What changed in this filing

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Item 1A. Risk Factors

2022-08-09 compared with 2022-05-12 · 24 added, 25 removed, 331 unchanged (13% of the section changed)

28 unchanged sentences

As a result of the COVID-19 pandemic, governments around the world implemented significant measures to control the spread of the virus, including quarantines, travel restrictions, stay-at-home orders and business shutdowns.

While governments have relaxed these measures as case numbers decreased, periodic surges in COVID-19 cases have prompted, and may in the future prompt, many governments to reimplement these restrictions, including in the United States, Europe, India and China, which is currently experiencing severe lockdowns in connection with its zero covid policy.

We continue to take precautionary measures intended to minimize our employees’ potential exposure to the virus, including temporarily requiring all employees who can do so to work remotely and suspending all non-essential business travel worldwide for our employees and requiring employees to be fully vaccinated against COVID-19.

The majority of our employees continuing to work remotely may disrupt our operations, increase the risk of a cybersecurity incident or otherwise negatively affect our business.

We continue to take precautionary measures intended to minimize our employees’ potential exposure to the virus, including requiring employees to be vaccinated against COVID-19 and adopting a hybrid working model allowing our employees flexibility regarding when and how frequently to retu rn to the office .

Many of our employees continue to work primarily remotely, which may disrupt our operations, increase the risk of a cybersecurity incident or otherwise negatively affect our business.

In addition to the risks related to the COVID-19 pandemic discussed above, the uncertainty surrounding, and risks created by, the pandemic may have the effect of heightening many of the other risks discussed in this section impacting our operations.

If we fail to achieve the expected financial and operational benefits of our recent reorganization plan, our business and financial position could be materially and adversely affected.

In July 2022, we implemented a corporate reorganization plan designed to reduce our operating expenses, preserve cash and align our resources to support the ongoing clinical development 3733 and nonclinical development of 4334, our HBV/HDV entry inhibitor, our IFNAR agonist and two currently undisclosed viral targets outside of HBV.

As part of this reorganization plan, we discontinued clinical development of our first generation core inhibitor, VBR, and implemented a staff reduction of approximately 30%, primarily consisting of our clinical development organization.

The successful implementation of the reorganization activities pursuant to the reorganization plan is subject to a number of assumptions, risks and uncertainties.

We may incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the reorganization plan.

These reorganization activities may yield unintended consequences, such as the loss of institutional knowledge and expertise, employee attrition beyond the planned reduction in force and a reduction in morale among our remaining employees.

The streamlined organization may make it more challenging to achieve our discovery and development goals in the current timelines and may limit our ability to pursue new opportunities and initiatives.

As a result, we may not achieve the anticipated benefits of the reorganization, which may have an adverse effect on our results of operations or financial condition.

We are not currently profitable and might never become profitable, and we will need additional financing to complete the development of any product candidates and fund our activities into the future.

3 unchanged sentences

However, there is no assurance that we will be successful in raising any necessary additional capital on terms that are acceptable to us, or at all.

If we are unable to develop and commercialize any product candidates and generate sufficient revenue or raise capital, we could be forced to delay, scale back or discontinue product development and clinical studies, sacrifice attractive business opportunities, cease operations entirely and sell, or otherwise transfer, all or substantially all of our remaining assets, which would likely have a material adverse impact on our business, results of operations, financial condition and share price.

If we are unable to develop and commercialize any product candidates and generate sufficient revenue or raise capital, we could be forced to delay, scale back or discontinue

product development and clinical studies, sacrifice attractive business opportunities, cease operations entirely and sell, or otherwise transfer, all or substantially all of our remaining assets, which would likely have a material adverse impact on our business, results of operations, financial condition and share price.

Nonclinical and clinical studies required for our product candidates are expensive and time-consuming and may fail to demonstrate the level of safety and efficacy necessary for product approval.

40 unchanged sentences

unexpected changes in tariffs, trade barriers and regulatory requirements;

compliance with the FCPA and other anti-corruption and anti-bribery laws;

compliance with the United States Foreign Corrupt Practices Act (the FCPA) and other anti-corruption and anti-bribery laws;

compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

14 unchanged sentences

If any product candidate we develop or acquire in the future receives FDA or other regulatory approval, we expect to continue our reliance on one or more third-party contractors to manufacture our products.

If, for any reason, we are unable to rely on any third-party sources we have identified to manufacture our product candidates, we would need to identify and contract with additional or replacement third-party manufacturers to manufacture compounds, drug substances and drug products for nonclinical, clinical and commercial purposes.

If, for any reason, we are unable to rely on any third-party sources we have identified to manufacture our product candidates, we would need to identify and contract with additional or replacement third-party manufacturers to manufacture drug substance and drug product for nonclinical, clinical and commercial purposes.

We may be unsuccessful in identifying additional or replacement third-party manufacturers, or in negotiating acceptable terms with any that we do identify.

17 unchanged sentences

Our executive officers are critical to our success, and loss of any of these key employees could have a material adverse impact on our business, financial condition and results of operations.

The Fact Track Designation for VBR may not result in faster development, regulatory review or approval.

If nonclinical or clinical data demonstrate potential to address unmet medical needs for a serious or life-threatening condition, the sponsor may apply for FDA Fast Track designation.

Fast Track designation provides increased opportunities for sponsor meetings with the FDA during nonclinical and clinical development, in addition to the potential for rolling review once a marketing application is filed.

VBR has received Fast Track designation for treatment of patients with chronic HBV infection.

However, even with Fast Track designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures.

Fast Track designation 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 product development program.

Any such withdrawal could adversely affect our business.

We are dependent on an in-license relationship for VBR.

35 unchanged sentences

The pharmaceutical and biotechnology industries are intensely competitive.

In addition, the clinical and commercial landscape for HBV is rapidly changing;

In addition, the clinical and commercial landscape for HBV and HDV is rapidly changing;

we expect new data from commercial and clinical-stage products to continue to emerge.

We compete with organizations, some with significantly more resources, who are developing competitive product candidates.

If our competitors develop effective treatments for HBV or any other indication or field we might pursue, and successfully commercialize those treatments, our business and prospects could be materially harmed.

If our competitors develop effective treatments for HBV, HDV or any other indication or field we might pursue, and successfully commercialize those treatments, our business and prospects could be materially harmed.

Other companies with core inhibitor products may produce negative clinical data, which would adversely affect public and clinical communities’ perceptions of our product candidates, and may negatively impact regulatory approval of, or demand for, our potential products.

3 unchanged sentences

Moreover, our success depends upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of core inhibitor product candidates we may develop in lieu of, or in addition to, existing treatments with which they are already familiar and for which more clinical data may be available.

regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for our product candidates that are approved, if any, and a decrease in demand for any such products.

Adverse events in our nonclinical or clinical studies or those of our competitors or of academic researchers utilizing core inhibitor therapies, even if not ultimately attributable to our product candidates, and any resulting publicity could result in increased governmental regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for our product candidates that are approved, if any, and a decrease in demand for any such products.

Risks Related to Our Regulatory and Legal Environment

29 unchanged sentences

Delays in obtaining regulatory approvals might:

delay commercialization of, and our ability to derive product revenues from,

our product candidates;

delay commercialization of, and our ability to derive product revenues from, our product candidates;

impose costly procedures on us;

47 unchanged sentences

comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities;

comply with the United States Foreign Corrupt Practices Act (the FCPA), the U.K.

comply with the FCPA, the U.K.

Bribery Act 2010, the PRC Criminal Law, the PRC Anti-unfair Competition Law and other anti-bribery and trade laws;

30 unchanged sentences

Beyond the protection afforded by patents, we seek to rely on trade secret protection and confidentiality agreements to protect proprietary know-how, information, or technology that is not covered by our patents.

agreements require all of our employees to assign their inventions to us, and we require all of our employees, consultants, advisors, collaborators, contractors and any third parties who have access to our trade secrets, proprietary know-how and other confidential information and technology to enter into appropriate confidentiality agreements, we cannot be certain that our trade secrets, proprietary know-how and other confidential information and technology will not be subject to unauthorized disclosure or that our competitors will not otherwise gain access to or independently develop substantially equivalent trade secrets, proprietary know-how and other information and technology.

Although our agreements require all of our employees to assign their inventions to us, and we require all of our employees, consultants, advisors, collaborators, contractors and any third parties who have access to our trade secrets, proprietary know-how and other confidential information and technology to enter into appropriate confidentiality agreements, we cannot be certain that our trade secrets, proprietary know-how and other confidential information and technology will not be subject to unauthorized disclosure or that our competitors will not otherwise gain access to or independently develop substantially equivalent trade secrets, proprietary know-how and other information and technology.

If we are unable to prevent unauthorized disclosure of our intellectual property related to our product candidates and technology to third parties, we may not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business and operations.

10 unchanged sentences

We cannot guarantee that the manufacture, use or marketing of any product candidates that we develop will not infringe third-party patents.

If a patent infringement suit were brought against us, we may be forced to stop or delay developing, manufacturing, or selling potential products that are claimed to infringe a third party’s intellectual property, unless that third party grants us rights to use its intellectual property.

grants us rights to use its intellectual property.

In such cases, we may be required to obtain licenses to patents or proprietary rights of others to continue development, manufacture or sale of our products.

7 unchanged sentences

As a result, we may not be able to prevent third parties from practicing our inventions in all countries, or from selling or importing products made using our inventions in and into the United States or other countries.

Third parties may use our technologies in territories in which we have not obtained patent protection to develop their own products and may infringe our patents in territories which

provide inadequate enforcement mechanisms.

Third parties may use our technologies in territories in which we have not obtained patent protection to develop their own products and may infringe our patents in territories which provide inadequate enforcement mechanisms.

Such third-party products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

41 unchanged sentences

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-Q

Item 1A. Risk Factors