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Item 1A. Risk Factors

2025-02-27 compared with 2024-03-27 · 101 added, 128 removed, 914 unchanged (20% of the section changed)

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Future conditions might require us to make substantial write-downs in our assets, which would adversely affect our balance sheet and results of operations.

We review our long-lived tangible and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

We also test our indefinite-lived intangible assets for impairment at least annually in the fourth quarter, or when events or changes in the business environment indicate that the carrying value of the reporting unit may exceed its fair value.

The preliminary data from the HepTcell Phase 2 trial indicates that the results are not sufficient to warrant moving forward with this product candidate.

As a result, we recorded non-cash impairment charges of $12.4 million for an acquired In-Process Research and Development asset in connection with the discontinuation of our product candidate HepTcell.

This and other significant write-downs of our long-lived assets in the future could adversely affect our balance sheet and results of operations.

We review our long-lived tangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Significant write-downs of our long-lived assets in the future could adversely affect our balance sheet and results of operations.

We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed would force us to delay, limit, reduce or terminate our product development or commercialization efforts.

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We believe that we will continue to expend substantial resources for the foreseeable future developing our product candidates.

These expenditures will include costs associated with research and development, maintaining our intellectual property estate, potentially acquiring new technologies, obtaining regulatory approvals and manufacturing products, forming partnerships and strategic alliances, as well as marketing and selling products approved for sale, if any.

These expenditures will include costs associated with research and development, maintaining our intellectual

property estate, potentially acquiring new technologies, obtaining regulatory approvals and manufacturing products, forming partnerships and strategic alliances, as well as marketing and selling products approved for sale, if any.

In addition, other unanticipated costs may arise.

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While our public float is currently more than $75.0 million, we have been subject to this limitation in the past and we may be subject to it again in the future.

ability to utilize a Form S-3 registration statement for a primary offering of our securities is limited to one-third of our public float, we may conduct such an offering pursuant to an exemption from registration under the Securities Act or under a Form S-1 registration statement, and we would expect either of those alternatives to increase the cost of raising additional capital relative to utilizing a Form S-3 registration statement.

If our ability to utilize a Form S-3 registration statement for a primary offering of our securities is limited to one-third of our public float, we may conduct such an offering pursuant to an exemption from registration under the Securities Act or under a Form S-1 registration statement, and we would expect either of those alternatives to increase the cost of raising additional capital relative to utilizing a Form S-3 registration statement.

Our ability to timely raise sufficient additional capital also may be limited by NASDAQ’s stockholder approval requirements for transactions involving the issuance of our common stock or securities convertible into our common stock.

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If the results of our ongoing or future clinical trials are inconclusive with respect to the efficacy of our product candidates, if we do not meet our clinical endpoints with statistical significance or if there are safety concerns or adverse events associated with our product candidates, we may be prevented or delayed in obtaining marketing approval for our product candidates, or we may determine to suspend development of or abandon specific product candidates.

For example, we suspended the development of a Densigen platform-based product candidate, Flunisyn, which was being developed as a T-cell vaccine for the treatment of influenza, in favor of NasoVAX.

Clinical trials with this product candidate showed that it was generally well-tolerated and able to induce robust T-cell responses

against the viral sequences represented, but a comparison of the entire study population in later-stage clinical trials showed no statistical differences between the vaccinated and placebo groups for several measures of protection.

For example, in 2015, we suspended the development of a Densigen platform-based product candidate, Flunisyn, which was being developed as a T-cell vaccine for the treatment of influenza, in favor of NasoVAX.

Clinical trials with this product candidate showed that it was generally well-tolerated and able to induce robust T-cell responses against the viral sequences represented, but a comparison of the entire study population in later-stage clinical trials showed no statistical differences between the vaccinated and placebo groups for several measures of protection.

In addition, we can offer no assurances that we have correctly estimated the resources or personnel necessary to seek partners, co-developers or acquirers for our programs.

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● our third-party contractors (such as CROs, product manufacturers, or investigators) may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner;

● fraudulent activity by a clinical researcher, if discovered, could preclude the submission of clinical data prepared by that researcher, lead to the suspension or substantive scientific review or one or more of our marketing applications by regulatory agencies;

● fraudulent activity by a clinical researcher, if discovered, could preclude the submission of clinical data prepared by that researcher and/or lead to the suspension of substantive scientific review of one or more of our marketing applications by regulatory agencies;

● the cost of our clinical trials may be greater than we anticipate;

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Even if we enroll a sufficient number of eligible subjects to initiate our clinical trials, we may be unable to maintain participation of these subjects throughout the course of the clinical trial as required by the clinical trial protocol, in which event we may be unable to use the research results from those subjects.

For example, we may face difficulties in identifying patient populations with active disease to enroll in clinical trials of HepTcell in patients with chronic HBV.

Other clinical trials involving patients with active HBV have sometimes faced difficulties in working with these patient populations, which may include significant numbers of individuals with difficulties with treatment compliance, such as active drug users.

While we are developing strategies to address this issue, there is no guarantee that these strategies will prove successful.

If we have difficulty enrolling and maintaining the enrollment of a sufficient number of subjects to conduct our clinical trials as planned, we may need to delay, limit or terminate ongoing or planned clinical trials, any of which would have an adverse effect on our business.

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Because our product candidates involve novel therapeutic approaches, it may be difficult to predict the time and cost of product development.

For example, the Densigen platform involves synthetic peptide T-cell vaccines and the EuPort platform involves a novel peptide-based dual GLP-1/glucagon receptor agonist.

Unforeseen problems with our approaches to vaccines and therapies may prevent further development or approval of our product candidates.

Because of the novelty of our approaches, there may be unknown safety risks associated with the vaccines and therapies that we develop or the clinical endpoints that we establish in trials may not be generally accepted by regulatory agencies, which may therefore require us to perform large field studies to demonstrate efficacy.

Unforeseen problems with our approaches to therapies may prevent further development or approval of our product candidates.

Because of the novelty of our approaches, there may be unknown safety risks associated with the therapies that we develop or the clinical endpoints that we establish in trials may not be generally accepted by regulatory agencies, which may therefore require us to perform large field studies to demonstrate efficacy.

There can be no assurance that any development problems we may experience in the future will not cause significant delays or unanticipated costs, or that such development problems can be solved.

In addition, novel vaccine adjuvants, which are included in HepTcell, our product candidate based on the Densigen technology, may pose an increased safety risk to patients.

Adjuvants are compounds that are added to vaccine antigens to enhance the activation and improve immune response and efficacy of vaccines.

Development of vaccines with novel adjuvants requires evaluation in larger numbers of patients prior to approval than would be typical for therapeutic drugs.

Guidelines for evaluation of vaccines with novel adjuvants have been established by the FDA and other regulatory bodies and expert committees.

Any vaccine, because of the presence of an adjuvant, may have side effects considered to pose too great a risk to patients to warrant approval of the vaccine.

Traditionally, regulatory authorities have required extensive study of novel adjuvants because vaccines typically get administered to healthy populations, in particular infants, children and the elderly, rather than in people with disease.

As a result, although it is anticipated that HepTcell is intended

for the treatment of patients suffering from a disease, regulatory agencies such as the FDA may nevertheless require us to conduct extensive safety testing prior to approval to demonstrate a low risk of rare and severe adverse events caused by our product candidates that include novel vaccine adjuvants.

If approved, the novel mechanism of action of the vaccines may adversely affect physician and patient perception and acceptance of our products.

Public perception of vaccine safety issues, including adoption of novel vaccine mechanisms of action, may adversely influence willingness of subjects to participate in clinical trials, or if approved, to prescribe and receive novel vaccines.

For example, GSK pulled from the market an approved vaccine to prevent Lyme disease (Lymerix) in February 2002 after anecdotal evidence of joint pain resulted in subjects’ unwillingness to receive the vaccine.

The FDA found no evidence that the vaccine caused a safety risk;

however, GSK pulled the vaccine due to low sales resulting from the negative public perception associated with the reports on joint pain.

We rely, and expect to continue to rely, on third parties to conduct preclinical studies and clinical trials for our product candidates, and if they do not properly and successfully perform their obligations to us, we may not be able to obtain regulatory approvals for our product candidates.

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Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, clinical investigators and trial sites.

We cannot be certain that, upon inspection, such regulatory authorities will determine that any of our clinical trials complies with GCP requirements.

We cannot be certain

that, upon inspection, such regulatory authorities will determine that any of our clinical trials complies with GCP requirements.

Although we rely on third parties to conduct our clinical trials, we are responsible for ensuring that each of these clinical trials is conducted in accordance with applicable law, regulations and standards, including our general investigational plan and protocol.

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These companies also compete with us by having significantly greater research and marketing capabilities than we do and may also have products that have been approved or are in late stages of development and have collaborative arrangements in our target markets with leading companies and research institutions.

Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make the products that we develop obsolete.

Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel compounds or to in-

license novel compounds that could make the products that we develop obsolete.

We also face competition from smaller companies who, like us, rely on investors to fund research and development and compete for co-development and licensing opportunities from large and established pharmaceutical companies.

We face competition for pemvidutide, our dual GLP-1/glucagon dual agonist for the treatment of obesity and MASH.

For obesity, we face competition from companies such as Novo Nordisk, whose GLP-1 agonist, brand named Wegovy, or compound name semaglutide, was approved for weight loss in June 2021.

Other companies with potentially competitive products or product candidates, include Eli Lilly with GLP-1/glucose-dependent insulinotropic polypeptide receptor (“GIP”) dual agonists, including Zepbound, or compound name tirzepatide, approved for obesity in November 2023;

Boehringer Ingelheim, AstraZeneca, Innovent Biologics/Eli Lilly, and Roche through its acquisition of Carmot and D&D Pharma, with GLP-1/glucagon receptor dual agonists;

For obesity, we face competition from companies such as Novo Nordisk, whose GLP-1 agonist, brand named Wegovy, or compound name semaglutide, was approved for weight loss in June 2021 and Eli Lilly, whose GLP-1/glucose-dependent insulinotropic polypeptide receptor (“GIP”) dual agonist, brand named Zepbound, or compound name tirzepatide, was approved for obesity in November 2023.

Other companies with potentially competitive product candidates include Roche and Viking Therapeutics with GLP-1/GIP dual agonists;

Boehringer Ingelheim, AstraZeneca, D&D Pharmatech, and Innovent Biologics/Eli Lilly, with GLP-1/glucagon receptor dual agonists;

Hanmi Pharmaceutical and Eli Lilly with GLP-1/glucagon/GIP triple agonists;

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and Novo Nordisk with Amylin and Amylin-GLP-1 combination candidates.

Other companies have been developing oral candidates for the treatment of obesity with GLP-1 monoagonist or GLP-1/GIP dual receptor agonists including Pfizer, Lilly, Structure Therapeutics, AstraZeneca through its acquisition of Eccogene and Roche through its acquisition of Carmot.

In addition, Novo Nordisk has an FDA-approved oral GLP-1 therapy, Rybelsus or compound name semaglutide.

We face competition in MASH from companies such as Madrigal Pharmaceuticals, Terns, Aligos and Viking Therapeutics, which are developing orally administered, thyroid hormone receptor (“THR”) β-selective agonist;

Akero Therapeutics, 89Bio, Novo Nordisk and Boston Pharmaceuticals, which are developing fibroblast growth factor 21 (“FGF-21”) analogs;

Novo Nordisk, which is developing a GLP-1 agonist;

Merck/Hanmi Pharmaceutical, which is developing a GLP-1/glucagon dual agonist, Eli Lilly, which is developing a GLP-1/GIP dual agonist, Inventiva, which is developing a pan-peroxisome proliferator-activated receptor (“PPAR”) agonist;

Merck/Hanmi Pharmaceutical and Boehringer Ingelheim, which are developing GLP-1/glucagon dual agonists, Eli Lilly, which is developing a GLP-1/GIP dual agonist, Inventiva, which is developing a pan-peroxisome proliferator-activated receptor (“PPAR”) agonist;

Sagimet which is developing a fatty acid synthetase inhibitor, HEC Pharma which is developing a GLP-1/FGF-21dual agonist;

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As a result of all of these factors, our competitors may succeed in obtaining patent protection and/or FDA approval or discovering, developing and commercializing products before we do.

In addition, any new product that we develop that

competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and to be commercially successful.

In addition, any new product that we develop that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and to be commercially successful.

If we are not able to compete effectively against potential competitors, our business will not grow, and our financial condition and operations will suffer.

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We are highly dependent on members of our senior management, including Dr.

Vipin Garg, our President and Chief Executive Officer, Richard Eisenstadt, our Chief Financial Officer, Dr.

Vipin Garg, our President and Chief Executive Officer, Gregory Weaver, our Chief Financial Officer, Dr.

Scott Harris, our Chief Medical Officer, Dr.

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Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel.

We also experience competition for the hiring of scientific and clinical personnel from universities

and research institutions.

We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions.

In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy.

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Similar events in the future could impact our operations, including the potential interruption of our clinical trial activities, regulatory reviews and our supply chain.

For example, future outbreaks of infectious disease, such as COVID 19, and any future variants or subvariants that may emerge, may delay preclinical testing and enrollment in our clinical trials due to prioritization of laboratory and hospital resources toward the outbreak or other factors, and some patients may be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, which would delay our ability to conduct clinical trials or release clinical trial results and could delay our ability to obtain regulatory approval and commercialize our product candidates.

The spread of an infectious disease, including COVID 19, its subvariants and other SARS-CoV-2 viruses, may affect the operations of key governmental agencies, such as the FDA, which may delay the development of our product candidates or also result in the inability of our suppliers to deliver components or raw materials on a timely basis or at all.

For example, future outbreaks of infectious disease, and any future variants or subvariants that may emerge, may delay preclinical testing and enrollment in our clinical trials due to prioritization of laboratory and hospital resources toward the outbreak or other factors, and some patients may be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, which would delay our ability to conduct clinical trials or release clinical trial results and could delay our ability to obtain regulatory approval and commercialize our product candidates.

The spread of an infectious disease may affect the operations of key governmental agencies, such as the FDA, which may delay the development of our product candidates or also result in the inability of our suppliers to deliver components or raw materials on a timely basis or at all.

In addition, hospitals may reduce staffing and reduce or postpone certain treatments in response to the spread of an infectious disease.

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Global inflation rates have increased to levels not seen in several decades, which may result in increases in our operating costs, including our labor costs, constrained credit and liquidity, reduced government spending and volatility in financial markets which may adversely affect the Company’s business and financial condition.

Additionally, the upcoming 2024 U.S.

Presidential election could cause additional legal, political and economic uncertainty.

Additionally, the transition to a new administration under President Trump could cause additional legal, political and economic uncertainty.

The Federal Reserve and other international government agencies have raised, and may again raise, interest rates in response to concerns over inflation risk.

Increases in interest rates on credit and debt that would increase the cost of any borrowing that we may make from time to time and could impact our ability to access the capital markets.

Our acquisitions may expose us to unknown liabilities.

Because we have historically acquired all the outstanding shares of most of our acquired companies, our investment in those companies are or will be subject to all of their liabilities other than their respective debts which we paid or will pay at the time of the acquisitions.

If there are unknown liabilities or other obligations, our business could be materially affected.

We may also experience issues relating to internal controls over financial reporting, issues that could affect our ability to comply with the Sarbanes-Oxley Act, tax examinations by the IRS or state tax authorities, or issues that could affect our ability to comply with other applicable laws.

Tax laws could change.

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For net operating losses arising in taxable years beginning after December 31, 2017, we are permitted a net operating loss deduction that is limited to 80% of our taxable income in such year.

The net operating loss carryforwards are subject to a 382-limitation related to ownership changes.

The net operating loss

carryforwards are subject to a 382-limitation related to ownership changes.

Under Section 382 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its net operating losses (“NOLs”), to offset U.S.

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If the FDA or other regulatory authority approves any of our product candidates, the manufacturing processes, labeling, packaging, distribution, import, export, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements.

These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP, and compliance with cGMP and GCP for any clinical trials that we conduct post-approval.

Manufacturers and manufacturers’ facilities are also required to comply with extensive FDA and comparable foreign regulatory authority requirements, including ensuring that quality control and manufacturing procedures conform to cGMP regulations and applicable product tracking and tracing requirements.

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If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or not able to maintain regulatory compliance, we may lose any marketing approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.

Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent us or any of our existing or future collaboration partners from obtaining approvals for the commercialization of our current product candidates and any other product candidate we develop.

Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and we or any of our existing or future collaboration partners may not be able to obtain approvals for the commercialization of our current product candidates and any other product candidate we develop.

Any current or future product candidate we may develop and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, import, export and distribution, are subject to comprehensive regulation by the FDA and other regulatory authorities in the United States and by comparable authorities in other countries.

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In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit, or prevent marketing approval of a product candidate.

Any marketing approval we ultimately

obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.

Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.

If we experience delays in obtaining approval or if we fail to obtain approval of any current or future product candidates we may develop, the commercial prospects for those product candidates may be harmed, and our ability to generate revenues will be materially impaired.

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We may also be subject to competition from biosimilar products in the EU.

To date, many biosimilar products have been authorized by the European Commission, after application at EMA for a centralized marketing authorization.

To date, many biosimilar products have been authorized by the European Commission, after application to the EMA for a centralized marketing authorization.

As in the United States the regulatory approval pathway for biosimilar products in the EU is abbreviated.

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The pathway is more complex than the abridged procedure that may be followed to obtain authorization of a generic version of a non-biological product, but it would still allow the biosimilar product to be brought to market more quickly and less expensively than our original product.

That said, in the EU, applications for marketing authorizations in relation to biosimilar products are subject to the same data and market exclusivity rules that apply to generic non-biologic products so no biosimilar product can be approved or placed on the market during the period such exclusivity applies to our product.

Marketing authorization of a biosimilar product in the EU does not guarantee that the biosimilar product may be substituted for the reference product.

Interchangeability of a biosimilar product with the reference product is not assessed by the EMA but this determination is left to each of the member states.

We cannot know at this stage the extent to which any biosimilar product would be interchangeable with our reference product, and this may vary between member states.

That said, in the EU, applications for marketing authorizations in relation to biosimilar products are subject to the same data and market exclusivity rules that apply to generic non-biologic products, so no biosimilar product can reference our original product data in order to be approved or placed on the market during the period such exclusivity applies to our product.

The EMA and Heads of Medicines Agencies have published a joint statement emphasizing that biosimilars authorized in the EU are considered, from a scientific perspective, to be interchangeable with the reference product and other biosimilars of the same reference product.

However, decisions on how to implement interchangeability are managed by individual member states of the EU.

Any biosimilar product authorized in the EU may therefore be treated as interchangeable with our reference product, although this may vary between member states of the EU.

We may pursue pediatric exclusivity for one or more of our product candidates but may not succeed in obtaining it.

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Where an application for a marketing authorization is submitted in respect of a medicinal product designated as an orphan medicinal product and that application contains the results of studies conducted in compliance with an approved PIP, market exclusivity for that orphan medicinal product may be extended by two years.

Where an application for a marketing authorization is submitted in respect of a medicinal product that is not designated as an orphan medicinal product and that application contains the results of studies conducted in compliance with an approved PIP, it may be possible to obtain a six month extension of a supplementary protection certificate extending patent protection for a medicinal product.

Orphan drug designation presents yet another regulatory incentive that may be available to us and our competitors.

The FDA may grant orphan drug designation to products intended to treat a “rare disease or condition” that affects fewer than 200,000 individuals in the United States, or affects more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will be recovered from sales in the United States of such drug.

Orphan drug designation must be requested before submitting an application for marketing approval.

Orphan drug designation can provide opportunities for grant funding towards clinical trial costs, tax advantages and FDA user fee exemptions.

In addition, if a product that has an orphan drug designation subsequently receives FDA approval for the indication for which it has such designation, the

product may be entitled to orphan drug exclusivity, which means the FDA would not approve any other application to market the same drug for a period of seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity.

In the European Union, orphan drug status offers similar but not identical benefits as those in the United States.

We may pursue orphan drug designation for one or more of our product candidates but obtaining such designation cannot be assured.

Even if we obtain orphan drug exclusivity, competitors may receive approval of either a different product for the same indication or the same product for a different indication but that could be used off-label in the orphan indication.

Additionally, should a competitor receive orphan drug designation for a product to treat the same disease and same indication as one of our product candidates, there is a risk that the FDA or a comparable European regulatory body could delay approving our product candidate.

Where an application for a marketing authorization is submitted in respect of a medicinal product that is not designated as an orphan medicinal product and that application contains the

results of studies conducted in compliance with an approved PIP, it may be possible to obtain a six month extension of a supplementary protection certificate extending patent protection for a medicinal product.

Risks Related to Our Intellectual Property

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We cannot be certain that our licensors were the first to satisfy the requirements necessary to secure patent rights relating to any particular invention.

Furthermore, if third parties have filed such patent applications, an interference proceeding in the United States can be initiated by such third party, or by the USPTO itself, to determine who was the first to invent any of the subject matter covered by the patent claims of our patent applications.

Furthermore, if third parties have filed such patent applications, there are pre-grant and post-grant proceedings before the USPTO whereby a third party can challenge a patent grant.

Even if patents do successfully issue and even if such patents cover our product candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed or invalidated.

Any successful challenge to our patents or patent applications, or to any other patents or patent applications owned by or

licensed to us, could deprive us of the rights necessary to prevent competition from third parties, which may impair the commercial success of any product candidate that we may develop.

Any successful challenge to our patents or patent applications, or to any other patents or patent applications owned by or licensed to us, could deprive us of the rights necessary to prevent competition from third parties, which may impair the commercial success of any product candidate that we may develop.

There is no assurance that all potentially relevant prior art relating to our patents and patent applications or those of our licensors has been found, and prior art that we have not identified could be used by a third party to invalidate a patent or prevent a patent from issuing from a pending patent application.

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Even if we were able to obtain a license, the rights may be non-exclusive, which could result in our competitors gaining access to the same intellectual property.

Ultimately, we could be forced to redesign an infringing product, prevented from commercializing a product, or

forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms.

Ultimately, we could be forced to redesign an infringing product, prevented from commercializing a product, or forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms.

Defending against claims of patent infringement or misappropriation of trade secrets could be costly and time consuming, regardless of the outcome.

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We may face a claim of misappropriation if a third party believes that we inappropriately obtained and used trade secrets of such third party.

If we are found to have misappropriated a third party’s trade secrets, we may be prevented from further using such trade secrets, limiting our ability to develop our product candidates, and we may be required to pay damages.

If we are found to have misappropriated a third party’s trade secrets, we may be prevented from

further using such trade secrets, limiting our ability to develop our product candidates, and we may be required to pay damages.

During the course of any patent or other intellectual property litigation, there could be public announcements of the results of hearings, rulings on motions, and other interim proceedings in the litigation.

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We are a party to a number of license agreements that are important to our business, and we may enter into additional license agreements in the future.

Certain of our in-licensed intellectual property covers, or may cover, EuPort technology, and certain of our product candidates including pemvidutide.

Certain of our in-licensed intellectual property covers, or may cover, certain of our product candidates including pemvidutide.

Our existing license agreements impose, and we expect that future license agreements will impose, various diligence, milestone payment, royalty and other of our obligations.

If there is any conflict, dispute, disagreement or issue of non-performance between the Company and our licensing partners regarding our rights or obligations under the license agreements, including any such conflict, dispute or disagreement arising from our failure to satisfy payment obligations under any such agreement, we may owe damages, our licensor may have a right to terminate the affected license, and our ability to utilize the affected intellectual property in

our product discovery and development efforts and our ability to enter into collaboration or marketing agreements for an affected product candidate may be adversely affected.

We may need to license certain intellectual property from third parties, and such licenses may not be available on commercially reasonable terms or at all.

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We rely on, and expect to continue to rely on, third parties to manufacture our product candidates and related materials for our products, if approved, as well as for our clinical trials and preclinical studies, and these third parties may not perform satisfactorily.

We do not have any manufacturing facilities or personnel, and we rely on, and expect to continue to rely on, third-party manufacturers and suppliers to manufacture and supply vaccines, drug substance and drug product for our preclinical studies and clinical trials, and on related materials, such as HBV products and pemvidutide.

We rely on a small number of third-party manufacturers and suppliers to manufacture and supply bulk drug substance and drug product and fill finished vaccines for our initial clinical trials.

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Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively.

To that end, we must be able to manage our development efforts and clinical trials effectively and hire, train and integrate

additional management, administrative and, if necessary, sales and marketing personnel.

To that end, we must be able to manage our development efforts and clinical trials effectively and hire, train and integrate additional management, administrative and, if necessary, sales and marketing personnel.

We may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successfully growing our business.

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Even if we are successful in our efforts to establish strategic partnerships, the terms that we agree upon may not be favorable to the Company, and we may not be able to maintain such strategic partnerships if, for example, development or approval of a product is delayed or sales of an approved product are disappointing.

Any delay in entering into strategic partnership agreements related to our product candidates could delay the development and commercialization of our product candidates and reduce their competitiveness even if they reach the market.

Any delay in entering into strategic partnership agreements related to

our product candidates could delay the development and commercialization of our product candidates and reduce their competitiveness even if they reach the market.

In addition, any future partnerships we may enter into pose a number of risks, including that our partners may breach their agreements with the Company, and we may not be able to adequately protect our rights under these agreements.

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Our systems, and those of our third-party providers, are potentially vulnerable to data security breaches or cyberattack, whether by employees or others, which may expose sensitive data to unauthorized persons.

the public exposure of personal information (including sensitive personal medical information) of clinical trial participants, our employees and others, or adversely impact the conduct of scientific research and clinical trials, including the submission of research results to support marketing authorizations.

A data security breach or compromise could lead to the loss of trade secrets or other intellectual property, the value of which may be contingent upon maintaining our confidentiality, or could lead to the public exposure of personal information (including sensitive personal medical information) of clinical trial participants, our employees and others, or adversely impact the conduct of scientific research and clinical trials, including the submission of research results to support marketing authorizations.

This could require us to expend significant efforts and resources or incur significant expense to eliminate these problems and address related security concerns.

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In some countries, particularly member states of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control.

In these countries, pricing negotiations with governmental authorities can take considerable time after receipt of marketing approval for a

In these countries, pricing negotiations with governmental authorities can take considerable time after receipt of marketing approval for a product.

In addition, there can be considerable pressure by governments and other stakeholders on coverage, prices and reimbursement levels, including as part of cost containment measures.

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There can be no assurance that our product candidates, if approved, will be considered cost-effective by third-party payers, that an adequate level of reimbursement will be available or that the third-party payers’ reimbursement policies will not adversely affect our ability to sell our products profitably.

If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.

reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.

We are subject to multiple and substantial federal and state health care and other laws, and the complexity of our regulatory compliance obligations is likely to increase in the event our product candidates are commercialized.

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● the FCPA, which regulates certain financial relationships with foreign government officials (which could include, for example, certain medical professionals), and anti-bribery laws and related laws, and laws pertaining to the accuracy of our internal books and records, which have been the focus of increasing enforcement activity in recent years;

to, research, distribution, sales-and-marketing arrangements as well as submitting claims involving health care items or services reimbursed by any third-party payer, including commercial insurers;

● state law equivalents of each of the above federal laws, such as anti-kickback, false claims, consumer protection and unfair competition laws, which may apply to our business practices, including but not limited to, research, distribution, sales-and-marketing arrangements as well as submitting claims involving health care items or services reimbursed by any third-party payer, including commercial insurers;

state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government that otherwise restricts payments that may be made to health care providers;

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The Health Care Reform Law established and provided significant funding for a new Patient-Centered Outcomes Research Institute to coordinate and fund comparative effectiveness research.

While the stated intent of comparative

effectiveness research is to develop information to guide providers to the most efficacious therapies, outcomes of comparative effectiveness research could influence the reimbursement or coverage for therapies that are determined to be less cost effective than others.

While the stated intent of comparative effectiveness research is to develop information to guide providers to the most efficacious therapies, outcomes of comparative effectiveness research could influence the reimbursement or coverage for therapies that are determined to be less cost effective than others.

Should any of our products be approved for sale, but then determined to be less cost effective than alternative therapies, the levels of reimbursement for these products, or the willingness to reimburse at all, could be impacted, which could materially impact our financial results.

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For example, the Tax Cuts and Jobs Act of 2017, eliminated the tax-based payment for individuals who fail to maintain minimum essential coverage under section 5000A of the Internal Revenue Code of 1986, as amended, commonly referred to as the “individual mandate,” effective January 1, 2019.

Further, the Bipartisan Budget Act of 2018 among other things, amended the Medicare statute, effective January 1, 2019, to reduce the coverage gap in most Medicare prescription drug plans, commonly known as the “donut hole,” by raising the manufacturer discount under the Medicare Part D coverage gap discount program from 50% to 70%.

discount program from 50% to 70%.

Additional legislative changes, regulatory changes and judicial challenges related to the Health Care Reform Law remain possible.

It is unclear how the Health Care Reform Law and its implementation, as well as efforts to repeal, replace or otherwise modify, or invalidate, the Health Care Reform Law, or portions thereof, will affect our business.

We cannot predict what affect further changes to the Health Care Reform Law would have on our business, especially including under the Biden administration.

We cannot predict what affect further changes to the Health Care Reform Law would have on our business, especially including under the Trump administration.

In addition, other legislative changes have been proposed and adopted since the Health Care Reform Law was enacted.

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For example, on July 9, 2021, President Biden issued an executive order directing the FDA to, among other things, continue to clarify and improve the approval framework for biosimilars, including the standards for interchangeability of biological products, facilitate the development and approval of biosimilar and interchangeable products, clarify existing requirements and procedures related to the review and submission of BLAs, and identify and address any efforts to impede biosimilar competition.

We cannot predict further changes under the Trump administration.

Additionally, there has been increasing legislative and enforcement interest in the United States with respect to drug pricing practices.

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If a product receives multiple orphan designations or has multiple approved indications, it may not qualify for the orphan drug exemption.

The implementation of the IRA is currently subject to ongoing litigation challenging the constitutionality of

the IRA’s Medicare drug price negotiation program.

The implementation of the IRA is currently subject to ongoing litigation challenging the constitutionality of the IRA’s Medicare drug price negotiation program.

The effects of the IRA on our business and the healthcare industry in general is not yet known.

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There have been several Congressional inquiries and proposed and enacted federal and state legislation and regulatory initiatives designed to, among other things, bring more transparency to product pricing, evaluate the relationship between pricing and manufacturer patient programs, and reform government healthcare program reimbursement methodologies for drug products.

It is possible that the Health Care Reform Law, as currently enacted or may be amended or otherwise modified in the future, as well as other health care reform measures that may be adopted in the future, may result in additional reductions in Medicare payment and other health care financing, more rigorous coverage criteria, and new payment methodologies and in additional downward pressure on coverage and payment and the price that we receive for any approved product.

approved product.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from commercial payers.

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● the level of taxes that we are required to pay.

Changes in funding for the FDA and other domestic and foreign government authorities could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.

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

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

In addition, government funding of other government authorities that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

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

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

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

Our business depends upon the ability of the FDA to accept and review our potential regulatory filings.

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

Further, future shutdowns of other government authorities, such as the U.S.

Securities and Exchange Commission, may also impact our business through review of our public filings and our ability to access the public markets.

Certain business practices associated with the commercialization of pharmaceutical products are subject to scrutiny by regulatory authorities, as well as to lawsuits brought by private citizens under federal and state laws.

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Moreover, liability under the Anti-Kickback Statute may be established without proving actual knowledge of the law or specific intent to violate.

There are statutory exceptions and regulatory safe harbors that protect certain arrangements from prosecution or administrative sanctions, but the exceptions and safe harbors are drawn narrowly.

are statutory exceptions and regulatory safe harbors that protect certain arrangements from prosecution or administrative sanctions, but the exceptions and safe harbors are drawn narrowly.

The fact that an arrangement does not fall within a safe harbor does not necessarily render the conduct illegal under the Anti-Kickback Statute, but the arrangement may be subject to scrutiny based on the facts and circumstances.

Practices that involve remuneration to those who prescribe, purchase, or recommend pharmaceutical products, including certain discounts, or engaging such individuals as consultants, advisors and speakers, may be subject to scrutiny if they do not fit squarely within an exception or safe harbor.

Moreover, there are

no safe harbors for many common practices, such as educational and research grants, charitable donations, product support and patient assistance programs.

Moreover, there are no safe harbors for many common practices, such as educational and research grants, charitable donations, product support and patient assistance programs.

Violations of the Anti-Kickback Statute may be punished by civil and criminal penalties, damages, fines, or exclusion from participation in federal health care programs like Medicare and Medicaid.

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Some states require the posting of information relating to clinical studies and their outcomes.

Other states and cities require identification or licensing of sales representatives.

Other states and cities require identification or

licensing of sales representatives.

In addition, several states require pharmaceutical companies to implement compliance programs or marketing codes of conduct.

● The FD&C Act and comparable foreign laws, in addition to prohibiting the promotion of the safety or effectiveness of product candidates not yet approved for commercialization, an act known as pre-approval promotion, also generally restrict companies from promoting approved products for indications other than those indications for which a product is approved, which is also referred to as off-label use.

This means, for example, that we may not make claims about the use of our products, should they be approved for sale,

outside of their approved indications, and we may not proactively discuss or provide information regarding any of their off-label uses subject to very specific and limited exceptions.

This means, for example, that we may not make claims about the use of our products, should they be approved for sale, outside of their approved indications, and we may not proactively discuss or provide information regarding any of their off-label uses subject to very specific and limited exceptions.

If we or our business partners fail to comply with applicable laws and regulations governing off-label uses of our product candidates, if approved, then we could be subject to administrative or judicially imposed sanctions, including, but not limited to:

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These laws are continually evolving and subject to varying interpretations, which requires us to periodically update policies and procedures to maintain compliance.

In the U.S., we may be subject to data privacy and security laws and regulations by both the federal government and the states in which we conduct our business, including, for example, state data breach notification laws, state health information and/or genetic privacy laws and federal and state consumer protection laws (e.g., Section 5 of the FTC Act and the California Consumer Privacy Act (“CCPA”)), which, govern the collection, use, disclosure, and protection of health-related and other personal information.

In the U.S., we may be subject to data privacy and security laws and regulations by both the federal government and the states in which we conduct our business, including, for example, state data breach notification laws, state health information and/or genetic privacy laws and federal and state consumer protection laws (including Section 5 of the FTC Act and the California Consumer Privacy Act (“CCPA”)), which govern the collection, use, disclosure, and protection of health-related and other personal information.

Many of these laws and regulations differ from each other in significant ways and the impact of such laws may vary, thus potentially complicating compliance efforts.

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The CCPA, for example, establishes data privacy rights for individuals located in California and imposes certain requirements for how businesses can collect and use personal data about them.

The California Privacy Rights Act, or CPRA, significantly modified the CCPA and imposes additional obligations on covered businesses, including by expanding consumers’ rights with respect to their personal data and establishes a state agency vested with the authority to enforce the CCPA.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.

Other states, such as Virginia, Colorado, Utah Connecticut, Texas, Oregon, Tennessee, Delaware and Iowa have recently passed or enacted similar, comprehensive privacy and data protection legislation.

Many state privacy and data protection laws differ from each other in significant ways, and it is not yet fully clear how such laws will be enforced and interpreted.

The obligations to comply with the CCPA and other evolving legislation may require us, among other things, to update our notices and develop new processes internally and with our partners.

The California Privacy Rights Act, or CPRA, significantly modified the CCPA and imposed additional obligations on covered businesses, including by expanding consumers’ rights with respect to their personal data and established a state agency vested with the authority to enforce the CCPA.

The CCPA provides for civil penalties for violations, as well as a private right of action for certain types of data breaches which may lead to an increased risk of data breach litigation and associated penalties.

Other states, including Virginia, Colorado, Utah, Connecticut, Texas, Oregon, Tennessee, Delaware, Iowa, have recently passed or enacted similarly comprehensive privacy and data protection legislation which differ from each other in significant ways.

It is not yet fully clear how such laws will be enforced and interpreted.

The obligations to comply with the CCPA and other U.S.

state privacy laws may require us, among other things, to regularly update our notices and develop new processes internally and with our partners.

In Europe, the collection and use of personal information, including health data, is governed by the EU’s General Data Protection Regulation and the United Kingdom’s implementation of the same (collectively, the “GDPR”).

The GDPR is wide-ranging in scope and imposes numerous requirements on covered companies, including requirements related to individual notice regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors.

The GDPR also imposes strict rules on the transfer of personal data to countries outside the EU, including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR.

The GDPR also imposes strict rules on the transfer of personal data to countries outside the EU, including the U.S.

and permits data protection authorities to impose large penalties for violations of the GDPR.

Noncompliance can result in penalties of up to the greater of EUR 20 million, or 4% of annual global company revenues.

The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.

While we expect to have substantially compliant programs and controls in place to comply with the GDPR requirements , our compliance with the regulation is likely to impose additional costs on us and we cannot predict whether the interpretations of the requirements, or changes in our practices in response to new requirements or interpretations of the requirements could have a material adverse effect on our business.

There is a risk that we may be subject to fines and penalties, litigation, and reputational harm in connection with our European activities.

Any investigation or charges by European data protection authorities could have a negative effect on our existing business and on our ability to attract and retain new clients or pharmaceutical collaboration partners.

While we expect to have substantially compliant programs and controls in place to comply with GDPR requirements, our efforts toward maintaining compliance with the regulation will likely impose additional costs on us and we cannot accurately predict whether the interpretations of the requirements, or changes in our practices will result in a material adverse effect on our business.

We may be subject to fines and penalties, litigation, and reputational harm in connection with any complaints, investigations or charges by European data protection authorities or data subjects which could have a negative effect on our existing business and on our ability to attract and retain new clients or pharmaceutical collaboration partners.

We may also experience hesitancy, reluctance, or refusal by European or multi-national clients or pharmaceutical partners to do business with us due to the potential risk of exposure as a result of the current and future data protection obligations imposed on them by certain data protection authorities in interpretation of European privacy and data protection laws, including the GDPR.

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and the EEA and vice versa as a result of adequacy decisions and regulations, to enable the transfer of personal data outside of the EEA or the UK, adequate safeguards must be implemented in compliance with the GDPR.

On June 4, 2021, the European Commission issued new forms of standard contractual clauses (“SCCs”) for data transfers from controllers or processors in the EEA (or otherwise subject to the GDPR) to controllers or processors established outside the EEA (and not subject to the GDPR).

As of December 27, 2022 the new SCCs replace the SCCs that were adopted previously under the EU Data Protection Directive.

The UK is not subject to the European Commission’s new SCCs, and instead it has published the UK International Data Transfer Agreement (“IDTA”) and the International Data Transfer Addendum to the new SCCs (“Addendum”), which enable transfers from the UK.

For new transfers, the IDTA (or SCCs and Addendum) must be in place, and such measures must be in place for all existing transfers from the UK from March 21, 2024.

Companies relying on SCCs or the IDTA to govern transfers of personal data to third countries will also need to assess whether the data importer can ensure sufficient guarantees for safeguarding the personal data under GDPR, including an analysis of the laws in the recipient’s country.

When conducting restricted data transfers, including to the U.S., under the EU GDPR and UK GDPR (i.e., the UK’s post-Brexit transposition of the GDPR), we must ensure these safeguards are in place.

The European Commission issued updates to its forms of standard contractual clauses (“SCCs”) for data transfers from controllers or processors in the EEA (or otherwise subject to the GDPR) to controllers or processors established outside the EEA (and not subject to the GDPR).

The UK is not subject to the European Commission’s SCCs, and instead adopted the UK International Data Transfer Agreement (“IDTA”) and the International Data Transfer Addendum to the SCCs (“Addendum”), which enable transfers from the UK.

For new transfers, the IDTA (or SCCs and Addendum) must be in place for all new and existing transfers from the U.K.

as of March 21, 2024.

Companies relying on SCCs or the IDTA to govern transfers of personal data to third countries will also need to assess

whether the data importer can ensure sufficient guarantees for safeguarding the personal data under GDPR, including an analysis of the laws in the recipient’s country.

When conducting restricted data transfers, including to the U.S., under the GDPR in the EEA and the U.K., we must ensure these safeguards are in place.

We are subject to extensive government regulatory compliance and ethics oversight, and we will need to develop more extensive compliance and ethics policies in the future.

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We cannot eliminate the risk of accidental injury or contamination from the use, manufacture, distribution, storage, handling, treatment or disposal of hazardous materials.

In the event of contamination

or injury, or failure to comply with environmental, occupational health and safety and export control laws and regulations, we could be held liable for any resulting damages and any such liability could exceed our assets and resources.

In the event of contamination or injury, or failure to comply with environmental, occupational health and safety and export control laws and regulations, we could be held liable for any resulting damages and any such liability could exceed our assets and resources.

In addition, we may be required to pay damages or civil judgments related to third-party claims, for which we are uninsured, including those relating to personal injury (including exposure to hazardous chemicals and biological materials), product quality issues, property damage or contribution to remedial obligations.

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Our stock price has been and, in the future, may be subject to substantial volatility.

For example, on September 13, 2018 we amended our Amended and Restated Certificate of Incorporation to effect a reverse stock split at a ratio 1-for-30 (the “Reverse Stock Split”).

The Reverse Stock Split was effective on September 13, 2018, and our shares of common stock commenced trading on NASDAQ on a post-Reverse Stock Split basis on September 14, 2018.

The volatility of our stock price has increased since we effected the Reverse Stock Split.

Since our common stock began trading on a post-reverse stock split basis on September 14, 2018 and through December 31, 2024, our stock has traded in a range with a low of $1.51 and a high of $36.25.

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In the past, stockholders have initiated class action lawsuits against pharmaceutical and biotechnology companies following periods of volatility in the market prices of these companies’ stock.

Such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources from our business.

For example, in 2024, purported stockholders filed complaints in federal court alleging, among other things, securities laws violations, breaches of fiduciary duty, and other claims relating to alleged false and misleading statements and omissions of material fact.

Any such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources from our business.

Future sales and issuances of our common stock or rights to purchase common stock could result in substantial dilution to the percentage ownership of our stockholders.

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The issuance or even the expected issuance of a large number of shares of our common stock upon purchase, conversion or exercise of the securities described above could depress the market price of our stock and the issuance of such shares will dilute the stock ownership of our existing stockholders.

Shares that we may issue in the future in connection with certain capital-raising transactions and shares available for future issuance upon exercise of warrants and options could dilute our stockholders and depress the market price of our common stock and result in the adjustment of the conversion terms of our existing securities.

We can give no assurances that we will ever again pay dividends.

Shares that we may issue in the future in

connection with certain capital-raising transactions and shares available for future issuance upon exercise of warrants and options could dilute our stockholders and depress the market price of our common stock and result in the adjustment of the conversion terms of our existing securities.

We can give no assurances that we will ever pay dividends.

Altimmune has never paid any dividends on our common stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors