed in our or any future licensors’ patents or patent applications.
+Added: Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or any current or future licensors were the first to either (i) file any patent application related to our product candidates and other proprietary technologies we may develop or (ii) invent any of the inventions claimed in our or any current or future licensors’ patents or patent applications.
Even where we have a valid and enforceable patent, we may not be able to exclude others from practicing the claimed invention where the other party can show that they used the invention in commerce before our filing date or the other party benefits from a compulsory license.
−Removed: However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our future issued patents, all of which could adversely affect our business, financial condition, results of operations and prospects.
+Added: However, the Leahy-Smith Act and its implementation could increase
+Added: the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our future issued patents, all of which could adversely affect our business, financial condition, results of operations and prospects.
In addition, the patent positions of companies in the development and commercialization of pharmaceuticals are particularly uncertain.
The United States Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.
−Removed: Depending on future actions by the United States Congress, the United States courts, the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable
−Removed: ways that would weaken our or any future licensors’ ability to obtain new patents and patents that we or any future licensors might obtain in the future.
+Added: Depending on future actions by the United States Congress, the United States courts, the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken our or any current or future licensors’ ability to obtain new patents and patents that we or any current or future licensors might obtain in the future.
We cannot predict how future decisions by the courts, the United States Congress or the USPTO may impact the value of our patents.
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We may decide to opt out our future European patents from the UPC, but doing so may preclude us from realizing the benefits of the UPC.
−Removed: Moreover, if we do not meet all of the formalities and requirements for opt-out under the UPC, our future European could remain under the jurisdiction of the UPC.
+Added: Moreover, if we do not meet all of the formalities and requirements for opt-out under the UPC, our future European patents could remain under the jurisdiction of the UPC.
The UPC will provide our competitors with a new forum to centrally revoke our European patents and allow for the possibility of a competitor to obtain pan-European injunction.
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Given the amount of time required for the development, testing and regulatory review of products or new product candidates, patents protecting such products or candidates might expire before or shortly after such products or candidates are commercialized.
−Removed: As a result, our patent portfolio may not provide us with sufficient and continuing rights to exclude others from commercializing products similar or identical to ours.
+Added: As a result, our patent portfolio may not
+Added: provide us with sufficient and continuing rights to exclude others from commercializing products similar or identical to ours.
If we do not obtain patent term extension for our product candidates, our business may be materially harmed.
Depending upon the timing, duration and specifics of any FDA regulatory approval of our product candidates, one or more of our issued United States patents or issued United States patents that we may own in the future may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Action of 1984 (the “Hatch-Waxman Amendments”).
−Removed: The Hatch-Waxman Amendments permit a patent extension term of up to five years as compensation for
−Removed: patent term lost during the FDA regulatory review process.
+Added: The Hatch-Waxman Amendments permit a patent extension term of up to five years as compensation for patent term lost during the FDA regulatory review process.
A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a method for using it or a method for manufacturing it may be extended.
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For example, our collaborator, Foresite Labs, utilizes extensive trade secret algorithms, machine learning and AI analysis techniques, and we rely on their maintenance of these trade secrets.
−Removed: Although we take steps to protect our proprietary information and trade secrets, including through contractual means with our employees and consultants, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology.
+Added: Although we take steps to protect our
+Added: proprietary information and trade secrets, including through contractual means with our employees and consultants, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology.
We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.
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We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners or customers in our markets of interest.
−Removed: At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion.
+Added: At times, competitors or other third parties may adopt
+Added: trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion.
In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names.
−Removed: Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then
−Removed: we may not be able to compete effectively, and our business may be adversely affected.
+Added: Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively, and our business may be adversely affected.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, domain name or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our business, financial condition, results of operations and prospects.
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In addition, if we do not conduct head-to-head comparative clinical trials for our product candidates, we will be unable to make comparative claims regarding any other products in the promotional materials for our product candidates.
−Removed: If we promote our products, if approved, in a manner inconsistent with FDA-approved labeling, or the labeling approved by another comparable foreign regulatory authority, or otherwise not in compliance with FDA regulations or comparable foreign rules, we may be subject to enforcement action.
+Added: If we promote our products, if approved, in a manner inconsistent with FDA-approved labeling, or the labeling approved by another comparable foreign regulatory authority, or otherwise not in compliance with FDA
+Added: regulations or comparable foreign rules, we may be subject to enforcement action.
federal government has levied large civil and criminal fines against companies for alleged improper promotion of off-label use and has enjoined several companies from engaging in off-label promotion.
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● product seizure or detention or refusal to permit the import or export of products;
−Removed: ● injunctions, fines or the imposition of civil or criminal penalties.
+Added: ● injunctions, or the imposition of civil or criminal penalties.
The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenue and could require us to expend significant time and resources in response and could generate negative publicity.
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Recently enacted legislation, future legislation and other healthcare reform measures may increase the difficulty and cost for us to obtain regulatory approval for and commercialize our product candidates and may affect the prices we may set.
−Removed: In the United States and some foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system, including cost-containment measures that may reduce or limit coverage and reimbursement for newly approved drugs and affect our ability to profitably sell any product candidates for which we obtain regulatory approval.
+Added: In the United States and some foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system, including cost-containment measures that may reduce or limit
+Added: coverage and reimbursement for newly approved drugs and affect our ability to profitably sell any product candidates for which we obtain regulatory approval.
In particular, there have been and continue to be a number of initiatives at the U.S.
federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare.
−Removed: For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “ACA”) was enacted in the United States, which made a number of substantial changes in the way healthcare is financed by both governmental and private insurers.
−Removed: The ACA included a number of provisions that may reduce the profitability of drug products, including provisions intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
−Removed: In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
−Removed: For example, the American Taxpayer Relief Act of 2021, effective January 1, 2024, eliminated the statutory cap on rebate amounts owed by drug manufacturers under the Medicaid Drug Rebate Program, which was previously capped at 100% of the Average Manufacturer Price for a covered outpatient drug.
−Removed: Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs.
−Removed: Healthcare reform initiatives culminated in the enactment of the IRA in August 2022, which, among other things, allows HHS to directly negotiate the selling price of a statutorily specified number of drugs and biologics each year that the Centers for Medicare & Medicaid Services reimburses under Medicare Part B and Part D.
−Removed: Only high-expenditure single-source drugs that have been approved for at least 7 years for single-source drugs (11 years for biologics) are eligible to be selected by CMS for negotiation, with the negotiated price taking effect two years after the selection year.
−Removed: CMS selected the Medicare Part D products in 2023, negotiations began in 2024, and the negotiated maximum fair price for each product has been announced.
−Removed: These negotiations resulted in significant price reductions for the products from their 2023 list prices, ranging from 38 to 79 percent, with an average price reduction of 59.4 percent.
−Removed: The price cap for each of these products, which cannot exceed a statutory ceiling price, will take effect in 2026.
−Removed: Negotiations for Medicare Part B products will begin in 2026 with the negotiated price taking effect in 2028.
−Removed: A drug or biological product that has an orphan drug designation for only one rare disease or condition are excluded from the IRA’s price negotiation requirements, but will lose that exclusion if it receives designations for more than one rare disease or condition, or if is approved for an indication that is not within that single designated rare disease or condition, unless such additional designation or such disqualifying approvals are withdrawn by the time CMS evaluates the drug for selection for negotiation.
−Removed: The negotiated prices have represented, and will continue to represent, a significant discount from average prices to wholesalers and direct purchasers.
−Removed: The law also imposes rebates on Medicare Part D and Part B drugs whose prices have increased at a rate greater than the rate of inflation, and in November 2024, CMS finalized regulations for the Medicare Part B and Part D inflation rebates.
−Removed: The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.
−Removed: The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
−Removed: Manufacturers that fail to comply with the IRA may be subject to various penalties, including civil monetary penalties.
−Removed: These provisions may be subject to legal challenges.
−Removed: For example, the provisions related to the negotiation of selling prices of high-expenditure single-source drugs and biologics have been challenged in multiple lawsuits brought by pharmaceutical manufacturers.
−Removed: Thus, while it is unclear how the IRA will be implemented, it will likely have a significant impact on the pharmaceutical industry.
−Removed: At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, restrictions on certain product access, reporting on price increases and the introduction of high-cost drugs.
−Removed: In some states, laws have been enacted to encourage importation of lower cost drugs from other countries and bulk purchasing.
−Removed: For example, the FDA released a final rule in September 2020 providing guidance for states to build and submit proposals for importing drugs from Canada, and FDA authorized the first such plan in Florida in January 2024, which has been extended until July 6, 2025.
−Removed: It is unclear how this program will be implemented, including which drugs will be chosen, and whether it will be subject to legal challenges in the United States or Canada.
−Removed: Other states have also submitted proposals that are pending review by the FDA.
+Added: For example, in March 2010, the ACA was enacted in the United States, which made a number of substantial changes in the way healthcare is financed by both governmental and private insurers.
+Added: Since its enactment, there have been amendments and judicial, Congressional and executive branch challenges to certain aspects of the ACA.
+Added: For example, on July 4, 2025, the OBBBA was signed into law, which narrowed access to ACA marketplace exchange enrollment and declined to extend the ACA enhanced advanced premium tax credits that expired at the end of 2025, which, among other provisions in the law, are anticipated to reduce the number of Americans with health insurance.
+Added: The OBBBA also is expected to reduce Medicaid spending and enrollment by implementing work requirements for some beneficiaries, capping state-directed payments, reducing federal funding, and limiting provider taxes used to fund the program.
+Added: Congress is considering proposed legislation intended to further reduce healthcare costs with alternatives to replace the expired ACA subsidies.
+Added: We expect that additional U.S.
+Added: federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that the U.S.
+Added: federal government will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.
+Added: The current administration is pursuing policies to reduce regulations and expenditures across government agencies including at HHS, the FDA, the CMS and related agencies.
+Added: These actions, presently directed by executive orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional uncertainty for our business.
+Added: For example, the current administration has announced agreements with several pharmaceutical companies that require the drug manufacturers to offer, through a direct-to-consumer platform, U.S.
+Added: patients and Medicaid programs prescription drug Most-Favored Nation pricing equal to or lower than those paid in other developed nations, with additional mandates for direct-to-patient discounts and repatriation of foreign revenues.
+Added: Other recent actions, for example, include (1) directing agencies to reduce agency workforce and cut programs;
+Added: (2) directing HHS and other agencies to lower prescription drug costs through a variety of initiatives, including by establishing Most-Favored-Nation pricing for pharmaceutical products and launching an online clearinghouse, referred to as TrumpRx, for patients to purchase certain products from manufacturers on a cash pay basis;
+Added: (3) imposing tariffs on imported pharmaceutical products;
+Added: and (4) as part of the Make America Healthy Again Commission’s Strategy Report released in September 2025, working across government agencies to increase enforcement on direct-to-consumer pharmaceutical advertising.
+Added: Additionally, the current administration recently called on Congress to enact “The Great Healthcare Plan,” to codify and expand Most-Favored Nation pricing, lower government subsidies to private insurance companies, increase healthcare price transparency, expand pharmaceutical drugs available for over-the-counter purchase, and enact restrictions on pharmacy benefit manager payment methodologies, among other things.
+Added: These actions and policies may significantly reduce U.S.
+Added: drug prices, potentially impacting manufacturers’ global pricing strategies and profitability, while increasing their operational costs and compliance risks.
+Added: In June 2024, the U.S.
+Added: Supreme Court’s Loper Bright decision greatly reduced judicial deference to regulatory agencies, which could increase successful legal challenges to federal regulations affecting our operations.
+Added: Congress may introduce and ultimately pass health care related legislation that could, among other things, impact the drug approval process and make changes to the Medicare Drug Price Negotiation Program.
+Added: Individual states in the United States have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
+Added: Legally mandated price controls on payment amounts by third-party payors or other restrictions could materially and adversely affect our business, financial condition, results of operations and prospects.
In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.
−Removed: This could reduce the ultimate demand for our drug products that we successfully commercialize or put pressure on our product pricing.
−Removed: We expect that the ACA, the IRA, and any other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product.
+Added: This could reduce the ultimate demand for our product candidates or put pressure on our product pricing.
+Added: We expect that these and any other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product.
Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.
−Removed: The implementation of cost-containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates, if approved.
+Added: implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates, if approved.
Moreover, in order to obtain reimbursement for our products in some European countries, including some EU member states, we may be required to compile additional data comparing the cost-effectiveness of our products to other available therapies.
−Removed: This of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedures in some EU member states, including those representing the larger markets.
−Removed: The HTA process is the procedure to assess therapeutic, economic and societal impact of a given medicinal product in the national healthcare systems of the individual country.
+Added: This assessment of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedures in some EU member states, including those representing the larger markets.
+Added: The HTA process is the procedure to assess therapeutic, economic and societal impact of a given medicinal product in the national healthcare systems of the original country.
The outcome of an HTA will often influence the pricing and reimbursement status granted to these medicinal products by the competent authorities of individual EU member states.
The extent to which pricing and reimbursement decisions are influenced by the HTA of the specific medicinal product currently varies between EU member states.
−Removed: In December 2021, Regulation No 2021/2282 on HTA amending Directive 2011/24/EU, was adopted in the EU.
−Removed: While the HTA Regulation entered into force in January 2022, it will only begin to apply from January 2025 onwards, with preparatory and implementation-related steps to take place in the interim.
−Removed: Once applicable, it will have a phased implementation depending on the concerned products.
−Removed: The Regulation intends to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and provide the basis for cooperation at EU level for joint clinical assessments in these areas.
−Removed: It will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
+Added: On January 12, 2025, Regulation No 2021/2282 on HTA amending Directive 2011/24/EU, entered into force through a phased implementation depending on the concerned products.
+Added: The Regulation intends to boost cooperation among EU member states in assessing health technologies, including new medicinal products.
+Added: The Regulation establishes the framework for EU level joint clinical assessments, joint clinical assessments, joint scientific consultations, and the early identification of emerging health technologies.
+Added: It permits EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas and requires them to rely on EU-level joint clinical assessment reports for the clinical components of their national HTA evaluations.
Individual EU member states will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technologies and making decisions on pricing and reimbursement.
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Our operations and relationships with healthcare providers, healthcare organizations and third-party payors will be subject to applicable anti-bribery, anti-kickback, fraud and abuse, transparency and other healthcare laws and regulations, which could expose us to, among other things, enforcement actions, criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.
−Removed: Our future arrangements with healthcare providers, healthcare organizations and third-party payors will expose us to broadly applicable anti-bribery, fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, market, sell and distribute our product candidates, if approved.
+Added: Our arrangements with healthcare providers, healthcare organizations and third-party payors will expose us to broadly applicable anti-bribery, fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, market, sell and distribute our product candidates, if approved.
Restrictions under applicable federal, state and foreign anti-bribery and healthcare laws and regulations, include the following:
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A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;
−Removed: ● the federal criminal and civil false claims laws, including the federal False Claims Act, which can be enforced through civil whistleblower or qui tam actions against individuals or entities, and the Federal Civil Monetary Penalties Laws, which prohibit, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be
−Removed: made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
+Added: ● the federal criminal and civil false claims laws, including the federal False Claims Act, which can be enforced through civil whistleblower or qui tam actions against individuals or entities, and the Federal Civil Monetary Penalties Laws, which prohibit, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
In addition, certain marketing practices, including off-label promotion, may also violate false claims laws.
Moreover, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act;
−Removed: ● HIPAA, which imposes criminal and civil liability, prohibits, among other things, knowingly and willfully executing, or attempting to execute a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;
+Added: ● HIPAA, which imposes criminal and civil liability, prohibits, among other things, knowingly and willfully executing, or attempting to execute a scheme to defraud any healthcare benefit program, or knowingly and
+Added: willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;
similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;
+Added: ● HIPAA, as amended by HITECH, and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
● the federal legislation commonly referred to as the Physician Payments Sunshine Act, enacted as part of the ACA, and its implementing regulations, which requires certain manufacturers of covered drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with certain exceptions, to report annually to CMS information on certain payments and other transfers of value to clinicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), teaching hospitals, and certain other health care providers (such as physician assistants and nurse practitioners), as well as ownership and investment interests held by the clinicians described above and their immediate family members;
4 unchanged sentences
In the EU, interactions between pharmaceutical companies and healthcare professionals and healthcare organizations are governed by strict laws, regulations, industry self-regulation codes of conduct and physicians’ codes of professional conduct both at EU level and in the individual EU member states.
−Removed: The provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of pharmaceutical products is prohibited in the EU.
+Added: The provision of benefits or advantages to healthcare professionals to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of pharmaceutical products is prohibited in the EU.
Relationships with healthcare professionals and associations are subject to stringent anti-gift statutes and anti-bribery laws, the scope of which differs across the EU.
3 unchanged sentences
Efforts to ensure that our current and future business arrangements with third parties comply with applicable healthcare laws and regulations could involve substantial costs.
−Removed: It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving
−Removed: applicable fraud and abuse or other healthcare laws and regulations.
−Removed: If our operations are found to be in violation of any such requirements, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, the curtailment or restructuring of our operations, loss of eligibility to obtain approvals from the FDA or comparable foreign regulatory authorities, exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid or comparable foreign programs, integrity oversight and reporting obligations, or reputational harm, any of which could adversely affect our financial results.
−Removed: These risks cannot be entirely eliminated.
+Added: It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations.
+Added: If our operations are found to be in violation of any such requirements, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, the curtailment or restructuring of our operations, loss of eligibility to obtain approvals from the FDA or comparable foreign regulatory authorities, exclusion from participation in government
+Added: contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid or comparable foreign programs, integrity oversight and reporting obligations, or reputational harm, any of which could adversely affect our financial results.
Any action against us for an alleged or suspected violation could cause us to incur significant legal expenses and could divert our management’s attention from the operation of our business, even if our defense is successful.
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For example, HIPAA imposes specific requirements relating to the privacy, security, and transmission of individually identifiable health information.
−Removed: We may obtain health information from third parties (including research institutions from which we obtain clinical trial data) that are subject to privacy and security requirements under HIPAA.
+Added: We may obtain health information from third parties that are subject to privacy and security requirements under HIPAA.
Depending on the facts and circumstances, we could be subject to significant penalties if we violate HIPAA.
−Removed: Additionally, the California Consumer Privacy Act (“CCPA”) applies to personal information of California consumers, business representatives, and employees, and among other things requires regulated businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights, including the
−Removed: right to opt out of certain disclosures of their information.
+Added: Additionally, the CCPA applies to personal information of California consumers, business representatives, and employees, and among other things requires regulated businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights, including the right to opt out of certain disclosures of their information.
The CCPA provides for civil penalties as well as a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach.
1 unchanged sentence
Similar laws are being considered or have been enacted in several other states, as well as at the federal and local levels.
−Removed: state privacy laws, like the CCPA, may also exempt some data processed in the context of clinical trials, these developments further complicate compliance efforts, and increase legal risk and compliance costs for us and the third parties with whom we work.
+Added: While certain U.S.
+Added: state privacy laws,
+Added: like the CCPA, may also exempt some data processed in the context of clinical trials, these developments further complicate compliance efforts, and increase legal risk and compliance costs for us and the third parties with whom we work.
In addition to government activity, privacy advocacy groups and technology and other industries are considering various new, additional or different self-regulatory standards that may place additional burdens on us.
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Additionally, EU member states may introduce further conditions, including limitations, and make their own laws and regulations further limiting the processing of “special categories of personal data,” including personal data related to health, biometric data used for unique identification purposes and genetic information, which could limit our ability to process such special categories of personal data, and could cause our compliance costs to increase, ultimately adversely affecting our business, financial condition, results of operations and prospects.
−Removed: Certain of our employees, other personnel and/or vendors may use generative artificial intelligence (“AI”) technologies to perform their work, and the disclosure and use of personal information in generative AI technologies is subject to various privacy laws and other privacy obligations.
+Added: Certain of our employees, other personnel and/or vendors use generative artificial intelligence (“AI”) technologies to perform their work, and the disclosure and use of personal information in generative AI technologies is subject to various privacy laws and other privacy obligations.
+Added: Any errors, flaws or other unintended issues in or associated with AI inputs, outputs or technologies could result in adverse impacts on our business.
Governments have passed and are likely to pass additional laws regulating generative AI.
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In particular, the European Economic Area (the “EEA”) and the UK have significantly restricted the transfer of personal information to the United States and other countries whose privacy laws it generally believes are inadequate.
−Removed: Although there are currently various mechanisms that may be used to transfer personal information from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, the EU-US Data Privacy Framework, and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal information to the United States.
+Added: Although there are currently various mechanisms that may be used to transfer personal information from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, the EU-US Data Privacy Framework, and the UK extension thereto (“Data Privacy Framework”) (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Data Privacy Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal information to the United States.
Other jurisdictions may adopt or have already adopted similarly stringent data localization and cross-border data transfer laws.
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Additionally, companies that transfer personal information out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups.
−Removed: Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly violating the
−Removed: GDPR’s cross-border data transfer limitations.
−Removed: Regulators in the United States are also increasingly scrutinizing certain personal information transfers and have enacted certain restrictions on cross-border personal information transfers.
+Added: Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations.
+Added: Regulators in the United States are also increasingly scrutinizing certain personal information transfers and have enacted certain restrictions on cross-border date transfers.
+Added: For example, the U.S.
+Added: Department of Justice issued a rule entitled the Preventing Access to U.S.
+Added: Sensitive Personal Data and Government-Related Data by Countries of Concern or Covered Persons, which places additional restriction on certain data transactions involving countries of concern (e.g., China, Russia, Iran) and covered persons (i.e., individuals and entities who are
+Added: designated as such by the U.S.
+Added: Attorney General or considered “foreign persons” and are majority owned by, organized under the laws of, a primary resident in, or a contractor of, a covered person or country of concern, as applicable) that impacts certain business activities such as vendor engagements, sale or sharing of data, employment of certain individuals, and investor agreements.
+Added: Violations of the rule could lead to significant civil and criminal fines and penalties.
+Added: The rule applies regardless of whether data is anonymized, key-coded, pseudonymized, de-identified or encrypted, which presents particular challenges for companies like ours that process key-coded clinical trial data and biospecimens.
In addition to data privacy and security laws, we are also bound by other contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful.
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In addition, any such changes could compromise our ability to develop an adequate marketing strategy and pursue our growth strategy effectively or even prevent us from providing certain products in jurisdictions in which we currently operate and in which we may operate in the future or incur potential liability in an effort to comply with such legislation, which, in turn, could adversely affect our business, financial condition, results of operations and prospects.
−Removed: Complying with these numerous, complex and often changing regulations is expensive and difficult, and failure to comply with any data privacy or security laws, whether by us, one of our CROs, CMOs or another third party with whom we work, could adversely affect our business, financial condition, results of operations and prospects, including but not limited to:
+Added: Complying with these numerous, complex and often changing regulations is expensive and difficult, and failure to comply with any data privacy or security obligations, whether by us, one of our CROs, CMOs or another third party with whom we work, could adversely affect our business, financial condition, results of operations and prospects, including but not limited to:
regulatory investigation costs;
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or substantial changes to our business model or operations.
−Removed: In particular, plaintiffs have become increasingly more active in bringing privacy-related claims against companies, including class claims and mass arbitration demands.
+Added: In particular, plaintiffs have become increasingly more active in bringing privacy-related claims against companies, including class
+Added: claims and mass arbitration demands.
Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations.
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Risks Related to Our Reliance on Third Parties
−Removed: We may have conflicts with any future licensors or collaborators that could delay or prevent the development or commercialization of our product candidates.
−Removed: We may enter into strategic transactions in the future, and we may have conflicts with any potential licensors or collaborators, such as conflicts concerning the interpretation of preclinical or clinical data, the achievement of milestones, the interpretation of contractual obligations, payments for services, development obligations or the ownership of intellectual property developed during our collaboration.
−Removed: If any conflicts arise with any of our future collaborators, such collaborator may act in a manner that is adverse to our best interests.
+Added: We may have conflicts with any current or future licensors, licensees, collaborators or strategic partners that could delay or prevent the development or commercialization of our product candidates.
+Added: We are currently party to the Kaken Collaboration Agreement and the license and collaboration agreement with Pierre Fabre, and we may enter into strategic transactions in the future, and we may have conflicts with our current or future licensors, licensees, collaborators or strategic partners, such as conflicts concerning the interpretation of preclinical or clinical data, the achievement of milestones, the interpretation of contractual obligations, payments for services, development obligations or the ownership of intellectual property developed during our collaboration.
+Added: If any conflicts arise with our collaborators, such collaborator may act in a manner that is adverse to our best interests.
Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our product candidates, and in turn prevent us from generating revenue:
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We have relied and expect to continue to rely on third parties to conduct our preclinical studies and clinical trials.
−Removed: If those third parties do not perform as contractually required, fail to satisfy legal or regulatory requirements, miss expected deadlines or terminate the relationship, our development programs could be delayed, more costly or unsuccessful, and we may never be able to seek or obtain regulatory approval for or commercialize our product candidates.
+Added: those third parties do not perform as contractually required, fail to satisfy legal or regulatory requirements, miss expected deadlines or terminate the relationship, our development programs could be delayed, more costly or unsuccessful, and we may never be able to seek or obtain regulatory approval for or commercialize our product candidates.
We rely 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 clinical trials of our current or future product candidates.
−Removed: 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 clinical trials than we would have had we conducted them independently.
+Added: 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 clinical trials than we would have if we had 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.
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As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed.
−Removed: 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.
+Added: 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.
If any of our relationships with these third parties terminate, we may not be able to enter into alternative arrangements or do so on commercially reasonable terms.
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We do not own or operate, and currently have no plans to establish, any manufacturing facilities for drug manufacturing, storage, distribution or quality testing.
−Removed: We currently rely, and expect to continue to rely, on third parties for the manufacture of active pharmaceutical ingredients (“API”), bulk drug substances, raw materials, samples, components and other materials for our product candidates for clinical testing, as well as for the manufacture of any products candidates that we commercialize, if approved.
+Added: We currently rely, and expect to continue to rely, on third parties for the manufacture of API, bulk drug substances, raw materials, samples, components and other materials for our product candidates for clinical testing, as well as for the manufacture of any products candidates that we commercialize, if approved.
Reliance on third-party manufacturers may expose us to different risks than if we were to manufacture product candidates ourselves.
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Moreover, we are dependent on our CMOs for manufacturing in compliance with cGMPs and other regulatory requirements.
−Removed: In the event that any of our manufacturers
−Removed: fails to comply with such requirements or to perform its obligations in relation to quality, timing or otherwise, or if our projected manufacturing capacity or supply of materials becomes limited, interrupted, or more costly than anticipated, we may be forced to enter into an agreement with another third party, which we may not be able to do timely or on reasonable terms, if at all.
−Removed: In some cases, the technical skills or technology required to manufacture our product candidates may be unique or proprietary to the original manufacturer and we may have difficulty transferring such to another third party.
+Added: In the event that any of our manufacturers fails to comply with such requirements or to perform its obligations in relation to quality, timing or otherwise, or if our projected manufacturing capacity or supply of materials becomes limited, interrupted, or more costly than anticipated, we may be forced to enter into an agreement with another third party, which we may not be able to do timely or on reasonable terms, if at all.
+Added: In some cases, the technical skills or technology required to manufacture our product candidates may be
+Added: unique or proprietary to the original manufacturer and we may have difficulty transferring such to another third party.
These factors would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to enable us, or to have another third party, manufacture our product candidates.
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As part of our process development efforts, we also may make changes to the manufacturing processes at various points during development, for various reasons, such as controlling costs, achieving scale, decreasing processing time, improving product formulations, increasing manufacturing success rate or other reasons.
−Removed: For example, we are implementing certain manufacturing process changes for ESK-001 to increase scalability with respect to our Phase 3 clinical trials.
+Added: For example, we are implementing certain manufacturing process changes for envu to increase scalability with respect to our Phase 3 clinical trials.
Such changes carry the risk that they will not achieve their intended objectives, and any of these changes could cause our current or future product candidates to perform differently and affect the results of our future clinical trials.
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Additionally, our CMOs may experience difficulties due to resource constraints or as a result of labor disputes or unstable political environments.
−Removed: If our CMOs were to encounter any of these difficulties, our ability to provide our product
−Removed: candidates to participants in preclinical and clinical trials, or to provide product for treatment of participants once approved, would be jeopardized.
+Added: If our CMOs were to encounter any of these difficulties, our ability to provide our product candidates to participants in preclinical and clinical trials, or to provide product for treatment of participants once approved, would be jeopardized.
We depend on limited source suppliers for certain raw materials used in our product candidates.
If we are unable to source these supplies on a timely basis or establish redundancy in our manufacturing process or longer-term contracts with our CMOs, we will not be able to complete our clinical trials on time and the development of our product candidates may be delayed.
−Removed: Certain of the raw materials necessary to produce ESK-001 and A-005 are in limited supply, and we generally rely on one CMO for each manufacturing stage.
+Added: Certain of the raw materials necessary to produce envu and A-005 are in limited supply, and we generally rely on one CMO for each manufacturing stage.
While we intend to identify and qualify additional suppliers and redundant manufacturers to provide the API, drug product and critical raw material prior to submission of an NDA to the FDA and/or a comparable marketing application outside the United States, there can be no assurance that we will be successful in doing so.
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● the imposition of new laws and regulations, including those relating to labor conditions, quality, and safety standards, imports, duties, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds, particularly new or increased tariffs imposed on imports from countries where our suppliers operate;
+Added: ● fluctuations in currency exchange rates over time, which may substantially increase our costs of doing business abroad where we have payment obligations in local currency;
● greater challenges and increased costs with enforcing and periodically auditing or reviewing our suppliers’ and manufacturers’ compliance with cGMPs or status acceptable to the FDA or comparable foreign regulatory authorities;
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These and other factors beyond our control could interrupt our suppliers’ production, influence the ability of our suppliers to export our clinical supplies cost-effectively or at all, and inhibit our suppliers’ ability to procure certain materials, any of which could harm our business, financial condition, results of operations and prospects.
+Added: We may be exposed to significant currency exchange risk.
+Added: We operate a number of our clinical trials outside of the United States and incur portions of our expenses, and may in the future derive revenues, in a variety of currencies.
+Added: As a result, we are exposed to currency exchange risk as our results of operations and cash flows are subject to fluctuations in currency exchange rates.
+Added: Fluctuations in currency exchange rates have had, and will continue to have, an impact on our results as expressed in United States dollars.
+Added: We currently do not have a formal hedging program with respect to foreign currencies.
+Added: We cannot predict the impact of foreign currency fluctuations, and foreign currency fluctuations in the future may adversely affect our financial condition, results of operations and cash flows.
Risks Related to Ownership of Our Common Stock
−Removed: As a result of our history of losses and negative cash flows from operations, our consolidated financial statements contain a statement regarding a substantial doubt about our ability to continue as a going concern.
−Removed: Our history of operating losses and negative cash flows from operations combined with our anticipated use of cash to fund operations raises substantial doubt about our ability to continue as a going concern as our existing cash, cash equivalents and marketable securities of $288.3 million as of December 31, 2024 will not be sufficient to meet operating and capital requirements for at least 12 months from the date of issuance of our audited consolidated financial statements included in Part II, Item 8.
−Removed: of this Annual Report on Form 10-K.
−Removed: Based on our current operating plan, we will need to raise additional financing to continue our products’ development for the foreseeable future, and until we become profitable.
−Removed: Our future viability as an ongoing business is dependent on our ability to generate cash from our operating activities or to raise additional capital to finance our operations.
−Removed: If we are unable to raise additional capital as and when needed, our business, financial condition and results of operations will be materially and adversely affected, and we may be forced to delay our development efforts, limit our activities and reduce research and development costs.
−Removed: If we are unable to continue as a going concern, we may have to liquidate our assets, and the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements.
−Removed: The inclusion of a going concern explanatory paragraph by our independent registered public accounting firm, our lack of cash resources and our potential inability to continue as a going concern may materially adversely affect our share price and our ability to raise new capital, enter into licensing and collaboration arrangements or other contractual relationships with third parties and otherwise execute our development strategy.
An active and liquid trading market for our common stock may not develop, and you may not be able to resell your shares of common stock at or above the price you paid for them.
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Furthermore, an inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter into strategic collaborations or acquire companies or products by using our shares of common stock as consideration.
−Removed: Our quarterly and annual operating results, and the combined company’s results, if the proposed Merger is consummated, may fluctuate significantly or may fall below the expectations of investors or securities analysts or any guidance we may publicly provide, each of which may cause our stock price to fluctuate or decline.
−Removed: We expect our operating results, and the combined company’s results, if the proposed Merger is consummated, to be subject to quarterly and annual fluctuations which may, in turn, cause the price of our common stock to fluctuate substantially.
+Added: Our quarterly and annual operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts or any guidance we may publicly provide, each of which may cause our stock price to fluctuate or decline.
+Added: We expect our operating results to be subject to quarterly and annual fluctuations which may, in turn, cause the price of our common stock to fluctuate substantially.
Our net loss and other operating results will be affected by numerous factors, including:
−Removed: ● variations in the level of expense related to the ongoing development of our most advanced product candidate ESK-001, A-005 and other development programs;
+Added: ● variations in the level of expense related to the ongoing development of our most advanced product candidate envu, A-005 and other development programs;
● results and timing of preclinical studies and ongoing and future clinical trials, or the addition or termination of any such clinical trials;
−Removed: ● the timing of payments we may make or receive under future license and future collaboration arrangements or the termination or modification thereof;
−Removed: ● our execution of any strategic transactions, including the proposed Merger and any future acquisitions, collaborations, licenses or similar arrangements, and the timing and amount of payments we may make or receive in connection with such transactions;
+Added: ● the timing of payments we may make or receive under any current or future license and future collaboration
+Added: arrangements or the termination or modification thereof;
+Added: ● our execution of any strategic transactions, including any future acquisitions, collaborations, licenses or similar arrangements, and the timing and amount of payments we may make or receive in connection with such transactions;
● any intellectual property infringement lawsuit or opposition, interference or cancellation proceeding in which we may become involved;
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● fluctuations in stock-based compensation expense;
−Removed: ● the impacts of inflation, rising interest rates and tariffs and escalating trade tensions on our business and operations;
+Added: ● the impacts of inflation and rising interest rates on our business and operations;
● changes in general market and economic conditions.
−Removed: If our quarterly or annual operating results (or the combined company’s results, if the proposed Merger is consummated) fall below the expectations of investors or securities analysts or any forecasts or guidance we may provide to the market, the price of our common stock could decline substantially.
+Added: If our quarterly or annual operating results fall below the expectations of investors or securities analysts or any forecasts or guidance we may provide to the market, the price of our common stock could decline substantially.
Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide.
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The market price of our common stock is likely to continue to be volatile and could fluctuate widely in response to many factors, including but not limited to:
+Added: ● announcements regarding our ability and anticipated timelines to submit applications for regulatory approvals of envu in PsO;
+Added: ● regulatory approval or non-approval of envu in PsO, specific label indications for or restrictions, warnings or limitations in its use or delays in the regulatory review process;
● volatility and instability in the financial and capital markets;
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● developments with respect to patents or intellectual property rights;
−Removed: ● announcements of technological innovations, new product candidates, new products or new contracts by us or our competitors;
−Removed: ● announcements relating to the proposed Merger and any future strategic transactions, including acquisitions, collaborations, licenses or similar arrangements;
+Added: ● announcements of technological innovations, new product candidates, new products or new contracts by us or
+Added: our competitors;
+Added: ● announcements relating to any future strategic transactions, including acquisitions, collaborations, licenses or similar arrangements;
+Added: ● our ability to achieve the perceived benefits of our strategic transactions, including the ACELYRIN Merger, as rapidly or to the extent anticipated by financial analysts or investors;
● actual or anticipated variations in our operating results due to the level of development expenses and other factors;
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● announcement or expectation of additional financing efforts and receipt, or lack of receipt, of funding in support of conducting our business;
−Removed: ● sales of our common stock by us, our insiders, or other stockholders, or issuances by us of shares of our common stock in connection with strategic transactions such as the proposed Merger;
+Added: ● sales of our common stock by us, our insiders, or other stockholders, or issuances by us of shares of our common stock in connection with strategic transactions;
● conditions and trends in the pharmaceutical, biotechnology and other industries;
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If our stockholders sell, or the market perceives that our stockholders intend to sell, substantial amounts of our common stock in the public market, the market price of our common stock could decline significantly.
−Removed: Immediately following the Merger, our pre-Merger equityholders are expected to hold approximately 55% of the combined company’s common stock and the pre-Merger equityholders of ACELYRIN are expected to hold approximately 45% of the combined company’s common stock, in each case, calculated on a fully diluted basis as of January 31, 2025.
−Removed: Upon consummation of the Merger, shares of our common stock issued in the Merger, will be freely tradeable in the public market.
We cannot predict what effect, if any, sales of our shares in the public market or the availability of shares for sale will have on the market price of our common stock.
−Removed: However, future sales of substantial amounts of our common stock in the public market, including shares issued upon exercise of outstanding options and any potential sales of shares of our common stock following consummation of the proposed Merger, or the perception that such sales may occur, could adversely affect the market price of our common stock.
+Added: However, future sales of substantial amounts of our common stock in the public market or the perception that such sales may occur, could adversely affect the market price of our common stock.
We also expect that significant additional capital may be needed in the future to continue our planned operations, including conducting our planned clinical trials, manufacturing and commercialization efforts, expanded research and development activities and costs associated with operating as a public company.
To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time.
−Removed: These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.
+Added: These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce
+Added: the market price of our common stock.
Our principal stockholders and management own a significant percentage of our common stock and will be able to control matters subject to stockholder approval.
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(i) the end of the fiscal year in which we have a total annual gross revenue of $1.235 billion;
−Removed: (ii) the last day of our fiscal year following the fifth anniversary of the completion
−Removed: of our initial public offering (“IPO”);
+Added: (ii) the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering (“IPO”);
(iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt;
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Even after we no longer qualify as an emerging growth company, we may continue to qualify as a smaller reporting company, which would allow us to take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation.
−Removed: In addition, if we are a smaller reporting company with less than $100 million in annual revenue, we would not be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.
+Added: In addition, as a smaller reporting company with less than $100 million in annual revenue, we are not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.
Anti-takeover provisions in our charter documents and under Delaware law could prevent or delay an acquisition of us that may be beneficial to our stockholders and may prevent attempts by our stockholders to replace or remove our current management.
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any action asserting a claim against us arising pursuant to the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws;
−Removed: or any action asserting a claim that
−Removed: is governed by the internal affairs doctrine.
+Added: or any action asserting a claim that is governed by the internal affairs doctrine.
This exclusive forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act.
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Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
−Removed: Our amended and restated bylaws provide that the federal district courts of the United States of America will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act (the Federal Forum Provision), including for all causes of action asserted against any defendant named in such complaint.
+Added: Our amended and restated bylaws provide that the federal district courts of the United States of America will, to the fullest extent permitted by law,
+Added: be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act (the “Federal Forum Provision”), including for all causes of action asserted against any defendant named in such complaint.
For the avoidance of doubt, this provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint, and any other professional entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering.
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Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions in our amended and restated certificate of incorporation, including the Federal Forum Provision.
−Removed: These provisions may limit a stockholders’ ability to bring a claim, and may result in increased costs for a stockholder to bring such a claim, in a judicial forum of their choosing for disputes with us or our directors, officers, other employees or agents, which may discourage lawsuits against us and our directors, officers, other employees or agents.
+Added: These provisions may limit a stockholder’s ability to bring a claim, and may result in increased costs for a stockholder to bring such a claim, in a judicial forum of their choosing for disputes with us or our directors, officers, other employees or agents, which may discourage lawsuits against us and our directors, officers, other employees or agents.
Our board of directors is authorized to issue and designate shares of our preferred stock without stockholder approval.
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We have never declared nor paid dividends on our capital stock.
−Removed: We currently intend to retain all of our future earnings, if any, to finance the growth and development, operation and expansion of our business and we do not anticipate declaring
−Removed: or paying any dividends in the foreseeable future.
+Added: We currently intend to retain all of our future earnings, if any, to finance the growth and development, operation and expansion of our business and we do not anticipate declaring or paying any dividends in the foreseeable future.
As a result, capital appreciation of our common stock, which may never occur, will be your sole source of gain on your investment for the foreseeable future.
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Consequently, if holders of our non-voting common stock exercise their option to make this conversion, this will have the effect of increasing the relative voting power of those prior holders of our non-voting common stock, and correspondingly decreasing the voting power of the holders of our common stock, which may limit your ability to influence corporate matters.
−Removed: Additionally, stockholders who hold, in the aggregate, more than 10% of our common stock and non-voting common stock, but 10% or less of our common stock, and are not otherwise an insider, may not be required to report changes in their ownership due to transactions in our non-voting common stock pursuant to Section 16(a) of the Exchange Act, and may not be subject to the short-swing profit provisions of Section 16(b) of the Exchange Act.
+Added: Additionally, stockholders who hold, in the aggregate, more than 10% of
+Added: our common stock and non-voting common stock, but 10% or less of our common stock, and are not otherwise an insider, may not be required to report changes in their ownership due to transactions in our non-voting common stock pursuant to Section 16(a) of the Exchange Act, and may not be subject to the short-swing profit provisions of Section 16(b) of the Exchange Act.
General Risk Factors
Unstable economic and market conditions may have serious adverse consequences on our business, financial condition and stock price.
−Removed: Global economic and business activities continue to face widespread uncertainties, and global credit and financial markets have experienced extreme volatility and disruptions in the past several years, including severely diminished liquidity and credit availability, rising inflation and monetary supply shifts, rising interest rates, labor shortages, declines in consumer confidence, declines in economic growth, increases in unemployment rates, recession risks and uncertainty about economic and geopolitical stability (for example, related to the ongoing conflicts in Ukraine and Israel and the surrounding areas).
+Added: Global economic and business activities continue to face widespread uncertainties, and global credit and financial markets have experienced extreme volatility and disruptions in the past several years, including severely diminished liquidity and credit availability, rising inflation and monetary supply shifts, rising interest rates, labor shortages, declines in consumer confidence, declines in economic growth, increases in unemployment rates, recession risks and uncertainty about economic and geopolitical stability (for example, related to the evolving U.S.
+Added: tariff landscape).
The extent of the impact of these conditions on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected timeframe, as well as that of third parties upon whom we rely, will depend on future developments which are uncertain and cannot be predicted.
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As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company.
−Removed: The Securities Act, the Exchange Act, Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection
−Removed: Act, the listing requirements of the Nasdaq Global Select Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
+Added: The Securities Act, the Exchange Act, Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Global Select Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
Our management and other personnel will continue to need to devote a substantial amount of time to these compliance initiatives.
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We are subject to the periodic reporting requirements of the Exchange Act.
−Removed: We must design our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
+Added: We have designed our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
Any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
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In addition, we do not have a formal risk management program for identifying and addressing risks to our business in other areas.
−Removed: We may be subject to securities litigation, which is expensive and could divert management attention.
−Removed: The market price of our common stock is likely to be volatile.
−Removed: The stock market in general, and Nasdaq and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies.
−Removed: In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation.
−Removed: We may be the target of this type of litigation in the future.
+Added: ACELYRIN has been named a defendant in a purported securities class action lawsuit, and we may be the target of other securities litigation in the future.
+Added: This could result in substantial damages or other expenses and could divert management’s time and attention from our business.
+Added: In connection with the ACELYRIN Merger, we assumed the liabilities of ACELYRIN, which include a purported federal securities class action lawsuit which was commenced against ACELYRIN in the United States District Court for the
+Added: Central District of California (the “Court”) on November 15, 2023.
+Added: On February 15, 2024, the Court appointed joint lead plaintiffs and lead counsel.
+Added: An amended complaint was filed on March 26, 2024, naming ACELYRIN and current and former officers and directors as defendants.
+Added: The complaint alleges that the defendants violated the Exchange Act and Securities Act in disclosures regarding the primary endpoint of HiSCR75 at week 16 not meeting statistical significance in ACELYRIN’s Phase 2b trial of izokibep in hidradenitis suppurativa.
+Added: The amended complaint seeks damages and an award of reasonable costs and expenses, as well as such other and further relief as the court may deem just and proper.
+Added: On May 3, 2024, the defendants filed their motion to dismiss the amended complaint, which was granted by the court, with leave to amend, in January 2026.
+Added: On February 5, 2026, the plaintiffs filed a second amended complaint which seeks damages and an award of reasonable costs and expenses, as well as such other and further relief as the court may deem just and proper.
+Added: On February 19, 2026, the defendants filed their motion to dismiss the second amended complaint, which remains pending.
+Added: This lawsuit is subject to inherent uncertainties, including its outcome.
+Added: We could be forced to expend significant resources and incur substantial legal fees and costs in the defense of this suit, and we may not prevail.
+Added: We have not established any reserve for any potential liability relating to this lawsuit.
+Added: It is possible that we could, in the future, incur judgments or enter into settlements of claims for monetary damages.
+Added: In addition, we may be the target of other securities litigation in the future.
Securities litigation (including the cost to defend against, and any potential adverse outcome resulting from any such proceeding) can be expensive and time-consuming, damage our reputation and divert our management’s attention from other business concerns, which could seriously harm our business.
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.