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Item 1A. Risk Factors

2025-03-25 compared with 2024-03-29 · 317 added, 354 removed, 918 unchanged (42% of the section changed)

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Risk Factors Summary

Investing in shares of our common stock involves a high degree of risk because our business is subject to numerous risks and uncertainties, as fully described below.

Investing in shares of our common stock involves a high degree of risk because our business is subject to numerous risks and uncertainties, as more fully described below.

The principal factors and uncertainties that make investing in shares of our common stock risky include, among others:

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We expect to incur losses over the next several years and may never achieve or maintain profitability.

• We may not realize the expected benefits from our business restructuring and workforce reduction and we may incur additional costs implementing it or other difficulties.

• We require substantial additional funding to meet our financial needs and to pursue our business objectives.

If we are unable to raise capital when needed, we could be forced to delay, reduce, or altogether cease our current and future product development programs or future commercialization efforts.

• We depend to a large degree on the success of epetraborole.

If we do not obtain regulatory approval for and successfully commercialize epetraborole or any of our other product candidates, or if we experience significant delays in doing so, we may never become profitable.

• If clinical trials of epetraborole or any other product candidate that we may advance to clinical trials fail to demonstrate safety, tolerability and/or efficacy to the satisfaction of the U.S.

Food and Drug Administration (“FDA”), Japan's Pharmaceuticals and Medical Devices Agency (“PMDA”) or other comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of epetraborole or any other product candidate.

• The data we have collected and continue to collect in our Phase 1 programs, from our Phase 2/3 clinical trial, and from future trials in NTM, may not support continued clinical investigation due to insufficient clinical or microbiological responses or occurrence of adverse safety events or may lead to adjustments in trial design, rendering it not feasible to conduct or not acceptable to the FDA or to us.

• If we experience further delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

• We rely on single-sourced third parties to conduct the preclinical and nonclinical studies, clinical trials and manufacture of our clinical trial material for epetraborole and our other product candidates, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such studies, trials and manufacturing services or failing to comply with applicable regulatory requirements.

• Even if epetraborole or any of our other product candidates receives regulatory approval, they may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.

If we are unable to establish sales, marketing and distribution capabilities for epetraborole or our other product candidates, or enter into sales, marketing and distribution agreements with third parties, we may not be successful in commercializing our product candidates, if and when they are approved.

• If we do not obtain regulatory approval for and successfully commercialize any of our product candidates, or if we experience significant delays in doing so, we may never become profitable.

• If clinical trials of our product candidates fail to demonstrate safety and/or efficacy of such product candidates to the satisfaction of the FDA or other comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

• If we experience delays or difficulties in the enrollment of patients in clinical trials, our clinical development activities and receipt of necessary regulatory approvals could be delayed or prevented.

• We rely on third parties to conduct our preclinical and nonclinical studies and clinical trials.

If these third parties do not successfully carry out their contractual duties, comply with applicable regulatory requirements or meet expected deadlines, our development programs and our ability to seek or obtain regulatory approval for or commercialize our product candidates may be delayed.

• Even if any of our product candidates receive regulatory approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors, and others in the medical community necessary for commercial success.

• We face substantial competition, which may result in others discovering, developing, or commercializing products before or more successfully than we do.

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• We have identified material weaknesses in our internal control over financial reporting.

If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business.

• Our rights to develop and commercialize our technology, epetraborole and our other product candidates are subject, in large part, to the terms and conditions of licenses granted to us by others, including Anacor.

Due to our failure to maintain effective internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business.

• Our rights to develop and commercialize our technology and our other product candidates are subject, in large part, to the terms and conditions of licenses granted to us by others, such as Anacor Pharmaceuticals, Inc.

(a wholly owned subsidiary of Pfizer) (“Anacor”).

If we fail to comply with our obligations in the agreements under which we in-license or acquire development or commercialization rights to products, technology, or data from third parties, we could lose such rights that are important to our business.

• If we are unable to obtain and maintain patent and other intellectual property protection for our technology, or for epetraborole or our other product candidates, or if the scope of the patent and other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and product candidates may be impaired.

• If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize epetraborole or our other product candidates, and our ability to generate revenue will be materially impaired.

• Future legislation, and/or regulations and policies adopted by the FDA, the PMDA or comparable regulatory authorities, may increase the time and cost required for us to conduct and complete clinical trials of epetraborole or other product candidates.

• The trading price of our common stock may be volatile.

• If we are unable to obtain and maintain patent and other intellectual property protection for our technology, or for our product candidates, or if the scope of the patent and other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and product candidates may be impaired.

• If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize our product candidates, and our ability to generate revenue will be materially impaired.

• The trading price of our common stock has been and may continue to be volatile.

Risks Related to Our Financial Position and Capital Needs

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In addition, we have limited experience as a company and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the biopharmaceutical industry.

Our initial product candidate, epetraborole, is currently in clinical development.

Our net loss was $64.7 million and $41.0 million for the year ended December 31, 2023 and 2022, respectively.

On August 8, 2024, we announced topline results from the Phase 2 part of the EBO-301 Phase 2/3 study evaluating epetraborole on top of optimized background regimen (“OBR”) in treatment-refractory MAC lung disease.

The Phase 2 part of the study met its primary objective of demonstrating the potential validation of a novel patient-reported outcome (PRO) tool and a higher PRO-based clinical response rate in the epetraborole + OBR arm (39.5%) vs.

placebo + OBR (25.0%;

treatment difference 13.9%, p=0.19).

Sputum culture conversion at Month 6, a key secondary endpoint, was similar between treatment arms (13.2% in epetraborole + OBR vs.

10.0% placebo + OBR;

treatment difference 3.4%, p=0.64).

Epetraborole was generally well tolerated in the trial.

Our net loss was $51.3 million and $64.7 million for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, we had an accumulated deficit of $205.8 million.

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We anticipate that our expenses will increase substantially as we:

• continue our ongoing and planned preclinical, nonclinical and clinical development of epetraborole and our other product candidates;

• continue our ongoing and planned preclinical, nonclinical, and clinical development of our product candidates;

• initiate preclinical and nonclinical studies and clinical trials for product candidates that we may pursue in the future;

• seek to discover and develop future product candidates;

• seek regulatory approvals for epetraborole and any of our other product candidates that successfully complete clinical trials;

• ultimately establish sales, marketing and distribution infrastructure and scale up external manufacturing capabilities as we move into later-stage clinical trials for epetraborole and look to commercialize any product candidate for which we may obtain regulatory approval and intend to commercialize on our own;

• seek regulatory approvals for any of our product candidates that successfully complete clinical trials;

• ultimately establish sales, marketing, and distribution infrastructure and scale up external manufacturing capabilities if we move into later-stage clinical trials for, and seek to commercialize, any product candidate for which we may obtain regulatory approval and intend to commercialize on our own;

• maintain, expand, and protect our intellectual property portfolio;

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To become and remain profitable, we must succeed in developing and eventually commercializing drugs that generate significant revenue.

This will require us to be successful in a range of challenging activities, including completing preclinical and nonclinical studies and clinical trials of epetraborole and any other product candidates, obtaining regulatory approval, manufacturing, marketing and selling any products for which we may obtain regulatory approval, as well as discovering and developing additional product candidates.

This will require us to be successful in a range of challenging activities, including completing preclinical and nonclinical studies and clinical trials of our product candidates, obtaining regulatory approval, manufacturing, marketing, and selling any products for which we may obtain regulatory approval, as well as discovering and developing additional product candidates.

We are only in the preliminary stages of most of these activities.

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Because of the numerous risks and uncertainties associated with drug development, we are unable to accurately predict the timing or amount of expenses or when, or if, we will be able to achieve profitability.

If we are required by regulatory authorities to perform studies in addition to those currently expected, or if there are further delays in the initiation and completion of our clinical trials or the development of epetraborole and any of our other product candidates, our expenses could increase.

If we are required by regulatory authorities to perform studies in addition to those currently expected, or if there are further delays in the initiation and completion of our clinical trials or the development of any of our product candidates, our expenses could increase.

Even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

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We have and may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving our business objectives.

We will need to transition successfully at some point from a company with a research and development focus to a company capable of supporting commercial activities.

For example, in August 2024, we announced topline data from the Phase 2 portion of our Phase 2/3 clinical trial evaluating our initial product candidate, epetraborole, in patients with treatment-refractory MAC lung disease.

Although the Phase 2 part of the study met its primary objective in demonstrating the potential validation of a novel patient-reported outcome (PRO) tool and a higher PRO-based clinical response rate in the epetraborole + OBR arm (39.5%) vs.

placebo + OBR (25.0%;

treatment difference 13.9%, p=0.19), sputum culture conversion at Month 6, a key secondary endpoint, was similar between treatment arms (13.2% in epetraborole + OBR vs.

10.0% placebo + OBR;

treatment difference 3.4%, p=0.64).

Given these results, we decided to close out the trial and are in the process of planning to unblind the Phase 3 part of the study and meet with the FDA to determine next steps.

In addition, we will need to transition successfully at some point from a company with a research and development focus to a company capable of supporting commercial activities.

We may not be successful in such a transition.

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Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance.

We may not realize the expected benefits from our business restructuring and workforce reduction and we may incur additional costs implementing it or other difficulties.

In August 2024, we announced a business restructuring plan and implemented a workforce reduction.

The objective of these initiatives was to focus the organization and our resources on product candidates and development compounds to treat Chagas diseases, NTM, melioidosis, other infectious diseases, and oncology while we continue to evaluate the TR-MAC program.

However, the changes to our business strategy and the reduction in workforce may yield unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond our intended workforce reduction, a reduction in morale among our remaining employees, and the risk that we may not achieve the anticipated benefits, all of which may have an adverse effect on our development activities, ability to progress our product candidate development, and results of operations or financial condition.

As a result of the workforce reduction, we have recognized severance and other charges of $2.2 million as of December 31, 2024, primarily consisting of severance payments and other employee termination-related expenses.

We may also incur other charges, costs, future cash expenditures or impairments not currently contemplated due to events that may occur as a result of, or in connection with, the revised business strategy and workforce reduction.

In addition, we may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees.

We may also discover that the workforce reduction and cost cutting measures will make it difficult for us to pursue new opportunities and initiatives and require us to hire qualified replacement personnel, which may require us to incur additional and unanticipated costs and expenses.

Moreover, there is no assurance we will be successful in our pursuit of any of our new goals.

Our failure to successfully accomplish any of the above activities and goals may have a negative impact on our business, financial condition, results of operations and growth prospects.

We require substantial additional funding to meet our financial needs and to pursue our business objectives.

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Our future capital requirements will depend on many factors, including:

• the timing, progress and results of our ongoing and future clinical trials of epetraborole and our other product candidates;

• the costs, timing and outcome of regulatory review of epetraborole and any of our other product candidates that may complete clinical development;

• the timing, progress, and results of our ongoing and future clinical trials of our product candidates;

• the costs, timing and outcome of regulatory review of any of our product candidates that may complete or be in the process of completing clinical development;

• the scope, progress, results and costs of identifying, obtaining, and conducting preclinical development, laboratory testing and clinical trials of future product candidates that we may pursue;

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• the amount of funding that we receive under our non-dilutive funding opportunities, including government awards that we may apply for;

• the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for epetraborole and any other product candidates that receive regulatory approval, if any;

• the pricing and revenue, if any, received from commercial sales of epetraborole or any other product candidates that receive regulatory approval;

• the costs and timing of future commercialization activities, including product manufacturing, marketing, sales, and distribution, for any product candidates that receive regulatory approval;

• the pricing and revenue, if any, received from commercial sales of any product candidates that receive regulatory approval;

• the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending any intellectual property-related claims;

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Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve product sales.

In addition, epetraborole and any of our other product candidates, if approved, may not achieve commercial success.

In addition, our product candidates, if approved, may not achieve commercial success.

Our commercial revenues, if any, will be derived from sales of drugs that we do not expect to be commercially available for several years, if at all.

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If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or altogether cease our research and development programs or any future commercialization efforts.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or to epetraborole or any of our other product candidates.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or to any of our product candidates.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings and debt financings.

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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, making capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or epetraborole or any other product candidates, or to grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our development of epetraborole or any other product candidate or future commercialization efforts or grant rights to a third party to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or any product candidates, or to grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our development of our product candidates or future commercialization efforts or grant rights to a third party to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

We have a contractual commitment to develop epetraborole for global health initiatives, which may affect our ability to develop and commercialize epetraborole in certain countries and may impact our intellectual property rights.

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Our strategy for developing epetraborole for global health initiatives depends on receiving non-dilutive funding from sources such as public and private agencies and foundations.

In September 2022, we received a cost-reimbursement contract award under which we are able to receive up to $17.8 million from the NIAID to support preclinical, Phase 1 studies and other activities to enable advancement of epetraborole into late-stage development for acute systemic melioidosis and other biothreat pathogens.

In addition, in September 2023, we entered into two cost-reimbursement contract awards with the University of Georgia Research Foundation (“UGARF”) and the Bill and Melinda Gates Foundation (“BMGF”) for the development of boron-containing small molecules for Chagas disease, and tuberculosis and malaria, respectively.

We, as a company, have limited experience with non-dilutive funding, and we may not be able to obtain additional non-dilutive funding to support our needs to fund our global health initiatives.

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If we fail to receive additional non-dilutive funding, progress in our global health initiatives may be impaired or delayed.

Risks Related to the Development of Our Current and Future Product Candidates

We depend to a large degree on the success of epetraborole, which is in clinical development, and for which we recently paused enrollment in the Phase 3 part of the Phase 2/3 study of treatment-refractory MAC lung disease.

We currently have no products approved for sale and have invested a significant portion of our efforts and financial resources on the development of our initial product candidate, epetraborole, as a treatment for NTM lung disease caused by MAC bacteria.

We expect that a substantial portion of our efforts and expenses over the next few years will be devoted to the development of epetraborole.

As a result, our business currently depends heavily on the successful development, regulatory approval, and, if approved, commercialization of epetraborole or any of our other product candidates.

Risks Related to the Development of Our Product Candidates

If we do not obtain regulatory approval for and successfully commercialize any of our product candidates, or if we experience significant delays in doing so, we may never become profitable.

We currently have no products approved for sale and have historically invested a significant portion of our efforts and financial resources on the development of our initial product candidate, epetraborole, as a treatment for treatment-refractory MAC lung disease.

Although we have discontinued our development efforts with respect to epetraborole in the treatment-refractory MAC population studied in the EBO-301 trial until completion of discussions with the FDA to align on potential next steps, our business remains heavily dependent on the successful development, regulatory approval, and, if approved, commercialization of our product candidates.

We cannot be certain that any product candidate will receive regulatory approval or will be successfully commercialized even if it receives regulatory approval.

The research, development, manufacturing, safety, efficacy, labeling, approval, sale, marketing and distribution of epetraborole or any of our other product candidates are, and will remain, subject to comprehensive regulation by the FDA, the PMDA and other comparable foreign regulatory authorities.

Before obtaining regulatory approvals for the commercial sale of epetraborole and any other product candidates, we must demonstrate through preclinical and nonclinical studies and clinical trials that the product candidate is safe and effective for use in each target indication.

The research, development, manufacturing, safety, efficacy, labeling, approval, sale, marketing and distribution of our product candidates are, and will remain, subject to comprehensive regulation by the FDA and other comparable foreign regulatory authorities.

Before obtaining regulatory approvals for the commercial sale of any product candidates, we must demonstrate through preclinical and nonclinical studies and clinical trials that the product candidate is safe and effective for use in each target indication.

Drug development is a long, expensive and uncertain process, and delay or failure can occur at any stage during our nonclinical studies, clinical trials or drug product manufacturing process.

These delays or failures could be caused by a variety of factors, including but not limited to, toxicity, safety, tolerability, efficacy, problems with clinical trial enrollment, drug product availability, stability, and impurity issues related to drug product manufacturing.

For example, in February 2024, we voluntarily paused enrollment of the Phase 3 portion of our ongoing Phase 2/3 clinical trial evaluating epetraborole in patients with treatment-refractory MAC lung disease after a blinded aggregate analysis of data from the Phase 2 portion of the trial suggested lower-than-anticipated efficacy results.

There is no guarantee that we will be able to successfully resume enrollment and complete the study in the manner or on the timing that we expect.

Even if we are able to complete our Phase 2/3 study, there is no guarantee that the study data will be sufficient to support an application seeking regulatory approval of epetraborole in treatment-refractory MAC lung disease.

Failure to obtain regulatory approval for epetraborole and our other product candidates in the United States or other territories will prevent us from commercializing and marketing such product candidates.

The success of epetraborole and our other product candidates will depend on several additional factors, including:

For example, in August 2024, we announced topline data from the Phase 2 portion of EBO-301, our Phase 2/3 clinical trial evaluating epetraborole in patients with treatment-refractory MAC lung disease.

Although the Phase 2 part of the study met its primary objective in demonstrating the potential validation of a novel patient-reported outcome (“PRO”) tool and a non-significant, but numerically higher PRO-based clinical response rate in the epetraborole + OBR arm (39.5%) vs.

placebo + OBR (25.0%;

treatment difference 13.9%, p=0.19), sputum culture conversion at Month 6, a key secondary endpoint, was similar between treatment arms (13.2% in epetraborole + OBR vs.

10.0% placebo + OBR;

treatment difference 3.4%, p=0.64).

Given these topline results, we decided to close out the Phase 3 portion of the trial and commence a review of data to help inform further development.

Although we believe that to date our ongoing data review supports the continued development of epetraborole in patients with treatment-refractory MAC lung disease, it is possible that we will determine to defer or discontinue development of epetraborole in NTM, whether due to further FDA feedback or otherwise.

Failure to obtain regulatory approval for our product candidates in the United States or other territories will prevent us from commercializing and marketing such product candidates.

The success of our product candidates will depend on several additional factors, including:

• successful and timely completion of preclinical and nonclinical studies and requisite clinical trials;

• performing preclinical studies and clinical trials in compliance with the FDA, the PMDA or any comparable regulatory authority requirements;

• performing preclinical studies and clinical trials in compliance with the FDA or any comparable regulatory authority requirements;

• receipt of regulatory approvals from applicable regulatory authorities;

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• obtaining regulatory approvals with labeling for sufficiently broad patient populations and indications, without unduly restrictive distribution limitations or safety warnings, such as black box warnings or a Risk Evaluation and Mitigation Strategies ("REMS") program;

• obtaining and maintaining patent, trademark and trade secret protection, and regulatory exclusivity for epetraborole and any other product candidates;

• obtaining and maintaining patent, trademark and trade secret protection, and regulatory exclusivity for our product candidates;

• making and retaining sufficient and reliable arrangements with third parties for manufacturing capabilities;

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• allowance to proceed with clinical trials under future investigational new drug applications ("INDs"), or under comparable applications submitted outside the United States.

If we do not achieve these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize epetraborole or any of our other product candidates, which would harm our business.

If we do not achieve these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would harm our business.

We may not be successful in our efforts to build a pipeline of product candidates.

A key element of our strategy is to develop our AN2 drug discovery platform, build a pipeline of product candidates and progress these product candidates through clinical development for the treatment of serious infections (including different forms of NTM lung disease).

A key element of our strategy is to develop our AN2 drug discovery platform, build a pipeline of product candidates and progress these product candidates through clinical development for the treatment of Chagas disease, NTM, melioidosis, other infectious diseases, and in oncology.

We may not be able to develop product candidates that are safe and effective for any proposed use.

Even if we are successful in continuing to build our pipeline, the potential product candidates that we identify may not be suitable for clinical development, as a result of significant safety, tolerability and other negative characteristics or limitations that may prevent successful regulatory approval or limit market acceptance or reimbursements from third-party payors.

If we do not successfully develop and commercialize epetraborole and/or any other product candidates, we will not be able to obtain product revenue in future periods, which could significantly harm our financial position and adversely affect the trading price of our common stock.

Success in preclinical or nonclinical studies or initial clinical trials may not be indicative of results in future clinical trials.

To support our clinical development strategy for epetraborole, we are relying, in part, on clinical data from prior clinical trials conducted by Anacor and GlaxoSmithKline plc which were not conducted in patients with NTM.

Differences with these prior clinical trials evaluating epetraborole will limit our use of prior clinical data for epetraborole and our ability to support our clinical trial plan for epetraborole with the FDA, PMDA and other comparable foreign regulatory authorities.

Success in preclinical or nonclinical studies or initial clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the safety, tolerability, and efficacy of a product candidate.

For example, certain prior clinical trials of epetraborole were not conducted in patients with NTM lung disease nor were they conducted over durations greater than 14 days, shorter than the typical treatment of patients with NTM lung disease.

Epetraborole and our other product candidates may fail to show the desired safety, tolerability, and efficacy in clinical development despite promising results in preclinical studies or having successfully advanced through initial clinical trials in healthy volunteers.

For instance, with respect to epetraborole, we cannot guarantee that the dose used in our ongoing clinical trial will be safe, tolerable, or effective.

We cannot guarantee that the dose selected will be successful in our ongoing clinical trial in patients with treatment-refractory MAC lung disease.

The ongoing clinical trial is the first evaluation of epetraborole in patients with MAC lung disease and specifically in treatment-refractory patients.

In February 2024, we voluntarily paused enrollment of the Phase 3 portion of our ongoing Phase 2/3 clinical trial after a blinded aggregate analysis of data from the Phase 2 portion suggested lower-than-anticipated efficacy results.

There is no guarantee that we will be able to successfully resume enrollment and complete the study in the manner or on the timing that we expect.

Even if we are able to complete our Phase 2/3 study, there is no guarantee that the study will produce results sufficient to demonstrate the safety or efficacy of epetraborole to the satisfaction of the FDA, PMDA or other regulatory authorities.

In addition, safety, tolerability and pharmacokinetic observations of epetraborole, used as monotherapy, in previous clinical trials conducted by Anacor and GSK, including penetration into alveolar (lung) macrophages and the long-term effects on red blood cell-related hematological parameters, such as hemoglobin and reticulocytes, may not be predictive of safety or efficacy results in our ongoing clinical trial.

There are significant differences in the epetraborole Phase 1 clinical trial conducted by Anacor and the five Phase 1 clinical trials and two Phase 2 clinical trials conducted by GSK compared to the clinical trial design of our ongoing clinical trial.

Other differences with these prior clinical trials, including differences in patient population, targeted indication, drug product formulation, duration of dosing and trial design, will limit our use of prior clinical data for epetraborole and our ability to support our clinical trial plan for epetraborole with the FDA, PMDA and other comparable foreign regulatory authorities.

There can be no assurance that the clinical trials we conduct will be sufficient for product approval.

Prior to marketing any product candidate in the United States, including epetraborole, we must demonstrate that such product candidate is safe and provide substantial evidence of effectiveness for its intended uses.

If we do not successfully develop and commercialize any of our product candidates, we will not be able to obtain product revenue in future periods, which could significantly harm our financial position and adversely affect the trading price of our common stock.

There can be no assurance that any clinical trials we conduct will be sufficient for product approval.

Prior to marketing any product candidate in the United States, we must demonstrate that such product candidate is safe and provide substantial evidence of effectiveness for its intended uses.

The FDA has generally interpreted the “substantial evidence” requirements as requiring sponsors to conduct two adequate and well-controlled Phase 3 clinical trials.

However, in some circumstances, the FDA may conclude that substantial evidence of efficacy has been demonstrated through the conduct of one adequate and well-controlled clinical trial, plus confirmatory evidence (whether obtained prior to or after such trial).

We plan to rely on a single pivotal clinical trial to support approval of epetraborole in treatment-refractory MAC lung disease, but there can be no assurance that the FDA will not require additional clinical trials for approval of epetraborole beyond the trials that we currently plan to conduct, even if we successfully complete the trial and believe the results are sufficiently positive.

The data we have collected and continue to collect in our Phase 1 programs, and from our ongoing Phase 2/3 clinical trial, may not support continued clinical investigation due to insufficient clinical or microbiological responses or occurrence of adverse safety events or may lead to adjustments in trial design, rendering it not feasible to conduct or not acceptable to the FDA or to us, including adjustments to clinical trial endpoints and sample size.

For example, we recently voluntarily paused enrollment in the Phase 3 portion of our ongoing Phase 2/3 clinical trial evaluating epetraborole in patients with treatment-refractory MAC lung disease after a blinded aggregate analysis data from the Phase 2 portion of the trial suggested potentially lower-than-anticipated efficacy results.

There is no guarantee that we will be able to successfully resume enrollment and complete the study in the manner or on the timing that we expect.

The FDA can recommend study design element changes at any time, including, for example, change of endpoints, eligibility criteria, or statistical analyses.

For example, Arikayce was approved based on the primary endpoint of microbiological culture conversion, whereas we may be required to demonstrate efficacy based on clinical response endpoints.

Specifically, based on the feedback we have received from the FDA, our ongoing Phase 2/3 trial includes a novel patient-reported outcome measure (“PRO”), as a primary endpoint to assess certain changes in patient symptoms.

However, to our knowledge, no treatment for NTM lung disease has been approved by the FDA on the basis of improvements demonstrated through a PRO endpoint.

In addition, we remain in ongoing discussions with the FDA regarding the design of our novel PRO, and any changes to the PRO that we may make create the risk that patients enrolled prior to implementing such changes will have completed treatment or will otherwise not be able to be assessed using the modified PRO.

In such an event, we may be required to gather additional clinical data before we are able to seek approval of epetraborole, if ever.

Even if we believe we have reached alignment with the FDA regarding the design of our Phase 2/3 trial, including our novel PRO endpoint, there is no guarantee that the data from such trial will be sufficient to support approval.

As a company, we have limited experience designing NTM clinical trials and have no prior experience conducting clinical trials in the United States or other geographies and may be unable to design and execute a clinical trial to support regulatory approval.

Regardless of the clinical development plans we decide to pursue with respect to our product candidates, there can be no assurance that the FDA will not require additional clinical trials for approval of such product candidates beyond the trials that we currently plan to conduct, even if we successfully complete the trial and believe the results are sufficiently positive.

As a company, we have limited experience designing and conducting clinical trials in the United States or other geographies and may be unable to design and execute a clinical trial to support regulatory approval.

In addition, the design and results of our clinical trials may not be sufficient to support approval, since factors such as an inappropriate dosage or flaws in the design of a clinical trial may not become apparent until the clinical trial is in progress or data are available.

There is a high failure rate for drug and biologic products proceeding through clinical trials.

There is a high failure rate for product candidates proceeding through clinical trials.

Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in later-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials.

For example, a Phase 2 clinical trial conducted by GSK to evaluate epetraborole in patients with complicated urinary tract infections was terminated early due to microbiological findings of resistance to epetraborole, which caused GSK to discontinue its epetraborole development program.

In addition, data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit, or prevent regulatory approval.

Furthermore, the dosing duration for administering epetraborole in humans has been limited to a maximum of 28 days in previous clinical trials.

The study drug dosing duration in our Phase 2/3 clinical trial is up to 16 months total.

The longer dosing duration in our clinical trial, as well as the use of epetraborole in patients with NTM lung disease, may increase the risk of hematological abnormalities or the potential for the emergence of new, unknown treatment-emergent adverse events.

In addition, we may experience regulatory delays or rejections as a result of many factors, including changes in regulatory policy during the period of our product candidate development.

Any such delays could negatively impact our business, financial condition, results of operations and growth prospects.

If clinical trials of epetraborole or any other product candidate that we may advance to clinical trials fail to demonstrate safety, tolerability, and/or efficacy to the satisfaction of the FDA, the PMDA or other comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of epetraborole or any other product candidate.

We may not commercialize, market, promote, or sell any product candidate without obtaining regulatory approval from the FDA, the PMDA or other comparable regulatory authorities, and we may never receive such approvals.

It is impossible to predict when or if epetraborole or any other product candidates will prove effective or safe in humans and will receive regulatory approval.

Before obtaining regulatory approval from regulatory authorities for the sale of epetraborole or any other product candidates, we must complete preclinical and nonclinical development and conduct extensive clinical trials to demonstrate the safety and efficacy of such product candidates in humans.

For example, in August 2024, we announced topline data from the Phase 2 portion of our Phase 2/3 clinical trial evaluating epetraborole in patients with treatment-refractory MAC lung disease.

Although we believe the Phase 2 part of the study met its primary objective in demonstrating the potential validation of a novel patient-reported outcome (PRO) tool and a higher PRO-based clinical response rate in the epetraborole + OBR arm (39.5%) vs.

placebo + OBR (25.0%;

treatment difference 13.9%, p=0.19), sputum culture conversion at Month 6, a key secondary endpoint, was similar between treatment arms (13.2% in epetraborole + OBR vs.

10.0% placebo + OBR;

treatment difference 3.4%, p=0.64).

Given these results, we decided to close the Phase 3 portion of the trial and to commence a review of data to help inform further development.

Although we believe that our ongoing data review to date supports the continued development of epetraborole in patients with treatment-refractory MAC lung disease, it is possible that we will defer or discontinue development of epetraborole in NTM, whether due to further FDA feedback or otherwise.

For example, based on the results from the Phase 2 portion of the EBO-301 trial, we submitted an amended statistical analysis plan for the EBO-301 trial selecting the Quality of Life – Bronchiectasis (QOL-B) respiratory domain patient reported outcome (PRO) instrument as the revised primary efficacy endpoint.

However, the FDA may not consider the data from the Phase 3 portion of the trial to be clinically meaningful or otherwise supportive for regulatory decision-making purposes, even if the Phase 3 data show a statistically significant outcome with respect to QOL-B.

If clinical trials of our product candidates fail to demonstrate safety and/or efficacy of such product candidates to the satisfaction of the FDA or other comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

We may not commercialize, market, promote, or sell any product candidate without obtaining regulatory approval from the FDA or other comparable regulatory authorities, and we may never receive such approvals.

It is impossible to predict when or if any of our product candidates will be deemed effective or safe in humans and receive regulatory approval.

Before obtaining regulatory approval from regulatory authorities for the sale of any of our product candidates, we must complete preclinical and nonclinical development and conduct extensive clinical trials to demonstrate the safety and efficacy of such product candidates in humans.

Clinical testing is expensive, difficult to design and implement, can take many years to complete, and is uncertain as to outcome.

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The FDA or comparable foreign regulatory authorities may require us to conduct additional preclinical studies for any product candidate before it allows us to initiate clinical trials under any IND or similar regulatory submission, which may lead to delays and increase the costs of our preclinical development programs.

We may experience numerous unforeseen events prior to, during, or as a result of, clinical trials that could delay or prevent our ability to receive regulatory approval or commercialize epetraborole or any of our other product candidates, including, but not limited to:

We may experience numerous unforeseen events prior to, during, or as a result of, clinical trials that could delay or prevent our ability to receive regulatory approval or commercialize any of our product candidates, including, but not limited to:

• we may be unable to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation or continuation of clinical trials;

• the FDA, the PMDA or other comparable regulatory authorities may disagree as to the design or implementation of our clinical trials, which may result in changes to our planned clinical trial design and potential target clinical outcomes;

• regulators, institutional review boards (“IRBs”), or ethics committees may not allow or authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

• we may not reach agreement on acceptable terms with prospective contract research organizations (“CROs”), and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;

• the FDA or other comparable regulatory authorities may disagree as to the design or implementation of our clinical trials, including the selection of primary and secondary endpoints, which may result in changes to our planned clinical trial design and potential target clinical outcomes, or may result in failure to obtain approval altogether;

• regulators, IRBs, or ethics committees may not allow or authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

• we may not reach agreement on acceptable terms with prospective CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;

• we may experience delays in identifying, recruiting and training suitable clinical investigators;

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• clinical trial sites may deviate from the trial protocol or drop out of a trial;

• clinical trials for epetraborole or any of our other product candidates may produce negative or inconclusive results;

• clinical trials for our product candidates may produce negative or inconclusive results;

• we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;

• enrollment in clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate, we may fail to recruit suitable patients to participate in a trial, or the number of patients required for clinical trials of epetraborole and any of our other product candidates may be larger than we anticipate;

• enrollment in clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate, we may fail to recruit suitable patients to participate in a trial, or the number of patients required for clinical trials of our product candidates may be larger than we anticipate;

• our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

• regulators may issue a clinical hold, or regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

• we may lack adequate funding to complete a clinical trial, or the cost of clinical trials of epetraborole or any of our other product candidates may be greater than we anticipate;

• the FDA, the PMDA or other comparable regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with whom we enter into agreements for clinical and commercial supplies;

• the supply or quality of epetraborole or any of our other product candidates or other materials necessary to conduct clinical trials of such product candidates may be insufficient or inadequate;

• we may lack adequate funding to complete a clinical trial, or the cost of clinical trials of our product candidates may be greater than we anticipate;

• the FDA or other comparable regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with whom we enter into agreements for clinical and commercial supplies;

• the supply or quality of our product candidates or other materials necessary to conduct clinical trials of such product candidates may be insufficient or inadequate;

• serious adverse events may occur in trials of the same class of agents conducted by other companies that could be considered similar to our product candidates;

• epetraborole or our other product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs to suspend or terminate the clinical trials;

• the approval policies or regulations of the FDA, the PMDA or other comparable regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

If we are required to conduct additional clinical trials or other testing of epetraborole or any of our other product candidates beyond the studies that we currently contemplate, such as our ongoing pivotal Phase 2/3 trial of epetraborole, if we are unable to successfully complete clinical trials or other testing of epetraborole or any of our other product candidates, or if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns observed in these trials or tests, we may:

• our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs to suspend or terminate the clinical trials;

• the approval policies or regulations of the FDA or other comparable regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

If we are required to conduct additional clinical trials or other testing of any of our product candidates beyond the studies that we currently contemplate, if we are unable to successfully complete clinical trials or other testing of our product candidates, or if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns observed in these trials or tests, we may:

• be delayed in obtaining regulatory approval for our product candidates;

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We do not know whether any of our preclinical and nonclinical studies or clinical trials will begin as planned, will need to be restructured, or will be completed on schedule or at all.

Significant preclinical and nonclinical study or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize epetraborole or our other product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize epetraborole or our other product candidates.

In addition, many of the factors that cause, or lead to, delays of clinical trials may ultimately lead to the denial of regulatory approval of epetraborole or any of our other product candidates.

We cannot predict whether or when bacteria may develop resistance to epetraborole or any of our other product candidates, which could affect the revenue potential of our product candidates.

We are developing epetraborole to treat bacterial infections.

Significant preclinical and nonclinical study or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates.

In addition, many of the factors that cause, or lead to, delays of clinical trials may ultimately lead to the denial of regulatory approval of our product candidates.

We cannot predict whether or when bacteria may develop resistance to any of our antibacterial product candidates, which could affect the revenue potential of our product candidates.

We are developing certain of our product candidates to treat bacterial infections.

The bacteria responsible for these infections evolve quickly and may develop antibiotic resistance caused by spontaneous mutations in the genes encoding the cellular target of the antibiotic.

In some cases, resistance mechanisms can be transferred within and between bacterial species.

Prescription or use of epetraborole or our other product candidates, if approved, may depend on the type and rate of resistance of the targeted bacteria.

Although we do analyze the potential of emergence of resistance to epetraborole and any other product candidates and only select those that we believe have low resistance potential, we cannot predict whether or when bacterial resistance to epetraborole or other product candidates may develop.

Prescription or use of our product candidates, if approved, could depend on the type and rate of resistance of the targeted bacteria.

Although we do intend to analyze the potential of emergence of resistance to our product candidates and only select those that we believe have low resistance potential, we cannot predict whether or when bacterial resistance may develop.

Such bacterial resistances, if and when identified, could adversely affect the conduct or results of our clinical trials, and could adversely affect the market potential of the product candidate, if approved.

For example, clinical resistance to epetraborole as a monotherapy was observed in certain bacteria by GSK in its Phase 2 trial for the treatment of complicated urinary tract infection, and we cannot guarantee that clinical resistance will not be observed in any of our future clinical trials with epetraborole in other types of bacterial infections.

The growth of drug-resistant infections in community settings or in countries with poor public health infrastructures, or the potential use of any product candidates outside of controlled hospital settings, could contribute to the rise of resistance.

Epetraborole or any of our other product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial potential, or result in significant negative consequences following any potential regulatory approval.

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial potential, or result in significant negative consequences following any potential regulatory approval.

Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics.

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Any of these occurrences may harm our business, financial condition, results of operations and growth prospects significantly.

In particular, epetraborole is not yet approved by the FDA, the PMDA or any other regulatory agency and has not yet been tested extensively in patients.

In previous development programs evaluating epetraborole, which largely used higher doses administered intravenously and orally, subjects and patients receiving epetraborole experienced drug-related side effects.

For example, the most common drug-related adverse events observed in oral administration of epetraborole in humans were gastrointestinal in nature.

Further, in a 26-week study conducted with epetraborole in rats and in a 39-week study conducted with epetraborole in non-human primates, safety observations of reduced hematocrit, hemoglobin, and other associated red blood cell-related parameters (red cell distribution width, mean corpuscular volume, mean corpuscular hemoglobin concentration, mean corpuscular hemoglobin) levels were observed, which remained below normal during the recovery period of the study while other blood cell parameters returned to normal levels.

In a Fertility and Embryo-Fetal Development study of epetraborole in rats, there were no external fetal malformations or variations, no soft-tissue (visceral or fixed-head) fetal malformations or variations, and no skeletal fetal malformations attributed to administration of epetraborole at any dose level evaluated in the study.

However, there were multiple maternal and fetal adverse events, including reduced mean maternal body weight during gestation, reduced mean fetal weight, increased mean total resorptions per litter and higher mean post-implantation loss at the highest dose level tested, which was 1,000 mg/kg, compared to a control group.

Decreased fetal body weights and increased incomplete fetal ossification was observed at all epetraborole dose levels.

The significance of these observations with respect to humans is still unknown.

Based on the observed maternal and fetal adverse events in rats, epetraborole could be harmful to human fetuses when taken during pregnancy.

Amongst the patients enrolled in the first six cohorts of our Phase 1b dose-ranging study of epetraborole in healthy volunteers, the most common treatment emergent adverse events (“TEAEs”), were gastrointestinal events, such as nausea, abdominal discomfort and diarrhea, and headache and vascular site access pain.

Most TEAEs observed in the Phase 1b dose-ranging study were mild or moderate in severity and no severe or serious TEAEs were observed in the study.

Two subjects in the study experienced TEAEs that caused premature discontinuation from epetraborole:

one epetraborole subject at the 250 mg q24h dose level had mild aminotransferase increases during a concomitant upper respiratory tract infection and one epetraborole subject at the 1,000 mg q48h dose level had mild nausea.

These TEAEs were both considered possibly or probably related to epetraborole.

Consistent with observations in chronic toxicology studies in non-human primates and rats, dose-dependent effects on red blood cell-related hematological parameters, such as hemoglobin and reticulocytes, were observed in the Phase 1b dose-ranging study.

The observed effects on hematological parameters were mild and most RBC values remained within normal limits with a slight downward trend, and the hematological parameters recovered following completion of dosing of epetraborole.

No subjects discontinued therapy as a result of the hematological effects that were observed.

Additional adverse events may emerge (along with additional data further defining previously identified risks) in any ongoing or subsequent clinical trials and there may be unforeseen serious adverse events or side effects that differ from those seen in studies completed to date.

For example, the dosing duration for administering epetraborole in humans has been limited to a maximum of 28 days in previous clinical trials, and in our Phase 2/3 clinical trial involves dosing up to 16 months.

Future trials may involve the same or longer dosing duration.

The longer dosing duration in the Phase 2/3 clinical trial, as well as the use of epetraborole in patients with NTM lung disease, may increase the risk of hematological abnormalities, as well as the potential for the emergence of new, unknown treatment-emergent adverse events.

In addition, with respect to our Phase 2/3 trial of epetraborole, we have included an independent data and safety monitoring board ("DSMB") to review safety as we increase dosing duration up to 16 months and transition from clinical investigations in healthy volunteers to patients.

It is possible that as we test epetraborole and our other product candidates in larger, longer and more extensive clinical programs, or as use of such product candidates becomes more widespread, if they receive regulatory approval, subjects will report illnesses, injuries, discomforts and other adverse events that were not observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials.

Many times, side effects are only detectable after investigational drugs are tested in large-scale, Phase 3 clinical trials or, in some cases, after they are made available to patients on a commercial scale after approval.

If additional clinical experience indicates that epetraborole or any other product candidate has unexpected side effects or causes serious or life-threatening side effects, the development of the product candidate may fail or be delayed, or, if the product candidate has received regulatory approval, such approval may be revoked, which would harm our business.

Furthermore, epetraborole is being developed for use in the treatment of treatment-refractory MAC lung disease as an add-on therapy to an optimized background regimen, which would include current standard of care drugs as outlined in the NTM treatment guidelines.

Even if our product candidates demonstrate clinical efficacy, any unacceptable adverse side effects or toxicities, when administered in the presence of other pharmaceutical products, which can arise at any stage of development, may outweigh potential benefits.

It is possible that as we test our product candidates in larger, longer and more extensive clinical programs, or as use of such product candidates becomes more widespread, if they receive regulatory approval, subjects will report illnesses, injuries, discomforts and other adverse events that were not observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials.

Many times, side effects are only detectable after investigational drugs are tested in large-scale clinical trials or, in some cases, after they are made available to patients on a commercial scale after approval.

If additional clinical experience indicates that any of our product candidates has unexpected side effects or causes serious or life-threatening side effects, the development of the product candidate may fail or be delayed, or, if the product candidate has received regulatory approval, such approval may be revoked, which would harm our business.

Even if we believe our product candidates demonstrate clinical efficacy, any unacceptable adverse side effects or toxicities, when administered in the presence of other pharmaceutical products, which can arise at any stage of development, may outweigh potential benefits.

We may observe adverse or significant adverse events or drug-drug interactions in future preclinical studies or clinical trial candidates, which could result in the delay or termination of development, prevent regulatory approval or limit market acceptance if ultimately approved.

Moreover, if we elect, or are required, to delay, suspend or terminate any clinical trial of epetraborole or any other product candidates, the commercial prospects of such product candidate may be harmed and our ability to generate revenue through its sale may be delayed or eliminated.

For example, we have observed cases of anemia in patients receiving epetraborole, and though we believe these reported adverse events have not been serious in nature or otherwise suggestive of a material safety issue, consistent imbalances in observed adverse events between active and placebo arms could adversely affect the integrity of a study blind and subsequent trial data.

Moreover, if we elect, or are required, to delay, suspend or terminate any clinical trial of any of our product candidates, the commercial prospects of such product candidate may be harmed and our ability to generate revenue through its sale may be delayed or eliminated.

Any of these occurrences may significantly harm our business.

Additionally, if epetraborole or any of our other product candidates receive regulatory approval, regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication, or the adoption of a REMS program to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of the drug for distribution to patients and a communication plan to health care practitioners.

Additionally, if any of our product candidates receive regulatory approval, regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication, or the adoption of a REMS program to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of the drug for distribution to patients and a communication plan to health care practitioners.

Furthermore, if we or others later identify undesirable side effects caused by any product candidates, several potentially significant negative consequences could result, including:

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If we are not successful in discovering, developing and commercializing additional product candidates, our ability to expand our business and achieve our strategic objectives would be impaired.

Although a substantial amount of our effort will focus on the continued clinical testing and potential regulatory approval of epetraborole, an element of our strategy is to discover, develop and commercialize a portfolio of product candidates to treat rare chronic lung infections including NTM lung disease and chronic Chagas disease.

Although a substantial amount of our effort will focus on potential clinical testing and potential regulatory approval of our current and future product candidates, including the development of AN2-502998, a boron-based small molecule therapeutic candidate for the treatment of Chagas disease, epetraborole for NTM or melioidosis, and other development compounds, an element of our strategy is to discover, develop and commercialize a portfolio of product candidates to treat diseases with high unmet need.

We are seeking to do so by utilizing our targeted-design AN2 drug discovery platform, which uses bacterial genomics and state-of-the-art molecular and dynamic models to design active new compounds that target known mechanisms.

We focus our clinical development on pathogens and patients with high, unmet medical needs to leverage the development and regulatory paths available for first-in-class or best-in-class anti-infectives.

We focus our clinical development on pathogens, drug targets, and patients with high, unmet medical needs to leverage the development and regulatory paths available for first-in-class or best-in-class therapeutics.

Research efforts to identify and develop product candidates require substantial technical, financial, and human resources, whether or not any product candidates are ultimately identified.

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• a product candidate may not be accepted as safe, tolerable and effective by patients, the medical community or third-party payors, if applicable;

• the FDA, the PMDA or other regulatory authorities may not approve or agree with the intended use of a new product candidate.

If we fail to develop and successfully commercialize epetraborole or our other product candidates, our business and future prospects may be harmed and our business will be more vulnerable to any problems that we encounter in developing and commercializing epetraborole.

• the FDA or other regulatory authorities may not approve or agree with the intended use of a new product candidate.

If we fail to develop and successfully commercialize our product candidates, our business and future prospects may be harmed and our business will be more vulnerable to any problems that we encounter in developing and commercializing our product candidates.

If we experience delays or difficulties in the enrollment of patients in clinical trials, our clinical development activities and receipt of necessary regulatory approvals could be delayed or prevented.

Patient enrollment is a significant factor in the timing of clinical trials, and the timing of our clinical trials will depend, in part, on the speed at which we can recruit patients to participate in our trials, as well as completion of required follow-up periods.

We may not be able to initiate, continue or complete clinical trials of epetraborole or any other product candidates that we develop if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials, as required by the FDA, the PMDA or other comparable regulatory authorities.

We may not be able to initiate, continue or complete clinical trials of any product candidates that we develop if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials, as required by the FDA or other comparable regulatory authorities.

We have limited experience enrolling patients in our clinical trials and cannot predict how successful we will be in enrolling patients in future clinical trials.

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• the risk that patients enrolled in clinical trials will drop out of the trials before completion.

In particular, we may face delays and difficulties in enrollment in our current trials of epetraborole because NTM lung disease caused by MAC is considered a rare disease (i.e., the size of the targeted patient population is small) and patients are generally managed in the outpatient setting by specialized clinics and caregivers.

Patients with this disease may also be reluctant to participate in a clinical trial with an investigational drug.

Additionally, most patients with NTM lung disease have pre-existing co-morbidities, including underlying structural lung disease.

Because of this, we expect difficulties in determining clinical responses in some patients in our clinical trials of epetraborole, which could result in a failure to meet prespecified clinical trial endpoints, or otherwise increase the challenges associated with trial enrollment.

For example, even if epetraborole has a beneficial effect on culture conversion, patient-reported symptom-based outcomes may not correlate with microbiological responses.

Moreover, in February 2024, we decided to voluntarily pause enrollment in the Phase 3 portion of our ongoing Phase 2/3 clinical trial, and there is no guarantee that if and when we resume patient enrollment, that we will not encounter further delays or difficulties in enrolling the trial, including due to our announcement of having observed lower-than-anticipated efficacy rates in a blinded aggregate analysis of available data.

In addition, pending further data review and discussions with FDA, we may decide to modify the protocol for our ongoing Phase 2/3 clinical trial, and any such modifications may require us to expand patient enrollment, which could result in additional expenses and further trial delays.

In particular, we may face delays and difficulties in enrollment in our planned trials of certain of our product candidates because Chagas disease and certain other conditions we may target include rare diseases (i.e., the size of the targeted patient population is small).

Because of this, we may experience difficulties in recruiting sufficient patients into certain of our planned clinical trials.

Additionally, other pharmaceutical companies and research institutions targeting these same diseases are recruiting clinical trial patients from these patient populations, which may make it more difficult to fully enroll any clinical trials.

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Risks Related to Our Dependence on Third Parties

We rely on third parties to conduct the preclinical and nonclinical studies and clinical trials, If these third parties do not successfully carry out their contractual duties, comply with applicable regulatory requirements or meet expected deadlines, our development programs and our ability to seek or obtain regulatory approval for or commercialize our product candidates may be delayed.

We are dependent on third parties to conduct our clinical trials and preclinical studies.

We rely on third parties to conduct our preclinical and nonclinical studies and clinical trials.

We are dependent on third parties to conduct our clinical trials, nonclinical studies and preclinical studies.

Specifically, we have engaged CROs and consultants to conduct our ongoing and planned preclinical and nonclinical studies and clinical trials, in each case in accordance with trial protocols and regulatory requirements.

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Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors.

If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for epetraborole and our other product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize such product candidates.

If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize such product candidates.

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

If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected the interpretation of the trial, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection by the FDA of any NDA we submit.

Any such delay or rejection could prevent us from commercializing epetraborole or any other product candidates.

Any such delay or rejection could prevent us from commercializing our product candidates.

We also expect to rely on other third parties to store and distribute product supplies for our clinical trials.

Any performance failure or regulatory noncompliance on the part of our distributors could delay clinical development or regulatory approval of epetraborole or any other product candidates or commercialization of such product candidates, resulting in additional losses and depriving us of potential product revenue.

Any performance failure or regulatory noncompliance on the part of our distributors could delay clinical development or regulatory approval of our product candidates or commercialization of such product candidates, resulting in additional losses and depriving us of potential product revenue.

Our reliance on single-sourced third parties to manufacture our product candidates increases the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

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We have limited personnel with experience in drug manufacturing and lack the resources and the capabilities to manufacture any of our product candidates on a clinical or commercial scale.

We currently rely on third parties, such as Esteve Química, S.A.

and Catalent Pharma Solutions, for drug substance and drug product manufacturing, respectively, of our current product candidate, and our strategy is to continue to outsource all manufacturing of our product candidates and approved products, if any, to third parties.

Our strategy is to continue to outsource all manufacturing of our product candidates and approved products, if any, to third parties.

In order to conduct clinical trials of our product candidates and prepare for commercialization, we will need to identify suitable manufacturers with the capabilities to manufacture our compounds in large quantities in a manner consistent with existing regulations.

Our future plans include identifying, qualifying, and contracting with a second manufacturing site to manufacture epetraborole, assuming we have adequate financial resources to pursue contingency manufacturing plans.

Our current and future third-party manufacturers may be unable to successfully increase the manufacturing capacity for any of our product candidates in a timely or cost-effective manner, or at all.

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If our manufacturers are unable to successfully scale up the manufacture of our current or future product candidates in sufficient quality and quantity, the development, testing and clinical trials of that product candidate may be delayed or infeasible, and regulatory approval or commercial launch of that product candidate may be delayed or not obtained, which could significantly harm our business.

We do not currently have any agreements with third-party manufacturers for the long-term commercial supply of epetraborole or any of our other product candidates.

We do not currently have any agreements with third-party manufacturers for the long-term commercial supply of any of our product candidates.

In the future, we may be unable to enter into agreements with third-party manufacturers for commercial supplies of such product candidates or may be unable to do so on acceptable terms.

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Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates.

Epetraborole and our other products and product candidates may compete with other product candidates and products for access to manufacturing facilities.

Our product candidates may compete with other product candidates and products for access to manufacturing facilities.

There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us.

If the third parties that we engage to supply any materials or manufacture product for our preclinical and nonclinical studies and clinical trials should cease to continue to do so for any reason, we likely would experience delays in advancing these studies and trials while we identify and qualify replacement suppliers, and we may be unable to obtain replacement supplies on terms that are favorable to us.

In addition, if we are not able to obtain adequate supplies of epetraborole or any other product candidates or the substances used to manufacture them, it will be more difficult for us to develop such product candidates and compete effectively.

In addition, if we are not able to obtain adequate supplies of our product candidates or the substances used to manufacture them, it will be more difficult for us to develop such product candidates and compete effectively.

Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop product candidates and commercialize any products that receive regulatory approval on a timely and competitive basis.

Risks Related to the Commercialization of Epetraborole and Our Other Product Candidates

Even if epetraborole or any of our other product candidates receives regulatory approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors, and others in the medical community necessary for commercial success.

Even if we obtain approvals from the FDA, the PMDA or other comparable regulatory agencies and are able to initiate commercialization of epetraborole or any other product candidates we develop, the product candidate may not achieve market acceptance among physicians, patients and third-party payors and, ultimately, may not be commercially successful.

Risks Related to the Commercialization of Our Product Candidates

Even if any of our product candidates receives regulatory approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors, and others in the medical community necessary for commercial success.

Even if we obtain approvals from the FDA or other comparable regulatory agencies and are able to initiate commercialization of any of our product candidates, such product candidates may not achieve market acceptance among physicians, patients and third-party payors and, ultimately, may not be commercially successful.

The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

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The development and commercialization of new drug products is highly competitive.

We face competition from major multi-national pharmaceutical companies, biotechnology companies, specialty pharmaceutical companies and generic drug companies with respect to epetraborole and other product candidates that we may develop and commercialize in the future.

There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of product candidates for the treatment of NTM lung infections.

We face competition from major multi-national pharmaceutical companies, biotechnology companies, specialty pharmaceutical companies and generic drug companies with respect to the product candidates that we intend to develop and commercialize.

Potential competitors also include academic institutions, government agencies and other public and private research organizations.

If our competitors obtain regulatory approval from the FDA, the PMDA or other comparable regulatory authorities for their product candidates more rapidly than we do, it could result in our competitors establishing a strong market position before we are able to enter the market.

Our competitors may also succeed in developing, acquiring or licensing technologies and drug products that are more effective, more effectively marketed and sold, or less costly than epetraborole or any other product candidates that we may develop, which could render our product candidate non-competitive and obsolete.

Our initial product candidate, epetraborole, is being developed for the treatment of patients with treatment-refractory MAC lung disease.

Insmed’s Arikayce is the only currently approved therapy for the treatment of MAC lung disease as part of a combination antibacterial drug regimen in patients who do not achieve negative sputum cultures after a minimum of six consecutive months of a multidrug background regimen therapy.

Other drugs used to treat these patients include generic drugs such as macrolides (clarithromycin and azithromycin), ethambutol, rifabutin and fluoroquinolones such as levofloxacin, bedaquiline, linezolid and clofazimine.

There are also a number of product candidates in clinical development by third parties that are intended to treat NTM lung disease.

Some mid- to late-stage product candidates include SPR720 from Spero Therapeutics, Inc., inhaled clofazimine from MannKind Corporation, and omadacycline from Paratek Pharmaceuticals, Inc.

In addition, there may also be unexpected or unknown competitors that we are not presently aware of.

If our competitors obtain regulatory approval from the FDA or other comparable regulatory authorities for their product candidates more rapidly than we do, it could result in our competitors establishing a strong market position before we are able to enter the market.

Our competitors may also succeed in developing, acquiring or licensing technologies and drug products that are more effective, more effectively marketed and sold, or less costly than any product candidates that we may develop, which could render our product candidate non-competitive and obsolete.

Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical and nonclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products than we do as an organization.

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These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

In addition, following the announcement of topline data from the Phase 2 portion of our Phase 2/3 clinical trial evaluating epetraborole, we effected a restructuring resulting in the elimination of a significant portion of the workforce and could result in additional unplanned loss of personnel.

Continued disruption caused by the transition or by the loss of ongoing services of any qualified scientific and management personnel could delay or prevent the successful development of our current and future product candidates.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, or are less expensive than any product candidates that we may develop.

Our competitors also may obtain approval from the FDA, the PMDA or other comparable regulatory agencies for their product candidates more rapidly than we may obtain approval for ours, which could result in product approval delays if a competitor obtains market exclusivity from the FDA, the PMDA or any comparable regulatory agencies or our competitors establish a strong market position before we are able to enter the market.

Our competitors also may obtain approval from the FDA or other comparable regulatory agencies for their product candidates more rapidly than we may obtain approval for ours, which could result in product approval delays if a competitor obtains market exclusivity from the FDA or any comparable regulatory agencies or our competitors establish a strong market position before we are able to enter the market.

In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic drugs.

Additional drugs may become available on a generic basis over the coming years.

If epetraborole or any other product candidates achieve regulatory approval, we expect that they will be priced at a significant premium over competitive generic drugs.

If any of our product candidates achieve regulatory approval, we expect that they will be priced at a significant premium over competitive generic drugs.

If we are unable to establish sales, marketing and distribution capabilities for our product candidates, or enter into sales, marketing and distribution agreements with third parties, we may not be successful in commercializing our product candidates, if and when they are approved.

We do not have a sales or marketing infrastructure and have limited experience in the sale, marketing, or distribution of pharmaceutical products.

To achieve commercial success for any product candidate for which we may obtain regulatory approval, we will need to establish a sales and marketing organization or enter into collaboration, distribution and other marketing arrangements with one or more third parties to commercialize such product candidate.

In the United States and other key markets, we intend to build a commercial organization to target areas with the greatest incidence of NTM lung infections and recruit experienced sales, marketing and distribution professionals.

In the United States and other key markets, we intend to build a commercial organization to target areas with the greatest incidence of conditions for which we may at some point obtain regulatory approval and recruit experienced sales, marketing and distribution professionals.

The development of sales, marketing and distribution capabilities will require substantial resources, will be time-consuming and could delay any product launch.

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• unforeseen costs and limitations with regard to setting up a distribution network.

If we are unable to establish our own sales, marketing and distribution capabilities in the United States and other jurisdictions in which epetraborole or any other product candidates are approved and, instead, enter into arrangements with third parties to perform these services, our revenues and profitability, if any, are likely to be lower than if we were to sell, market and distribute any product candidates that we develop ourselves.

If we are unable to establish our own sales, marketing and distribution capabilities in the United States and other jurisdictions in which any of our product candidates are approved and, instead, enter into arrangements with third parties to perform these services, our revenues and profitability, if any, are likely to be lower than if we were to sell, market and distribute any product candidates that we develop ourselves.

We may not be successful in entering into arrangements with third parties to sell, market and distribute our product candidates or may be unable to do so on terms that are favorable to us.

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If we do not establish sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing any product candidates.

Coverage and adequate reimbursement may not be available for epetraborole or any other product candidates, which could make it difficult for us to sell profitably, if approved.

Coverage and adequate reimbursement may not be available for any of our product candidates, which could make it difficult for us to sell profitably, if approved.

Market acceptance and sales of any product candidates that we commercialize, if approved, will depend in part on the extent to which reimbursement for these drugs and related treatments will be available from third-party payors, including government health administration authorities, managed care organizations and other private health insurers.

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Inadequate coverage and reimbursement may impact the demand for, or the price of, any drug for which we obtain regulatory approval.

If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize epetraborole and any other product candidates that we develop.

If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize any product candidates that we develop.

Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.

We face an inherent risk of product liability exposure related to the testing of epetraborole and any other product candidates in human clinical trials and will face an even greater risk if we commercially sell any drugs that we may develop.

We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face an even greater risk if we commercially sell any drugs that we may develop.

If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we will incur substantial liabilities.

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Even if our agreements with current or future collaborators entitle us to indemnification against losses, such indemnification may not be available or adequate should any claim arise.

There are a variety of risks associated with marketing epetraborole or any other product candidates internationally, which could affect our business.

We may seek regulatory approval for epetraborole or other product candidates outside of the United States and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countries if we obtain the necessary approvals, including:

There are a variety of risks associated with marketing our product candidates internationally, which could affect our business.

We may seek regulatory approval for our product candidates outside of the United States and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countries if we obtain the necessary approvals, including:

• differing regulatory requirements and reimbursement landscapes in foreign countries;

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We operate with a small team and our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.

We are highly dependent on the management, research and development, clinical, financial and business development expertise of Eric Easom, our co-founder, president, and chief executive officer, Paul Eckburg, M.D., our chief medical officer, Sanjay Chanda, Ph.D., our chief development officer, Lucy Day, our chief financial officer, Josh Eizen, J.D., our chief legal officer, Kevin Krause, our chief strategy officer, and Michael R.K.

(Dickon) Alley, Ph.D., our co-founder and head of biology, as well as the other members of our research, development and business teams.

We are highly dependent on the management, research and development, financial and business development expertise of Eric Easom, our co-founder, president, and chief executive officer, Sanjay Chanda, Ph.D., our chief development officer, Lucy Day, our chief financial officer, Josh Eizen, J.D., our chief legal and operating officer, Michael R.K.

(Dickon) Alley, Ph.D., our co-founder and SVP research fellow and head of biology, Stephen Prior, Ph.D., our chief strategy officer, and Vincent Hernandez, our senior vice president research and head of chemistry, as well as the other members of our research, development, and business teams.

Each may terminate employment with us at any time.

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Our limited personnel and resources may result in greater workloads for our employees compared to those at companies with which we compete for personnel, which may lead to higher levels of employee dissatisfaction and turnover.

Recruiting and retaining qualified research, development and business personnel and, if we progress the development of epetraborole or any other product candidates, commercialization, manufacturing, and sales and marketing personnel, will be critical to our success.

Recruiting and retaining qualified research, development, and business personnel and, if we progress the development of our product candidates, commercialization, manufacturing, and sales and marketing personnel, will be critical to our success.

The loss of the services of our executive officers or other key employees could impede the achievement of our research, development, and commercialization objectives and seriously harm our ability to successfully implement our business strategy.

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Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect consumer spending.

Similarly, volatility and disruptions in global markets and supply chains and global conflicts may adversely affect our business or the third parties on whom we rely.

If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive.

Similarly, volatility and disruptions in global markets and supply chains, tariffs, and global conflicts may adversely affect our business or the third parties on whom we rely.

If the equity and credit markets deteriorate, including as a result of political unrest or war, or new tariffs, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive.

Increased inflation rates can adversely affect us by increasing our costs, including labor and employee benefit costs.

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We have identified material weaknesses in our internal control over financial reporting.

Prior to the completion of the IPO, we had been a private company with limited accounting personnel to adequately execute our accounting processes and other supervisory resources with which to address our internal control over financial reporting.

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Accordingly, management has determined the IT deficiencies in the aggregate constitute a material weakness.

To address our material weaknesses, we implemented measures designed to improve our internal control over financial reporting and remediate the control deficiencies that led to the material weaknesses.

These measures include (i) the ongoing hiring of additional accounting personnel;

(ii) the design and implementation of our financial control environment, including the establishment of formal accounting policies and procedures, financial reporting controls and controls to account for and disclose complex transactions;

and (iii) implementation of an upgraded accounting system with IT controls to insure appropriate and restricted access to our accounting applications, programs and data.

As of December 31, 2023, we validated the effectiveness of controls to account for and disclose complex transactions, and the material weakness associated with the accounting for certain non-routine or complex transactions, including the proper application of U.S.

GAAP, was remediated as of December 31, 2023.

We are working to remediate the material weaknesses as efficiently and effectively as possible and expect full remediation to go beyond December 31, 2024.

We cannot assure you that there will not be future material weaknesses in our internal control over financial reporting in the future.

Any failure to maintain effective internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations, or cash flows.

If we fail to remediate our identified material weaknesses, or identify additional material weaknesses, in our internal control over financial reporting investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq Stock Market LLC, the Securities and Exchange Commission, or SEC, or other regulatory authorities.

Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

We expect to expand our research, development, and business capabilities and potentially implement sales, marketing, and distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

As the clinical development of epetraborole and any of our other product candidates progresses, we also expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of research, drug development, regulatory affairs and, if epetraborole or any other product candidate receives regulatory approval, sales, marketing and distribution.

To manage our anticipated future growth, we must continue to implement and improve our managerial, operational, and financial systems, expand our facilities and continue to recruit and train additional qualified personnel.

Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel.

The expansion of our operations may lead to significant costs and may divert our management and research and development resources.

The failure to maintain effective internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations, or cash flows.

These identified material weaknesses, or any additional material weaknesses, in our internal control over financial reporting may cause investors to lose confidence in the accuracy and completeness of our financial reports and/or cause the market price of our common stock to decline, and we could be subject to sanctions or investigations by Nasdaq Global Select Market, the SEC or other regulatory authorities.

Failure to remediate material weaknesses in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

If in the future, we need to expand our research, development, and business capabilities and implement sales, marketing, and distribution capabilities, we may encounter difficulties in managing such growth, which could disrupt our operations.

Although we effected a restructuring to reduce our workforce by approximately 50%, if the development of our product candidates progresses, we may experience growth in the scope of our operations, particularly in the areas of research, drug development, regulatory affairs and, if any of our product candidates receives regulatory approval, sales, marketing and distribution.

To manage any such growth, we will need to implement and improve our managerial, operational, and financial systems, expand our facilities and recruit and train additional qualified personnel.

Due to our limited financial resources and the limited experience of our management team in managing a company with such growth, we may not be able to effectively manage such an expansion of our operations or recruit and train additional qualified personnel.

The expansion of our operations may also lead to significant costs and may divert our management and research and development resources.

Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

If we engage in future acquisitions or strategic collaborations, this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks.

From time to time, we may evaluate various acquisitions and strategic collaborations, including licensing or acquiring complementary drug products, intellectual property rights, technologies or businesses, as deemed appropriate to carry out our business plan.

We have in the past and may from time to time in the future evaluate various acquisitions and strategic collaborations, including licensing or acquiring complementary drug products, intellectual property rights, technologies or businesses, as deemed appropriate to carry out our business plan.

Any potential acquisition or strategic collaboration may entail numerous risks, including:

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• the assumption of additional indebtedness or contingent liabilities;

• the issuance of our equity securities which would result in dilution to our stockholders;

• assimilation of operations, intellectual property and drug products of an acquired company, including difficulties associated with integrating new personnel;

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• our inability to generate revenue from acquired technology and/or drugs sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.

In addition, if we undertake such a transaction, we may incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain patent and other intellectual property protection for our technology, or for epetraborole or our other product candidates, or if the scope of the patent and other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and product candidates may be impaired.

We do not own any issued patents and we in-license patents and patent applications for epetraborole, our lead drug compound, and our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to epetraborole and any of our other product candidates.

We seek to protect our proprietary position by in-licensing intellectual property relating to our product candidates including patent applications in the United States and abroad related to our technology and product candidates that are important to our business.

If we are unable to obtain and maintain patent and other intellectual property protection for our technology, or for our product candidates, or if the scope of the patent and other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and product candidates may be impaired.

Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our product candidates.

We seek to protect our proprietary position by developing and in-licensing intellectual property relating to our product candidates including patent applications in the United States and abroad related to our technology and product candidates that are important to our business.

If we or our licensors do not adequately protect the intellectual property we in-license or own, competitors may be able to use our technologies and erode or negate any competitive advantage that we may have, which could harm our business and ability to achieve profitability.

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Furthermore, recent changes in patent laws in the United States, including the America Invents Act of 2011, and future changes in patent laws in or outside the United States may affect the scope, strength and enforceability of our patent rights or the nature of proceedings that may be brought by us related to our patent rights.

We may not be aware of all third-party intellectual property rights potentially relating to epetraborole or our other product candidates.

We may not be aware of all third-party intellectual property rights potentially relating to our product candidates.

Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.

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In these circumstances, we may need to defend and/or assert our in-licensed or owned patents, including by filing lawsuits alleging patent infringement.

In any of these types of proceedings, a court, or other agency with jurisdiction may find our in-licensed patents or any owned patents, should such patents issue in the future, invalid and/or unenforceable.

In any of these types of proceedings, a court, or other agency with jurisdiction may find our in-licensed patents or any owned patents, should such patents issue in the future, not infringed, invalid and/or unenforceable.

The issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and our in-licensed patents or patents we may own in the future may be challenged in the courts or patent offices in the United States and abroad.

Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and product candidates, or limit the duration of the patent protection of our technology and product candidates.

Such challenges may result in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and product candidates, or limit the duration of the patent protection of our technology and product candidates.

In addition, given the amount of time required for the development, testing, and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.

Any impairment of our intellectual property rights, or our failure to protect our intellectual property rights adequately, could give third parties access to our technology and product candidates and could materially and adversely impact our business, financial condition, results of operations and growth prospects.

Our rights to develop and commercialize our technology, epetraborole, and our other product candidates are subject, in large part, to the terms and conditions of licenses granted to us by others, such as Anacor.

Our rights to develop and commercialize our technology and our other product candidates are subject, in large part, to the terms and conditions of licenses granted to us by others, such as Anacor.

We are heavily reliant upon licenses to certain patent rights and other intellectual property that are important or necessary to the development of epetraborole or our other product candidates.

For certain product candidates, we rely on licenses to certain patent rights and other intellectual property that are important or necessary to the development of these product candidates.

For example, we depend on a license agreement from Anacor, a biopharmaceutical company that originally developed epetraborole and is currently a wholly-owned subsidiary of Pfizer.

Additionally, we have licensed our rights under the Anacor agreement in China, Hong Kong, Taiwan and Macau to Brii Biosciences.

Anacor has relied upon, and any future licensors may have relied 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.

Anacor has relied upon, our other licensors 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.

We have sublicensed certain patents from Anacor that are owned, maintained and prosecuted by GSK.

If third-party companies such as GSK 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 epetraborole or our other product candidates that are the subject of such licensed rights could be adversely affected.

If third-party companies such as GSK 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 our product candidates that are the subject of such licensed rights could be adversely affected.

Further, we rely upon Anacor’s compliance with its license agreement with GSK to maintain our sublicense to such patents owned by GSK, and any termination of Anacor’s license agreement with GSK could result in us losing our license to epetraborole.

Further development and commercialization of epetraborole, and development of any other product candidates may require us to enter into additional license or collaboration agreements.

For example, our licensors or other third parties may develop intellectual property covering epetraborole which we have not licensed.

Our future licenses may not provide us with exclusive rights to use the licensed patent rights and other intellectual property, 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 epetraborole or our other product candidates in the future.

Our license agreement with Anacor, and other intellectual property-related agreements we may enter into in the future may impose diligence and other obligations, including payment of milestones and royalties.

Further development and commercialization of our product candidates may require us to enter into additional license or collaboration agreements.

Our license agreement with Anacor, and other intellectual property-related agreements we have entered into and may in the future enter into may impose diligence and other obligations, including payment of milestones and royalties.

For example, our license agreement from Anacor requires us to satisfy diligence requirements, including using commercially reasonable efforts to develop and commercialize products.

If we fail to comply with our obligations to Anacor or any future licensors, those counterparties may have the right to terminate the license agreements, in which event we might not be able to develop, manufacture, or market any product candidate licensed under the agreements, which could materially adversely affect the value of the product candidate being developed under any such agreement and further involve termination of our rights to important intellectual property or technology.

In spite of our efforts, Anacor imposes or 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 by such license agreements.

If we fail to comply with our obligations to Anacor or any other or future licensors, those counterparties may have the right to terminate the license agreements, in which event we might not be able to develop, manufacture, or market any product candidate licensed under the agreements, which could materially adversely affect the value of the product candidate being developed under any such agreement and further involve termination of our rights to important intellectual property or technology.

In spite of our efforts, Anacor might conclude, or any other or 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 by such license agreements.

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-licenses could prevent us from commercializing product candidates that rely upon the patents or other intellectual property rights which were the subject matter of such terminated agreements.

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Any of these events could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Under our license agreement with Anacor, and any future license agreements, disputes may arise regarding intellectual property subject to a licensing agreement, including:

Under our license agreement with Anacor, and any other or future license agreements, disputes may arise regarding intellectual property subject to a licensing agreement, including:

• the scope of rights granted under the license agreement and other interpretation-related issues;

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We may not be successful in obtaining necessary rights to any product candidates we may develop through acquisitions and in-licenses.

We currently have rights to intellectual property, through licenses from third parties, to identify and develop product candidates.

We may find it necessary or prudent to obtain licenses from such third-party intellectual property holders in order to avoid infringing these third-party patents.

For example, many pharmaceutical companies, biotechnology companies and academic institutions compete with us and may be filing patent applications potentially relevant to our business.

We currently have rights to intellectual property through licenses from third parties, including Anacor, to identify and develop product candidates.

We may find it necessary or prudent to obtain licenses from other third-party intellectual property holders in order to avoid infringing these third-party patents.

For example, many pharmaceutical companies, biotechnology companies and academic institutions compete with us and may be filing patent applications that are potentially relevant to our business.

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

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

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

In addition, companies that perceive us to be a competitor may be unwilling to license any intellectual property rights to us.

We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment or at all.

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We may become involved in lawsuits to protect or enforce our owned or in-licensed patents or other intellectual property, which could be expensive, time-consuming and unsuccessful.

Competitors or other third parties may infringe, misappropriate or otherwise violate our in-licensed issued patents or other intellectual property we may own.

To counter such infringement, misappropriation or other unauthorized use, we 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.

Any claims we assert against third parties could provoke these parties to assert counterclaims against us alleging that we infringe, misappropriate or otherwise violate their patents, trademarks, copyrights or other intellectual property.

Competitors or other third parties may infringe, misappropriate or otherwise violate our in-licensed issued patents or other intellectual property rights we may own.

To counter such infringement, misappropriation, violation or other unauthorized use, we 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.

In addition, our in-licensed patents may become involved in inventorship or priority disputes.

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The outcome following legal assertions of invalidity and unenforceability is unpredictable.

An adverse determination in any such submission, proceeding or litigation could reduce the scope of, invalidate, or render unenforceable, our potential future owned patents or licensed patent rights, allow third parties to commercialize epetraborole or our other product candidates and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights In a patent infringement proceeding, there is a risk that a court will decide that a patent we in-license 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.

There is also a risk that, even if the validity of such patents are 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 in-licensed patents do not cover the invention.

An adverse outcome in a litigation or proceeding involving our in-licensed patents could limit our ability to assert our in-licensed 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.

Similarly, in the future, we expect to rely on trademarks to distinguish epetraborole and any of our other product candidates that are approved for marketing, and 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.

An adverse determination in any such submission, proceeding or litigation could reduce the scope of, invalidate, or render unenforceable, our potential future owned patents or licensed patent rights, allow third parties to commercialize our product candidates and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights In a patent infringement proceeding, there is a risk that a court will decide that a patent we own or in-license 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.

An adverse outcome in a litigation or proceeding involving our owned or in-licensed patents could limit our ability to assert our owned or in-licensed 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.

Similarly, in the future, we expect to rely on trademarks to distinguish our product candidates that are approved for marketing, if any, and if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the third 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.

In any infringement litigation, any award of monetary damages we receive may not be commercially valuable.

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.

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 or trade secrets could be compromised by disclosure during litigation.

In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.

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Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

Accordingly, despite our efforts, we may not be able to prevent third parties from infringing, misappropriating, or successfully challenging our intellectual property rights.

Accordingly, despite our efforts, we may not be able to prevent third parties from infringing, misappropriating, otherwise violating or successfully challenging our intellectual property rights.

Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a negative impact on our ability to compete in the marketplace, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could significantly harm our business.

Our commercial success depends, in part, on our ability to develop, manufacture, market and sell epetraborole or other product candidates and use our proprietary chemistry technology without infringing, misappropriating or otherwise violating the intellectual property of third parties.

Our commercial success depends, in part, on our ability to develop, manufacture, market and sell our product candidates and use our proprietary chemistry technology without infringing, misappropriating or otherwise violating the intellectual property rights of third parties.

Numerous third-party U.S.

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The outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance.

If we are found to have infringed, misappropriated, or otherwise violated any third party’s intellectual property rights, we could be forced, including by court order, to cease developing, manufacturing, or commercializing epetraborole or other product candidates.

Alternatively, we may be required to obtain a license from such third party in order to use technology and continue developing, manufacturing or marketing product candidates that infringe or violate such third party’s intellectual property.

If we are found to have infringed, misappropriated or otherwise violated any third party’s intellectual property rights, we could be forced, including by court order, to cease developing, manufacturing, or commercializing our product candidates.

Alternatively, we may be required to obtain a license from such third party in order to use technology and continue developing, manufacturing or marketing product candidates that infringe, misappropriate or otherwise violate such third party’s intellectual property rights.

However, we may not be able to obtain any such required license on commercially reasonable terms or at all.

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In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent or other intellectual property right.

A finding of infringement could prevent us from commercializing epetraborole or other product candidates or force us to cease some of our business operations.

A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations.

Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative effect on our business.

Even if we were to prevail in such a dispute, any litigation regarding our intellectual property could be costly and time-consuming and divert the attention of our management and key personnel from our business operations.

Even if we were to prevail in such a dispute, any litigation regarding our intellectual property rights could be costly and time-consuming and divert the attention of our management and key personnel from our business operations.

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 or trade secrets could be compromised by disclosure during this type of litigation.

During the course of litigation, there could be public announcements or the results of hearings, motions or other interim proceedings or developments.

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Any of the foregoing arising from uncertainty in legal proceedings could materially and adversely impact our business, financial condition, results of operations and growth prospects.

We may be subject to claims by third parties asserting that we or our employees, consultants, and advisors have misappropriated their intellectual property or claiming ownership of what we regard as our own intellectual property.

We may be subject to claims by third parties asserting that we or our employees, consultants and advisors have misappropriated their intellectual property rights or claiming ownership of what we regard as our own intellectual property rights.

Many of our employees, consultants and advisors were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors.

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Litigation may be necessary to defend against these potential claims.

In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, such employees and contractors may breach the agreement and claim the developed intellectual property as their own.

In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property rights to execute agreements assigning such intellectual property rights to us, such employees and contractors may breach the agreement and claim the developed intellectual property as their own.

Further, we may be unsuccessful in executing such agreements with each party who, in fact, conceives, or develops intellectual property that we regard as our own.

The assignment of intellectual property rights may not be self-executing and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property.

The assignment of intellectual property may not be self-executing and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property.

If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.

A court could prohibit us from using technologies or features that are essential to epetraborole or other product candidates if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers.

A court could prohibit us from using technologies or features that are essential to our product candidates if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers.

Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and could be a distraction to management.

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Our competitors may infringe our trademarks and we may not have adequate resources to enforce our trademarks and may not be able to prevent such third parties from using and marketing any such trademarks.

In addition, any proprietary name we propose to use with epetraborole or any other product candidate in the United States must be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark.

In addition, any proprietary name we propose to use with any product candidate in the United States must be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark.

The FDA typically conducts a review of proposed product names, including an evaluation of the potential for confusion with other product names.

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If we are unable to establish name recognition based on our trademarks, we may not be able to compete effectively and our business, financial condition, results of operations and growth prospects may be adversely affected.

If we are unable to protect the confidentiality of our proprietary information, know-how and trade secrets, the value of epetraborole or other product candidates could be adversely affected and our business and competitive position would be harmed.

In addition to seeking patent protection for epetraborole or other product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position.

If we are unable to protect the confidentiality of our proprietary information, know-how and trade secrets, the value of our product candidates could be adversely affected and our business and competitive position would be harmed.

In addition to seeking patent protection for our product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position.

We seek to protect our trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties.

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Although we use reasonable efforts to protect this proprietary information and technology, we also cannot guarantee that we have entered into such agreements with each party that may have or have had access to our confidential information, know-how, trade secrets or other proprietary information or each individual who has developed intellectual property on our behalf.

Monitoring unauthorized uses and disclosures of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property will be effective.

Monitoring unauthorized uses and disclosures of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property rights will be effective.

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, distracting to management, and time-consuming, and the outcome is unpredictable and varied depending on the jurisdiction.

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Moreover, the applicable time period or the scope of patent protection afforded could be less than we request.

If we are unable to obtain patent term extension or term of any such extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our business, financial condition, results of operations and growth prospects could be materially harmed.

If we are unable to obtain patent term extension or the term of any such patent term extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our business, financial condition, results of operations and growth prospects could be materially harmed.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and applications will be due to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of our owned or in-licensed patents and applications.

Periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and patent applications will be due to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of our owned or in-licensed patents and patent applications.

In certain circumstances, we rely on our licensing partners to pay these fees due to U.S.

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We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those in the United States.

Filing, prosecuting, enforcing and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those in the United States.

In some cases, we or our licensors may not be able to obtain patent protection for certain licensed technology outside the United States.

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Consequently, we may not be able to prevent third parties from practicing our in-licensed inventions in all countries outside the United States, even in jurisdictions where our licensors do pursue patent protection or from selling or importing products made using our inventions in and into the United States or other jurisdictions.

In addition, geo-political actions in the United States and in foreign countries could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications or those of any current or future licensors and the maintenance, enforcement or defense of our issued patents or those of any current or future licensors.

For example, the United States and foreign government actions related to Russia’s conflict in Ukraine may limit or prevent filing, prosecution, and maintenance of patent applications in Russia.

Government actions may also prevent maintenance of issued patents in Russia.

These actions could result in abandonment or lapse of our patents or patent applications, resulting in partial or complete loss of patent rights in Russia.

In addition, a decree was adopted by the Russian government in March 2022, allowing Russian companies and individuals to exploit inventions owned by patentees from the United States without consent or compensation.

Consequently, we would not be able to prevent third parties from practicing our inventions in Russia or from selling or importing products made using our inventions in and into Russia.

Accordingly, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.

Competitors may use our technologies in jurisdictions where we or our licensors have not pursued and obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States.

These products may compete with epetraborole, our other product candidates and our preclinical programs.

These products may compete with our product candidates and our preclinical programs.

Our in-licensed patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.

The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our in-licensed patents, if pursued and obtained, or the marketing of competing products in violation of our proprietary rights generally.

Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our in-licensed patents at risk of being invalidated or interpreted narrowly and our in-licensed patent applications at risk of not issuing and could provoke third parties to assert claims against us.

The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our owned or in-licensed intellectual property rights, if pursued and obtained, or the marketing of competing products in violation of our proprietary rights generally.

Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our owned or in-licensed patents at risk of being invalidated or interpreted narrowly and our owned or in-licensed patent applications at risk of not issuing and could provoke third parties to assert claims against us.

We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.

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If we or any of our 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 growth prospects may be adversely affected.

Risks Related to Regulatory Approval of Epetraborole and Our Other Product Candidates and Other Legal Compliance Matters

If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize epetraborole or our other product candidates, and our ability to generate revenue will be materially impaired.

Epetraborole and our other product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, record-keeping, labeling, storage, approval, advertising, promotion, sale, import, export and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable foreign regulatory authorities, with regulations differing from country to country.

Further, on June 1, 2023, the European Union Patent Package (“EU Patent Package”) regulations were implemented with the goal of providing a single pan-European Unitary Patent and a new European Unified Patent Court (“UPC”) for litigation involving European patents.

As a result, all European patents, including those issued prior to ratification of the EU Patent Package, now by default automatically fall under the jurisdiction of the UPC.

It is uncertain how the UPC will impact granted European patents in the biotechnology and pharmaceutical industries.

Our European patent applications, if issued, could be challenged in the UPC.

During the first seven years of the UPC’s existence, the UPC legislation allows a patent owner to opt its European patents out of the jurisdiction of the UPC.

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.

Moreover, if we do not meet all of the formalities and requirements for opt-out under the UPC, our future European patent applications and 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.

Such a loss of patent protection could have a material adverse impact on our business and our ability to commercialize our technology and product candidates and, resultantly, on our business, financial condition, results of operations and growth prospects.

Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters

If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize our product candidates, and our ability to generate revenue will be materially impaired.

Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, record-keeping, labeling, storage, approval, advertising, promotion, sale, import, export and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable foreign regulatory authorities, with regulations differing from country to country.

Failure to obtain regulatory approval for a product candidate will prevent us from commercializing the product candidate.

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Regulations and requirements vary among jurisdictions, including in Japan and Europe.

For instance, we met with the PMDA and gained alignment on the use of a microbiological primary endpoint to support registration in Japan.

We have not obtained regulatory approval for any product candidate, and it is possible that epetraborole and any product candidates we may seek to develop in the future will never obtain regulatory approval.

We are not permitted to market any product candidate in the United States until we receive regulatory approval of an NDA from the FDA.

We have not sought or obtained regulatory approval for any product candidate, and it is possible that epetraborole and any product candidates we may seek to develop in the future will never obtain regulatory approval.

We have not obtained regulatory approval for any product candidate, and it is possible that our product candidates will never obtain regulatory approval.

We have not sought or obtained regulatory approval for any product candidate, and it is possible that any product candidates we may seek to develop will never obtain regulatory approval.

In order to obtain approval to commercialize a product candidate in the United States or abroad, we or our collaborators must demonstrate to the satisfaction of the FDA or foreign regulatory agencies, that such product candidates are safe and effective for their intended uses.

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The FDA may also require us to conduct additional nonclinical studies or clinical trials for product candidates either prior to or post-approval, and it may otherwise object to elements of our clinical development program.

The FDA or any foreign regulatory bodies can delay, limit or deny approval of epetraborole or other product candidates or require us to conduct additional nonclinical or clinical testing or abandon a program for many reasons, including:

• disagreement with the design or implementation of our clinical trials;

• negative or ambiguous results from our clinical trials or results that may not meet the level of statistical significance required by the FDA or comparable foreign regulatory agencies for approval (for example, otherwise positive epetraborole results may be called into question if patient reported outcomes introduce ambiguity due to factors such as co-morbidities and other underlying patient issues);

The FDA or any foreign regulatory bodies can delay, limit or deny approval of our product candidates or require us to conduct additional nonclinical or clinical testing or abandon a program for many reasons, including:

• disagreement with the design, endpoint selection, or implementation of our clinical trials;

• serious and unexpected drug-related side effects experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates;

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Any delay in obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of that product candidate and would materially adversely impact our business and prospects.

Disruptions at the FDA and other government agencies 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.

The ability of the FDA and 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 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 foreign regulatory authorities’ ability to perform routine functions.

Disruptions at the FDA and other government agencies caused by the transition to a new administration with different philosophies, funding shortages, staffing limitations, 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.

The ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including the transition to a new administration, government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s or 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 foreign regulatory authorities’ ability to perform routine functions.

Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result.

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

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

For example, in recent years, the U.S.

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

In addition, the current U.S.

Presidential administration has issued certain policies and certain Executive Orders directed towards reducing the employee headcount and costs associated with U.S.

administrative agencies, including the FDA, and it remains unclear the degree to which these efforts may limit or otherwise adversely affect the FDA’s ability to conduct routine operations.

Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections at domestic and foreign manufacturing facilities at various points.

Even though the FDA has since resumed standard inspection operations, any resurgence of the virus may lead to other inspectional or administrative delays.

If a prolonged government shutdown occurs, or if global health concerns hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

If a prolonged government shutdown occurs, or if renewed global health concerns, funding shortages or staffing limitations hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

We may not be able to obtain or maintain orphan drug designations for any product candidates, and we may be unable to take advantage of the benefits associated with orphan drug designation, including the potential for market exclusivity.

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The European Commission may grant a product orphan medicinal product designation if the product is intended for the treatment, prevention or diagnosis of a life-threatening or very serious condition, with a prevalence in the European Union of not more than five in 10,000 people, and where either no satisfactory method of diagnosis, prevention or treatment of the condition in question exists, or if such method exists that the medicinal product will be of significant benefit to those affected by that condition.

As part of our business strategy, we sought and have received orphan drug designation from the FDA and orphan medicinal product designation from the European Commission for epetraborole for the treatment of infections caused by NTM, and we may seek additional orphan designations for epetraborole or our other product candidates;

however, we may not be able to maintain this status.

There can be no assurance that the FDA or European Commission will grant any orphan drug designations.

We may also seek orphan drug designation for other product candidates, and we may be unsuccessful in obtaining this designation.

As part of our business strategy, we intend to seek orphan drug designation, where applicable, from the FDA and orphan medicinal product designation from the European Commission;

however, we may not be able to obtain or maintain this status for our product candidates.

There can be no assurance that any regulatory authority will grant any orphan drug designations.

In the United States, orphan designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user-fee waivers.

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More than one product may be approved by the FDA for the same orphan disease or condition, as long as the products are different drugs, as determined by the FDA.

As a result, even though we have obtained orphan drug designation from the FDA for epetraborole for the treatment of infections caused by NTM, even if epetraborole is approved by the FDA and receives orphan drug exclusivity, absent other applicable exclusivities, the FDA can still approve other drugs for use in treating the same indication or disease covered by epetraborole, which could create a more competitive market for us.

As a result, if any of our product candidates is approved by the FDA and receives orphan drug exclusivity, absent other applicable exclusivities, the FDA can still approve other drugs for use in treating the same indication or disease, which could create a more competitive market for us.

The failure to successfully obtain orphan drug exclusivity would adversely affect our business.

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Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process.

Designation of any of our product candidates as a Qualified Infectious Disease Product (“QIDP”) may not actually lead to faster development or regulatory review or other benefits, and does not assure FDA approval of any product candidates which may receive such designation.

The Generating Antibiotic Incentives Now (the “GAIN Act”) established certain programs intended to incentivize the development of antibacterial and antifungal drugs for human use to treat serious or life-threatening infections.

Specifically, pursuant to the GAIN Act, the FDA may designate certain antimicrobial products as QIDPs, which provides sponsors with certain benefits during the development and review process.

In December 2021, the FDA granted QIDP designation to epetraborole for treatment-refractory MAC lung disease.

A QIDP is defined as an antibacterial or antifungal drug, including a biological product, for human use that acts on bacteria or fungi, or on substances produced by such bacteria or fungi, and is intended to treat serious or life-threatening infections, including those caused by either (1) an antibacterial or antifungal resistant pathogen, including novel or emerging infectious pathogens, or (2) a so-called “qualifying pathogen” found on a list of potentially dangerous, drug-resistant organisms established and maintained by the FDA under the GAIN Act.

The FDA has interpreted QIDP designation to apply to a specific drug product, including a specific dosage form of the product, and the FDA does not apply the designation to the drug substance in general or beyond the specified indications identified in the designation.

The benefits of QIDP designation include eligibility for Fast Track designation, priority review of a submitted marketing application, and an extension by an additional five years of any non-patent exclusivity period awarded, such as a five-year exclusivity period awarded for a new chemical entity.

This extension is in also addition to any pediatric exclusivity extension that may be awarded.

A sponsor must request such designation before submitting a marketing application, and the FDA will respond to a request for QIDP designation within 60 days of the date the FDA receives the request.

Receipt of QIDP designation does not assure ultimate approval by the FDA or related GAIN Act exclusivity benefits.

Under the GAIN Act, the FDA may only revoke a QIDP designation if the request for such designation contained an untrue statement of material fact.

While we believe that our request for our QIDP designation did not contain any untrue statement of material fact, if the FDA were to seek to revoke our QIDP designation for epetraborole, and if FDA were successful in doing so, we would not obtain the GAIN Act exclusivity benefits for epetraborole, which could have a material, adverse effect on our business prospects.

Obtaining a QIDP designation does not change the standards for product approval but may expedite the development or approval process.

Accordingly, such QIDP designations may not actually result in faster clinical development or regulatory review or approval.

We have received Fast Track designation from the FDA, but receipt of such designation may not actually lead to a faster development, regulatory review, or approval process, and does not assure ultimate FDA approval.

We received Fast Track designation from the FDA to investigate epetraborole for treatment-refractory MAC lung disease, and we may seek additional Fast Track designations for our product candidates or for epetraborole in other indications.

If a product candidate is intended for the treatment of a serious or life-threatening condition and the product demonstrates the potential to address unmet medical needs for this condition, the product sponsor may apply for Fast Track designation.

Fast Track designation applies to the combination of the product candidate and the specific indication for which it is being studied.

The sponsor of a Fast Track product candidate has opportunities for more frequent interactions with the applicable FDA review team during product development and, once an NDA is submitted, the application may be eligible for priority review.

An NDA submitted for a Fast Track product candidate may also be eligible for rolling review, where the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.

The TFDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it.

Even though we have received Fast Track designation to develop epetraborole in treatment-refractory MAC lung disease, and even if we receive Fast Track designation for other product candidates or indications, we may not experience a faster development process, review, or approval compared to conventional FDA procedures and does not assure ultimate approval by the FDA.

The FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from our clinical development program.

Many product candidates that have received Fast Track Designation have ultimately failed to obtain approval.

We may seek FDA approval using the limited-population antibacterial drug (“LPAD”) pathway.

We may not be able to obtain or maintain LPAD designations for epetraborole and/or any future candidates, and we may be unable to take advantage of the benefits associated with LPAD designation.

We may seek FDA approval for epetraborole using the LPAD pathway, through which the FDA may review and approve new antibacterial drugs to treat serious bacterial diseases in patients with an unmet medical need and for which effective antibacterial drugs are limited or lacking.

Specifically, under Section 506(h)(1) of the Federal Food, Drug, and Cosmetic Act (“FDCA”), the FDA may approve an antibacterial or anti-fungal drug, alone or in combination with one or more other drugs under the LPAD pathway.

For FDA to approve a drug under the LPAD pathway, the drug must be intended to treat a serious or life-threatening infection in a limited population of patients with unmet needs, the FDA’s traditional standards for approval must be otherwise met and the FDA must receive a written request from the sponsor to approve the drug as a limited population drug.

By pursuing this pathway, we may be able to conduct a more streamlined development program, including the potential to seek approval using smaller, shorter or fewer clinical trials than would otherwise be required to pursue approval within a broader patient population.

If our ongoing Phase 2/3 clinical trial of epetraborole is successful, we may submit an NDA seeking approval under the LPAD pathway.

However, there is a risk that the FDA may not agree that epetraborole qualifies for approval under the LPAD pathway, even if we believe the results from our Phase 2/3 clinical trial are sufficiently positive and warrant such approval, in which case we may be required to conduct additional clinical trials of epetraborole before we are able to seek approval, if ever.

Any requirements for us to conduct additional clinical trials would increase our costs and have an adverse effect on our business.

In addition, even if we are able to obtain approval for epetraborole under the LPAD pathway, the FDCA requires that drugs approved under the LPAD pathway include certain labeling statements that may limit the commercial potential of epetraborole, if approved.

We may attempt to seek accelerated approval in the United States for certain of our product candidates.

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If such post-approval studies fail to confirm the drug’s clinical benefit or are not completed in a timely manner, the FDA may withdraw its approval of the drug on an expedited basis.

In addition, in December 2022, President Biden signed an omnibus appropriations bill to fund the U.S.

government through fiscal year 2023.

Included in the omnibus bill is the Food and Drug Omnibus Reform Act of 2022, which among other things, provided FDA new statutory authority to mitigate potential risks to patients from continued marketing of ineffective drugs previously granted accelerated approval.

Under these provisions, the FDA may require a sponsor of a product seeking accelerated approval to have a confirmatory trial underway prior to such approval being granted.

In addition, the Food and Drug Omnibus Reform Act of 2022, provided the FDA new statutory authority to mitigate potential risks to patients from continued marketing of ineffective drugs previously granted accelerated approval.

Under these provisions, the FDA may require a sponsor of a product seeking accelerated approval to, among other things, have a confirmatory trial underway prior to such approval being granted.

Prior to seeking accelerated approval for any of our product candidates we intend to seek feedback from the FDA or will otherwise evaluate ability to seek and receive accelerated approval.

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A failure to obtain accelerated approval or any other form of expedited development, review or approval for our product candidate would result in a longer time period to commercialization of such product candidate, if any, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.

Failure to obtain regulatory approval in foreign jurisdictions would prevent epetraborole or our other product candidates from being marketed in these territories.

Any approval we are granted for our product candidates in the United States would not assure approval of our product candidates in foreign jurisdictions.

In order to market and sell epetraborole or our other product candidates in Japan, the European Union, United Kingdom, other areas of Asia, Australia, and any other jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements.

Failure to obtain regulatory approval in foreign jurisdictions would prevent our product candidates from being marketed in these territories.

Any approval we are granted for our product candidates in the United States would not assure approval of such product candidates in foreign jurisdictions.

In order to market and sell our product candidates in Japan, the European Union, United Kingdom, other areas of Asia, Australia, and any other jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements.

The approval procedure varies among countries and can involve additional testing.

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We may not be able to file for marketing authorization and may not receive necessary approvals to commercialize our product candidates in any market.

Even if we obtain regulatory approvals for epetraborole or any other product candidates, the terms of approvals and ongoing regulation of such product candidates may limit how we manufacture and market the product candidates and compliance with such requirements may involve substantial resources, which could materially impair our ability to generate revenue.

Even if regulatory approval of epetraborole or any other product candidates is granted, an approved product and its manufacturer and marketer are subject to ongoing review and extensive regulation, including with respect to the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for the product.

Even if we obtain regulatory approvals for our product candidates, the terms of approvals and ongoing regulation of such product candidates may limit how we manufacture and market the product candidates and compliance with such requirements may involve substantial resources, which could materially impair our ability to generate revenue.

Even if regulatory approval of any of our product candidates is granted, an approved product and its manufacturer and marketer are subject to ongoing review and extensive regulation, including with respect to the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for the product.

These requirements include submissions of safety and other post-marketing information and reports, registration, as well as ongoing compliance with cGMPs and GCPs for any clinical trials, In addition, manufacturers of approved products and those manufacturers’ facilities are required to comply with extensive FDA requirements including ensuring that quality control and manufacturing procedures conform to cGMP, which include requirements relating to quality control and quality assurance as well as the corresponding maintenance of records and documentation and reporting requirements.

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If we or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facilities where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

In addition, failure to comply with FDA and other comparable foreign regulatory requirements may subject our company to administrative or judicially imposed sanctions, including:

In addition, failure to comply with the FDA and other comparable foreign regulatory requirements may subject our company to administrative or judicially imposed sanctions, including:

• restrictions on the marketing or manufacturing of our products, withdrawal of the product from the market or voluntary or mandatory product recalls;

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These regulations include standards and restrictions for direct-to-consumer advertising, industry-sponsored scientific and educational activities, and promotional activities involving the internet and off-label promotion.

For example, any regulatory approval that the FDA grants is limited to those specific diseases and indications for which a product is deemed to be safe and effective by FDA.

For example, any regulatory approval that the FDA grants is limited to those specific diseases and indications for which a product is deemed to be safe and effective by the FDA.

While physicians in the United States may choose, and are generally permitted, to prescribe drugs for uses that are not described in the product’s labeling and for uses that differ from those tested in clinical trials and approved by the regulatory authorities, our ability to promote any products will be narrowly limited to those indications that are specifically approved by the FDA.

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We are exposed to the risk of employee fraud or other misconduct or failure to comply with applicable regulatory requirements.

Misconduct, errors, or omissions by employees and independent contractors, such as principal investigators, CROs, consultants, commercial partners, and vendors, could include failures to comply with regulations of the FDA, the PMDA and other comparable regulatory authorities, to provide accurate information to such regulators, to comply with manufacturing standards we have established, to comply with healthcare fraud and abuse laws, to report financial information or data accurately, to disclose unauthorized activities to us, or to comply with requirements of government contracts (e.g., the September 2022 NIAID contract).

Misconduct, errors, or omissions by employees and independent contractors, such as principal investigators, CROs, consultants, commercial partners, and vendors, could include failures to comply with regulations of the FDA and other comparable regulatory authorities, to provide accurate information to such regulators, to comply with manufacturing standards we have established, to comply with healthcare fraud and abuse laws, to report financial information or data accurately, to disclose unauthorized activities to us, or to comply with requirements of government contracts (e.g., the NIAID contract).

In particular, sales, marketing, and other business arrangements in the healthcare industry are subject to extensive laws intended to prevent fraud, kickbacks, self-dealing, and other abusive practices.

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If any such actions are instituted against us, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid, and other federal healthcare programs, contractual damages, reputational harm, diminished profits, and future earnings, additional reporting or oversight obligations if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with the law and curtailment, or restructuring of our operations, any of which could adversely affect our ability to operate.

If we successfully commercialize epetraborole or one of our other product candidates, failure to comply with our reporting and payment obligations under U.S.

If we successfully commercialize any of our product candidates, failure to comply with our reporting and payment obligations under U.S.

governmental pricing programs could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

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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;

• the federal Physician Payments Sunshine Act, which requires manufacturers of certain drugs, devices, biologicals, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare & Medicaid Services (“CMMS”) information related to payments and “transfers of value” provided to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), certain other healthcare providers (such as nurse practitioners and physicians assistants) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

• the federal Physician Payments Sunshine Act, which requires manufacturers of certain drugs, devices, biologicals, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare & Medicaid Services (“CMS”) information related to payments and “transfers of value” provided to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), certain other healthcare providers (such as nurse practitioners and physicians assistants) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;

• analogous state and foreign laws, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers;

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If any of the physicians or other healthcare providers or entities with whom we expect to do business, including future collaborators, are found not to be in compliance with applicable laws, they may be subject to criminal, civil, or administrative sanctions, including exclusions from participation in government healthcare programs, which could also affect our business.

Changes in healthcare policies, laws, and regulations may impact our ability to obtain approval for, or commercialize epetraborole or our other product candidates, if approved.

Changes in healthcare policies, laws, and regulations may impact our ability to obtain approval for, or commercialize our product candidates, if approved.

In the United States and some foreign jurisdictions there have been, and continue to be, several legislative and regulatory changes and proposed reforms of the healthcare system in an effort to contain costs, improve quality, and expand access to care.

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Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (the “IRA”) into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.

The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (the “IRA”) into law, which among other things, extended enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.

The IRA also eliminated the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program.

In addition, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S.

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Department of Health and Human Services (“HHS”) to negotiate the price of certain high-expenditure, single-source drugs and biologics covered under Medicare and (ii) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation.

These provisions take effect progressively starting in fiscal year 2023.

On August 29, 2023 HHS announced the list of the first ten drugs that will be subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges.

These provisions took effect progressively starting in fiscal year 2023.

CMS published the negotiated prices for the initial ten drugs, which will first be effective in 2026, and the list of the subsequent 15 drugs that will be subject to negotiation, although the Medicare drug price negotiation program is currently subject to legal challenges.

HHS has and will continue to issue and update guidance as these programs are implemented.

It is currently unclear how the IRA will be implemented but is likely to have a significant impact on the pharmaceutical industry.

In addition, in response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the Center for Medicare and Medicaid Innovation which will be evaluated on their ability to lower the cost of drugs, promote accessibility, and improve quality of care.

It is unclear whether the models will be utilized in any health reform measures in the future.

We expect that additional U.S.

federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that the U.S.

federal government will pay for healthcare products and services, which could result in reduced demand for epetraborole or our other product candidates or additional pricing pressures.

At the state level, legislatures have 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.

federal government will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

At the state level, legislatures have 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, drug price reporting, and other transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

Some states have enacted legislation creating so-called prescription drug affordability boards, which ultimately may attempt to impose price limits on certain drugs in these states.

Outside of the United States, particularly in 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 the receipt of regulatory approval for a product.

To obtain coverage and reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of epetraborole or our other product candidates to other available therapies.

To obtain coverage and reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidates to other available therapies.

If reimbursement of our product candidates is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be harmed.

Government Downsizing Initiatives Could Adversely Impact FDA Operations, Leading to Potential Delays in Regulatory Review and Approval

Recent government downsizing initiatives, including efforts to reduce the size and scope of federal agencies such as the U.S.

Food and Drug Administration (“FDA”), could negatively impact the agency’s ability to efficiently review and approve new drug applications.

These initiatives may lead to staff reductions, voluntary resignations, and resource constraints that could slow down regulatory processes, including clinical trial oversight, new drug application reviews, and post-market surveillance activities.

In addition, future agency cost-cutting measures, budget reductions, or structural changes remain uncertain and could further disrupt the FDA operations.

Any prolonged delays or unpredictability in regulatory timelines may adversely affect our ability to bring our product candidates to market in a timely manner, which could have a material impact on our business, financial condition, and future growth prospects.

Disruptions at the FDA and other government agencies caused by funding shortages, staff reductions or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.

The ability of the FDA and foreign regulatory authorities to review and/or approve new products can be affected by a variety of factors, including government budget and funding levels, staff reductions, statutory, regulatory, and policy changes, the FDA’s or 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 foreign regulatory authorities’ ability to perform routine functions.

Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result.

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.

Disruptions at the FDA and other agencies such as the EMA, following its relocation to Amsterdam and resulting staff changes, may also slow the time necessary for new drugs and biologics or modifications to approved drugs or biologics to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

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

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

If a prolonged government shutdown occurs, or if staffing reductions or global health concerns prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

We are subject to privacy and data security laws, rules, regulations, policies, industry standards, and contractual obligations, and our failure to comply with them could harm our business.

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Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors, and other collaborators from authorizing, promising, offering, or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector.

We may engage third parties to sell epetraborole or our other product candidates outside the United States, to conduct clinical trials, and/or to obtain necessary permits, licenses, patent registrations, and other regulatory approvals.

We may engage third parties to sell any approved product candidates outside the United States, to conduct clinical trials, and/or to obtain necessary permits, licenses, patent registrations, and other regulatory approvals.

We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations.

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We are also subject to export control, import, and trade sanctions laws and regulations which may restrict or prohibit altogether the provision, sale, or supply of our product candidates to certain governments, persons, entities, countries, and territories, including those that are the target of comprehensive sanctions or an embargo.

Additionally, new or increased tariffs and other changes in U.S.

trade policy, including new sanctions, could trigger retaliatory actions by affected countries.

Obtaining the necessary export license or other authorization for a particular transaction may be time-consuming and may result in the delay or loss of sales opportunities.

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• delaying, deferring, or preventing a change in control;

• entrenching our management and/or the board of directors ("Board");

• entrenching our management and/or the board of directors (the “Board”);

• impeding a merger, consolidation, takeover, or other business combination involving us;

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In addition, some of these persons or entities may have interests different than yours.

For example, because many of these stockholders purchased their shares at prices substantially below the price at which shares were sold in our IPO and have held their shares for a longer period, they may be more interested in selling our company to an acquirer than other investors, or they may want us to pursue strategies that deviate from the interests of other stockholders.

For example, because many of these stockholders purchased their shares at prices substantially below the price at which shares were sold in our IPO and recent financings and have held their shares for a longer period, they may be more interested in selling our company to an acquirer than other investors, or they may want us to pursue strategies that deviate from the interests of other stockholders.

A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

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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.

However, future sales of substantial amounts of our common stock in the public market, including shares issued upon exercise of outstanding options, or the perception that such sales may occur, could adversely affect the market price of our common stock.

However, future sales of substantial amounts of our common stock in the public market, including shares issued upon exercise of outstanding options, or vesting of restricted stock units, 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.

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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.

Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our corporate charter documents and under Delaware law, and the adoption of a rights plan, could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger, acquisition, or other change in control of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares.

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These provisions may also prevent changes in our management or limit the price that investors are willing to pay for our stock.

Additionally, in August 2024, we entered into a Rights Agreement, which was previously approved by the Board.

In connection with the Rights Agreement, a dividend was declared of one preferred stock purchase right for each share of the Common Stock of the Company outstanding at the Record Date (individually, a “Right” and collectively, the “Rights”).

Each Right entitles the registered holder thereof, after the Rights become exercisable and until August 15, 2025 (or the earlier redemption, exchange or termination of the Rights), to purchase from the Company one one-thousandth of a share of Series A Preferred, of the Company at a price of $6.50 per one one-thousandth of a share of Series A Preferred, subject to adjustment.

The Rights will expire on August 15, 2025, subject to the Company’s right to extend such date, unless earlier redeemed or exchanged by the Company or terminated.

The Rights Agreement could have the effect of discouraging, delaying or preventing a change in management or control over us.

While there is no plan to do so at this time, our Board may choose to extend the current Rights Agreement or adopt a new rights agreement in the future.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States will be the exclusive forums for substantially all disputes between us and our stockholders, including claims under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

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Our management will have broad discretion in the application of our cash, and could spend our cash in ways that do not improve our results of operations or enhance the value of our common stock.

The failure by our management to apply these funds effectively could result in financial losses that could have a negative impact on our business, cause the price of our common stock to decline, and delay the development of epetraborole and planned pipeline and expansion programs as well as commercial preparedness.

The failure by our management to apply these funds effectively could result in financial losses that could have a negative impact on our business, cause the price of our common stock to decline, and delay the development of our pipeline programs as well as commercial preparedness.

We do not anticipate paying any cash dividends on our capital stock in the foreseeable future, and accordingly, stockholders must rely on capital appreciation, if any, for any return on their investment.

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As of December 31, 2024, we had federal and state net operating loss (“NOLs”) carryforwards of approximately $81.3 million and $166.3 million, respectively.

Under the Tax Cuts and Jobs Act of 2017, or the Tax Act, as modified by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), our NOLs generated in tax years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal NOLs in tax years beginning after December 31, 2020, is limited to 80% of taxable income.

Under the Tax Cuts and Jobs Act of 2017 (“the Tax Act”), as modified by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), our NOLs generated in tax years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal NOLs in tax years beginning after December 31, 2020, is limited to 80% of taxable income.

There is variation in how states have responded and may continue to respond to the Tax Act or the CARES Act.

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As a result of this volatility, investors may not be able to sell their shares at or above the price paid for the shares.

In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, these factors include:

In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report Form 10-K, these factors include:

• the commencement, enrollment or results of our planned and future clinical trials;

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• adverse actions taken by regulatory agencies with respect to our clinical trials or manufacturers;

• changes or developments in laws or regulations applicable to epetraborole or any other product candidates;

• changes or developments in laws or regulations applicable to our product candidates;

• changes to our relationships with collaborators, manufacturers, or suppliers;

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• sales of our common stock by us, our executive officers and directors or our stockholders or the anticipation that such sales may occur in the future;

• general economic, political, and market conditions and overall fluctuations in the financial markets in the United States, Japan or other countries where we conduct critical business;

• general economic, political, and market conditions and overall fluctuations in the financial markets in the United States or other countries where we conduct critical business;

• stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the biopharmaceutical industry;

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These expenses will likely be even more significant after we no longer qualify as an emerging growth company.

The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq Stock Market LLC, and other applicable securities rules and regulations impose various requirements on public companies in the United States, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices.

The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq Global Select Market and other applicable securities rules and regulations impose various requirements on public companies in the United States, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices.

Our senior management and other personnel devote a substantial amount of time to these compliance initiatives.

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We have taken advantage of reduced reporting burdens in this Annual Report on Form 10-K.

In particular, in this Annual Report on Form 10-K, we have provided only two comparative periods of audited financial statements and we have not included all of the executive compensation related information that would be required if we were not an emerging growth company.

In particular, in this Annual Report on Form 10-K, we have provided only two comparative periods of audited financial statements.

We also have not provided all of the executive compensation related information that would be required if we were not an emerging growth company.

We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions.

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We have elected to avail ourselves of this exemption and, therefore, we will not be subject to the same requirements to adopt new or revised accounting standards as other public companies that are not “emerging growth companies.”

If we fail to adhere to the listing requirements of the Nasdaq Global Select Market our common stock could be delisted.

If we are unable to comply with the listing requirements of the Nasdaq Global Select Market, our stock could be delisted for such failure.

If our common stock is delisted from Nasdaq, we could be required to list on the over-the-counter market, which may adversely affect the price and trading liquidity of our common stock.

Delisting from the Nasdaq may have other negative results, including the potential loss of confidence in us by employees and partners, the loss of institutional investor interest, fewer business development opportunities and greater difficulty in obtaining financing on favorable terms or at all.

Recent and potential future changes to U.S.

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• a breach response and cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents.

Although we face risks from cybersecurity threats, no known cybersecurity threats have materially affected or we believe are reasonably likely to materially affect us, including our business, financial condition, results of operations and growth prospects.

Although we face risks from cybersecurity threats, no known cybersecurity threats have materially affected or we belie ve are reasonably likely t o materially affect us, including our business, financial condition, results of operations and growth prospects.

See “Risk Factors – Significant disruptions of our or our vendors’ information technology systems or cybersecurity incidents could result in significant financial, legal, regulatory, business, and reputational harm to us.”

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The CEO is supported by our Chief Legal Officer in exercising primary oversight for our overall cybersecurity risk management program.

Our management team takes steps to stay informed about and monitors efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel;

threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us;

and alerts and reports produced by security tools deployed in the IT environment.

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