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Item 1A. Risk Factors

2023-03-22 compared with 2022-02-28 · 318 added, 190 removed, 270 unchanged (65% of the section changed)

Purchasing shares of common stock is an investment in our securities and involves a high degree of risk.

You should carefully consider the following information about these risks, together with the other information contained in this Annual Report, before purchasing our securities.

If any of the following risks actually occur, our business, financial condition and results of operations would likely suffer.

In that case, the market price of the common stock could decline, and you may lose part or all of your investment in our company.

Additional risks of which we are not presently aware or that we currently believe are immaterial may also harm our business and results of operations.

Summary Risk Factors

Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, clinical and commercialization activities, the manufacturing of our product candidates, intellectual property, third-party relationships, competition factors, product and environmental liability, and common stock.

These risks are discussed more fully below and include, but are not limited to, risks related to:

Risks Relating to our Business

We have only a limited operating history, and, as such, an investor cannot assess our profitability or performance based on past results.

Since December 2015, our business has focused on the development of novel therapeutics and delivery methods for the treatment of breast cancer and other breast conditions.

In the first quarter of 2020, we began development of a novel potential therapy for hospitalized COVID-19 patients and in the second quarter 2020 we launched a second COVID-19 program for patients who do not require hospitalization.

However, this is a departure from our historical focus on breast cancer and we have no operating history as a company in developing treatments for infectious diseases.

Because of our limited operating history, particularly in the area of pharmaceutical development, our revenue and income potential is uncertain and cannot be based on prior results.

We have not established sources of ongoing revenue to cover operating costs and allow us to continue as a going concern.

We will need to raise substantial additional capital in the future to fund our operations and we may be unable to raise such funds when needed and on acceptable terms.

We may expend our capital resources in ways that you don't agree or that don't produce stockholder value.

We have a history of operating losses, and we expect to continue to incur losses in the future.

Any products we may develop may never achieve significant commercial market acceptance.

We may be unable to establish sales, marketing and commercial supply capabilities.

The loss of the services of our Chief Executive Officer could adversely affect our business.

Our acquisitions of, collaborations with, licenses with and investments in, other businesses may not yield expected benefits and our inability to successfully integrate these transactions may negatively impact our business, financial condition, and results of operations.

We may experience difficulty in locating, attracting, and retaining experienced and qualified personnel, which could adversely affect our business.

Compounds and methods that appear promising in research and development may fail to reach later stages of development for a number of reasons, including, among others, that clinical trials may take longer to complete than expected or may not be completed at all, and interim, top-line or preliminary clinical trial data reports may ultimately differ from actual results once data are more fully evaluated.

We may not obtain or maintain the regulatory approvals required to develop or commercialize some or all of our products.

We are developing our products for patients who are severely ill, and patient deaths that occur in our clinical trials could negatively impact our business even if such deaths are not shown to be related to our drugs.

We are dependent on third-party service providers for a number of critical operational activities including, in particular, for the manufacture and testing of our products and associated supply chain operations, as well as for clinical trial activities.

Any failure or delay in these undertakings by third parties could harm our business.

We may encounter delays in our clinical trials or may not be able to conduct our trials in a timely manner.

Our clinical trials may fail to demonstrate adequately the efficacy and safety of our product candidates, which would prevent or delay regulatory approval and commercialization.

Our products and services may expose us to possible litigation and product liability claims.

Business disruptions, including natural disasters and pandemics, could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our ability to use net operating loss carryforwards and research tax credits to reduce future tax payments may be limited or restricted.

Risks Related to our Intellectual Property

If we are not able to protect our proprietary technology, others could compete against us more directly, which would harm our business. 

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

Changes in U.S.

patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

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

Our current patent portfolio may not include all patent rights needed for the full development and commercialization of our products.

We cannot be sure that patent rights we may need in the future will be available for license on commercially reasonable terms, or at all. 

Third-party claims alleging intellectual property infringement may prevent or delay our drug discovery and development efforts.

We cannot assure you that our current or future products will not infringe on existing or future patents.

We may not be aware of patents that have already issued that a third-party might assert are infringed by one of our current or future products.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties. 

We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

Risks Related to Our Industry

Legislative or regulatory reforms may make it more difficult and costly for us to obtain regulatory approval of our product candidates and to manufacture, market and distribute our products after approval is obtained.

Our inadvertent or unintentional failure to comply with the complex government regulations concerning patients' privacy, data subjects, and of medical records could subject us to fines and adversely affect our reputation.

If we experience a significant disruption in our information technology systems or breaches of data security, our business could be adversely affected.

The failure to comply with complex federal and state laws and regulations related to submission of claims for services could result in significant monetary damages and penalties and exclusion from the Medicare and Medicaid programs.

We face significant competition from other biotechnology and pharmaceutical companies.

Our employees and third-party partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

Our business involves risk associated with handling hazardous and other dangerous materials.

Risks Related to the Securities Markets and Investment in our  

Our shares of common stock are listed on the Nasdaq Capital Market, but we cannot guarantee that we will be able to satisfy the continued listing standards going forward.

The sale of a substantial number of shares of our common stock into the market may cause substantial dilution to our existing stockholders and the sale, actual or anticipated, of a substantial number of shares of common stock could cause the price of our common stock to decline.

The trading price of our common stock has been and is likely to continue to be volatile.

The ownership of our common stock may become concentrated among a small number of stockholders, and if our principal stockholders, directors, and officers choose to act together, they may be able to significantly influence management and operations, which may prevent us from taking actions that may be favorable to stockholders.

If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the trading price of our common stock may be negatively affected.

Our Stockholder Rights Agreement, the anti-takeover provisions in our governing documents and Delaware law could delay or prevent a change in control which could reduce the market price of our common stock and could prevent or frustrate attempts by our stockholders to replace or remove our current management and the current Board of Directors.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price of our common stock and trading volume could decline.

Purchasing shares of common stock is an investment in our securities and involves a high degree of risk and uncertainty.

You should carefully consider the following information about these risks and uncertainties, together with the other information contained in this Annual Report on Form 10-K for the year ended December 31, 2022, before purchasing our securities.

If any of the following risks and uncertainties actually occur, our business, financial condition and results of operations may suffer.

In that case, the market price of our common stock could decline, and you may lose part or all of your investment in our Company.

Additional risks and uncertainties of which we are not presently aware or that we currently believe are immaterial may also harm our business and results of operations.

Risks Relating to our Business

We have only a limited operating history, and, as such, an investor cannot assess our profitability or performance based on past results.

Since December 2015, our business has primarily focused on the development of novel therapeutics for the treatment of breast cancer and other breast conditions. Because of our limited operating history, particularly in the area of pharmaceutical development, our revenue and income potential is uncertain and cannot be based on prior results.

Any evaluation of our business and prospects must be considered in light of these factors and the risks and uncertainties often encountered by companies in the development stage.

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respond effectively to competition;

manage growth in operations;

manage our growth in operations;

respond to changes in applicable government regulations and legislation;

access additional capital when required;

execute and successfully integrate strategic transactions, including potential acquisitions or investments;

attract and retain key personnel.

We have not established sources of ongoing revenue to cover operating costs and allow us to continue as a going concern.

 Although we have sufficient capital resources to fund our operations for at least the next 12 months based on our current business plan, our business plan may change and may require greater expenditures of capital than currently anticipated.

 Although we believe we have sufficient capital resources to fund our operations for at least the next 12 months based on our current business plan, our business plan may change and may require greater expenditures of capital than currently anticipated, in particular, due to expenditures relating to strategic transactions.

We have not yet established an ongoing source of revenue sufficient to cover operating costs and allow us to continue as a going concern.

Our ability to continue as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable.

If we are unable to obtain adequate capital, we may be unable to develop and commercialize our product offerings or geographic reach and we could be forced to cease operations.

If we are unable to obtain adequate capital on reasonable terms, if at all, including due to macroeconomic factors, such as the inflationary environment and recessionary fears, we may be unable to develop and commercialize our product offerings or increase our geographic reach and we could be forced to cease operations.

We will need to raise substantial additional capital in the future to fund our operations and we may be unable to raise such funds when needed and on acceptable terms.

For the year ended December 31, 2021, we incurred a net loss of $20,606,000 and we had an accumulated deficit of $129,234,000 since inception.

As of December 31, 2021, we had cash and cash equivalents of $136,377,000.

For the year ended December 31, 2022, we incurred a net loss of approximately $27.0 million, and we have had an accumulated deficit of approximately $156.2 million since inception.

As of December 31, 2022, we had cash and cash equivalents of approximately $111.0 million.

Because we have no current sources of revenue, we expect that we will need to raise capital again in the future to continue to fund our operations.

When we elect to raise additional funds or when additional funds are required, we may raise such funds from time to time through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives.

When we elect to raise additional funds or when additional funds are required, we may raise such funds through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives.

These financing arrangements may not be available on acceptable terms, if at all.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from developing our pharmaceutical candidates, pursuing acquisitions, invest in other companies including as a sponsor or investor in special purpose acquisition companies, licensing, development and commercialization efforts, and our ability to continue operations, generate revenues, and achieve or sustain profitability will be substantially harmed. 

We currently have fewer than 4 million shares of common stock authorized that are not reserved for specific purposes.

Although we have proposed to our stockholders that our charter be amended to add additional authorized shares for various potential purposes, including potential capital raising transactions, to date our stockholders have not approved such a proposal and may not approve such a proposal in the future.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may be prevented from developing our pharmaceutical candidates, pursuing acquisitions, and investing in other companies, including as a sponsor or investor in special purpose acquisition companies, licensing, development and commercialization efforts, and our ability to continue our operations, generate revenues, and achieve or sustain profitability may be substantially harmed. 

We currently have fewer than five million shares of common stock authorized that are not reserved for specific purposes.

Although we proposed to our stockholders, at our 2021 and 2022 annual stockholders’

meetings and at a special meeting of stockholders held in September 2021, that our amended and restated certificate of incorporation, as amended, be further amended to add additional authorized shares for various potential purposes, including potential capital raising transactions, our stockholders did not approve such proposals and may not approve a similar proposal in the future.

A lack of authorized shares may limit our ability to raise capital when needed.

If we raise additional funds by issuing equity securities, our stockholders will experience dilution.

If we raise additional funds by issuing equity securities, our stockholders will experience dilution.

Debt financing, if available, would result in increased fixed payment obligations and 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.

Any debt financing or additional equity, including securities convertible into or exercisable for equity securities, that we raise may contain terms, such as liquidation, conversion and other preferences, that are not favorable to us or our stockholders.

If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us.

If we raise additional funds through collaboration and licensing arrangements with third-parties, it may be necessary for us to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us.

Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, our business, operating results, financial condition and prospects could be materially and adversely affected, and we may be unable to continue our operations.

We may expend our capital resources in ways that you don't agree or that don't produce stockholder value

 We intend to use our capital resources to execute on our business plan, which may include acquiring or in-licensing additional programs.

We may also use our capital resources to invest directly or indirectly in business opportunities in healthcare or other industries including through purchases of equity in other companies.

These investments may be in special purpose acquisition companies either as a sponsor or as an equity investor. Our business plan may evolve to require more capital resources than currently contemplated either because our existing programs progress more quickly or at a greater expense than currently anticipated or because we add additional programs.

You may not agree with the ways in which we expend our capital resources and we may not produce stockholder value from the ways we deploy our capital.

We may expend our capital resources in ways that you don't agree or that don't produce stockholder 

 We intend to use our capital resources to execute on our business plan, which may include acquiring or in-licensing programs and may also include the internal development of additional programs that may or may not be related to oncology.

We may also use our capital resources to invest directly or indirectly in business opportunities in healthcare or other industries, including through purchases of equity in other companies, such as our investment in Dynamic Cell Therapies, Inc.

These investments may be in special purpose acquisition companies, including either as a sponsor or as an equity investor.

Our business plan may evolve to require more capital resources than currently contemplated either because our existing programs progress more quickly or at a greater cost than currently anticipated or because we may add additional programs.

Stockholders may not agree with the ways in which we expend our capital resources and our capital deployment activities may not lead to increases in stockholder value.

We have a history of operating losses, and we expect to continue to incur losses in the future.

 We have a limited operating history and have incurred net losses each year.

Our net loss for the year ended December 31, 2021, was $20,606,000.

We will continue to incur further losses in connection with research and development costs for development of our programs, including ongoing and additional clinical studies.

Our net loss for the year ended December 31, 2022, was approximately $27.0 million. We will continue to incur further losses in connection with research and development costs for development of our programs, including ongoing and additional clinical studies.

Any products we may develop may never achieve significant commercial market acceptance.

We may not succeed in achieving commercial market acceptance of any of our products.

In order to gain market acceptance for the drugs under development, we will need to demonstrate to physicians and other healthcare professionals the benefits of these therapies including the clinical and economic application for their particular practice.

Many physicians and healthcare professionals may be hesitant to introduce new services or techniques into their practice for many reasons, including lack of time and resources, the learning curve associated with the adoption of such new services or techniques into already established procedures, and the uncertainty of the applicability or reliability of the results of a new product.

In addition, the availability of full or even partial payment for our products, whether by third-party payors (e.g., insurance companies), or the patients themselves, will likely heavily influence physicians’

In order to gain market acceptance for the drugs under development, we will need to demonstrate to physicians and other healthcare professionals the benefits of these therapies, including the clinical and economic application for their particular practice, the efficacy and safety and potential advantages compared to alternative therapies.

Many physicians and healthcare professionals may be hesitant to introduce new services or techniques into their practice for many reasons, including lack of time and resources, the learning curve associated with the adoption of such new services or techniques into already established procedures, the product’s cost, convenience and ease of administration, the then-current standard of care, the strength of marketing and distribution support and the uncertainty of the applicability or reliability of the results of a new product.

In addition, the availability of full or even partial payment for our products, whether by third-party payors (e.g., insurance companies), by government payors or the patients themselves, will likely heavily influence physicians’

decisions to recommend or use our products.

We may be unable  

to establish sales, marketing and commercial supply capabilities.

 We do not currently have, nor have we ever had, commercial pharmaceutical sales and marketing capabilities.

If any of our product candidates become approved, we would need to build these capabilities in order to commercialize our approved product candidates.

The process of establishing commercial capabilities will be expensive and time consuming, and may not be successful.

Even if we are successful in building these capabilities, we may not be successful in commercializing any of our product candidates.

The loss of the services of our Chief Executive Officer could adversely affect our business.

Our success is dependent in large part upon the ability to execute our business plan, manufacture our pharmaceutical drugs and attract and retain highly skilled professional personnel.

Our success is dependent in large part upon our ability to execute our business plan, manufacture our pharmaceutical drugs and attract and retain highly skilled professional personnel.

In particular, due to the relatively early stage of our business, our future success is highly dependent on the services of Steven C.

Quay, our Chief Executive Officer and founder, who provides much of the necessary experience to execute our business plan.

We anticipate that we will make acquisitions of, collaborations with, licenses with or investments in businesses in the future.

We may not realize the anticipated benefits, or any benefits, from these transactions.

If we fail to properly evaluate, complete and execute acquisitions, our business may be seriously harmed and our stock price may decline.

For us to realize the benefits of future transactions, we must successfully integrate the acquired businesses with ours.

Some of the challenges to successful integration include:

unanticipated costs or liabilities resulting from our acquisitions;

inability to retain key employees from acquired businesses;

difficulties integrating acquired operations, personnel, and technologies;

diversion of management attention from existing business operations and strategy;

diversion of resources that are needed in other parts of our business;

potential write-offs of acquired assets;

inability to maintain relationship partners of the acquired business;

potential financial and credit risks associated with the acquired business;

the need to implement controls, procedures, and policies at the acquired company;

the need to comply with additional laws and regulations applicable to the acquired business;

the indirect tax of any such acquisitions.

Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and other transactions could cause us to fail to realize the anticipated benefits of such acquisitions and transactions and negatively impact our business, financial condition, and results of operations.

We may experience difficulty in locating, attracting, and retaining experienced and qualified personnel, which could adversely affect our business.

We will need to attract, retain, and motivate experienced clinical development and other personnel, particularly in the greater Seattle area as we expand our pharmaceutical development activities.

These employees may not be available in this geographic region.

In addition, competition for these employees is intense and recruiting and retaining skilled employees is difficult, particularly for a development-stage organization such as ours.

If we are unable to attract and retain qualified personnel, our development activities may be adversely affected. Even if we are successful in identifying and attracting qualified employees, recent market changes have made employment costs substantially higher.

As a result, our operating expenses may go up in the current market environment.

Compounds and methods that appear promising in research and development may fail to reach later stages of development for a number of reasons, including, among others, that clinical trials may take longer to complete than expected or may not be completed at all, and interim, top-line or preliminary clinical trial data reports may ultimately differ from actual results once data are more fully evaluated.

Successful development of anti-cancer and other pharmaceutical products is highly uncertain and obtaining regulatory approval to market drugs to treat cancer and other breast conditions is expensive, difficult, and speculative.

We will need to attract, retain, and motivate experienced clinical development and other personnel, particularly in the greater Seattle area as we expand our pharmaceutical development activities. Personnel with the required skills and experience may be scarce or may not be available at all in this geographic region.

In addition, competition for these skilled personnel is intense and recruiting and retaining skilled employees is difficult, particularly for a development-stage Company such as ours.

If we are unable to attract and retain qualified personnel, our development activities may be adversely affected.

Even if we are successful in identifying and attracting qualified employees, recent market changes, including the labor shortage, and rising inflation have increased employee-related costs substantially.

As a result, our operating expenses may continue to increase in the current market environment.

Successful development of pharmaceutical products is highly uncertain and obtaining regulatory approval to market drugs is expensive, difficult, and speculative.

Compounds that appear promising in research and development may fail to reach later stages of development for several reasons, including, but not limited to:

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delays in reaching or failing to reach agreement on acceptable terms with manufacturers or prospective clinical research organizations (CROs), and trial sites; 

availability of vaccines or approved therapeutics developed by others may reduce the demand and commercial opportunities for our COVID-19 drug candidates;

failure of third-parties, such as clinical research organizations, academic institutions, collaborators, cooperative groups, and/or investigator sponsors, to conduct, oversee, and monitor clinical trials and results.

In addition, from time to time we expect to report interim, top-line or “preliminary”

data for clinical trials, including for example the interim results reported in May 2020 for our Phase 2 study of Endoxifen in Australia.

data for clinical trials, including for example the results reported in 2021 for our neoadjuvant or “window of opportunity”

Phase 2 study of (Z)-endoxifen.

Such data are based on a preliminary analysis of then-available efficacy and safety data, and such findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial.

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As a result, interim, top-line or “preliminary”

results may differ from future results, or different conclusions or considerations may qualify such results once existing data have been more fully evaluated.

In addition, third parties, including regulatory agencies, may not accept or agree with our assumptions, estimations, calculations or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular compound and our business in general.

For example, some participants in the Phase 2 MBD study we conducted in Stockholm, Sweden despite showing reduced MBD as a result of using our topical Endoxifen exited the study before completing a full six months of dosing because of skin irritation and rashes.

If the development of our products is delayed or fails, or if top-line or preliminary clinical trial data reported differ from actual results, our development costs may increase and the ability to commercialize our products may be harmed, which could harm our business, financial condition, operating results or prospects.

results may differ from future/final results, or different conclusions or considerations may qualify such results once existing data have been more fully evaluated.

In addition, third-parties, including regulatory agencies, may not accept or agree with our assumptions, estimations, calculations or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular compound and our business generally.

If the development of our products is delayed or fails, or if top-line or preliminary clinical trial data reported differ from actual results, our development costs may increase and our ability to commercialize our products may be harmed, which could harm our business, financial condition, operating results or prospects.

We may not obtain or maintain the regulatory approvals required to develop or commercialize some or all of our products.

We are subject to rigorous and extensive regulation by the FDA in the U.S.

and by comparable agencies in other jurisdictions, including the Europe Medicines Agency (EMA) in the European Union (E.U.) and the Therapeutic Goods Administration (TGA) in Australia.

and by comparable agencies in other jurisdictions, including the Europe Medicines Agency (EMA) in the European Union (E.U.), the United Kingdom’s Medicines and Healthcare products Regulatory Agency and the Therapeutic Goods Administration (TGA) in Australia.

Our product candidates are currently in research or development, and we have not received marketing approval for our products.

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until they have been approved by the FDA and may not be marketed in other jurisdictions until they have received approval from the appropriate foreign regulatory agencies.

Each product candidate requires significant research, development and preclinical testing and extensive clinical investigation before submission of any regulatory application for marketing approval.

Each product candidate requires significant research, development and pre-clinical testing and extensive clinical investigation before submission of any regulatory application for marketing approval.

As a result, the regulatory pathway for these products may be more complex and obtaining regulatory approvals may be more difficult.

Obtaining regulatory approval requires substantial time, effort and financial resources, and we may not be able to obtain approval of any of our products on a timely basis, or at all.

The number, size, design, and focus of preclinical and clinical trials that will be required for approval by the FDA, the EMA, or any other foreign regulatory agency varies depending on the compound, the disease or condition that the products are designed to address and the regulations applicable to any particular products.

Preclinical and clinical data can be interpreted in different ways, which could delay, limit or preclude regulatory approval.

The number, size, design, and focus of pre-clinical and clinical trials that will be required for approval by the FDA, the EMA, or any other foreign regulatory agency varies depending on the compound, the disease or condition that the products are designed to address and the regulations applicable to any particular products.

Pre-clinical and clinical data can be interpreted in different ways, which could delay, limit or preclude regulatory approval.

The FDA, the EMA, and other foreign regulatory agencies can delay, limit, or deny approval of a product for many reasons, including, but not limited to:

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regulatory agencies might change their approval policies or adopt new regulations.

Regulatory agencies may also fail to grant approvals to commence studies for any number of reasons.

For example, in May 2020, the FDA asked for additional pre-clinical data and other information for a proposed study of AT-H201.

If we cannot provide the requested data and information the FDA may not authorize us to commence this study.

 Another example is that Hunan Research Ethics Committee (HREC) provided approval to commence the study but has not approved the final part of the study involving COVID-19 infected patients because it is unclear if that part of the study will be conducted at the site in Australia.

The addition of new sites will require additional approvals and we will have to conduct this part of the study where COVID-19 infections allow.

 If our products are not approved at all or quickly enough to provide net revenues to defray our operating expenses, our business, financial condition, operating results and prospects could be harmed.

We are developing our products, including AT-H201 drug to treat COVID-19 patients and Endoxifen to treat patients with breast cancer,  

who are severely  

We are developing our products  

for patients who are severely  

ill, and patient deaths that occur in our clinical trials could negatively impact our business even if such deaths are not shown to be related to our drugs.

 We intend to enroll patients in studies of our drug candidates for patients who may die while enrolled in our studies. 

For example, we are developing AT-H201for COVID patients who may be severely ill, including patients on ventilators.

COVID patients on ventilators are very sick and many do not recover either because of COVID-19 or other illnesses.

Patients in our Endoxifen studies may have breast cancer which could cause death.

As a result, it is likely that we will observe severe adverse outcomes of some patients in our clinical trials for our drugs, including patient death.

These adverse outcomes, even if unrelated to our drugs, could expose us to lawsuits and liabilities and could diminish our ability to obtain regulatory approval and/or achieve commercial acceptance for the related drug and our business could be materially harmed. 

 We have enrolled patients in studies of our drug candidates who may die while enrolled in our studies. 

Patients in our clinical trials may also experience adverse outcomes following treatment with our drug candidates, including patient death.

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As a result, we rely on third-parties to supply us in a timely manner with manufactured product candidates.

We may not be able to adequately manage and oversee the manufacturers we choose, they may not perform as agreed or they may terminate their agreements with us.

In particular, we depend on third-party manufacturers to conduct their operations in compliance with Good Laboratory Practices (GLP) or similar standards imposed by the U.S.

We may not be able to adequately manage and oversee the manufacturers we choose;

they may not perform as agreed or they may terminate their agreements with us.

In particular, we depend on third-party manufacturers to conduct their operations in compliance with current Good Laboratory Practices (GLP) or similar standards imposed by the U.S.

and/or applicable foreign regulatory authorities, including the FDA and EMA.

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Failure of our manufacturers to comply with FDA, EMA or other applicable regulations may cause us to curtail or stop the manufacture of such products until we obtain regulatory compliance.

We may not be able to obtain sufficient quantities of our products if we are unable to secure manufacturers when needed, or if our designated manufacturers do not have the capacity or otherwise fail to manufacture compounds according to our schedule and specifications or fail to comply with cGMP regulations.

We may not be able to obtain sufficient quantities of our products if we are unable to secure manufacturers when needed, or if our designated manufacturers do not have the capacity or otherwise fail to manufacture compounds according to our schedule and specifications or fail to comply with cGMP regulations.

Furthermore, in order to ultimately obtain and maintain applicable regulatory approvals, any manufacturers we utilize are required to consistently produce the respective products in commercial quantities and of specified quality or execute fill-finish services on a repeated basis and document their ability to do so, which is referred to as process validation.

In order to obtain and maintain regulatory approval of a compound, the applicable regulatory authority must consider the result of the applicable process validation to be satisfactory and must otherwise approve of the manufacturing process.

Even if our compound manufacturing processes obtain regulatory approval and sufficient supply is available to complete clinical trials necessary for regulatory approval, there are no guarantees we will be able to supply the quantities necessary to effect a commercial launch of the applicable drug, or once launched, to satisfy ongoing demand.

Even if our compound manufacturing processes obtain regulatory approval and sufficient supply is available to complete clinical trials necessary for regulatory approval, there are no guarantees we will be able to supply the quantities necessary to affect a commercial launch of the applicable drug, or once launched, to satisfy ongoing demand.

Any product shortage could also impair our ability to deliver contractually required supply quantities to applicable collaborators, as well as to complete any additional planned clinical trials.

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With regard to the distribution of our drugs, we depend on third-party distributors to act in accordance with Good Distribution Practice (GDP), and the distribution process and facilities are subject to continuing regulation by applicable regulatory authorities with respect to the distribution and storage of products.

In addition, we depend on medical institutions and CROs (together with their respective agents) to conduct clinical trials and associated activities in compliance with Good Clinical Practices (GCP) and data privacy standards such as defined under the Health Insurance Portability and Accountability Act (HIPAA), California Consumer Privacy Acts (CCPA), and General Data Protection Regulation (GDPR) and in accordance with our timelines, expectations and requirements.

We are substantially dependent on the organizations conducting the clinical trials of our proprietary Endoxifen.

In addition, we depend on medical institutions and CROs (together with their respective agents) to conduct clinical trials and associated activities in compliance with Good Clinical Practices (GCP) and data privacy standards such as defined under the Health Insurance Portability and Accountability Act (HIPAA), and General Data Protection Regulation (GDPR) and in accordance with our timelines, expectations and requirements.

We are substantially dependent on the organizations conducting our clinical trials.

To the extent any such third-parties are delayed in achieving or fail to meet our clinical trial enrollment expectations, fail to conduct our trials in accordance with GCP, patient and data privacy standards such as HIPAA or study protocol or otherwise take actions outside of our control or without our consent, our business may be harmed.

Furthermore, we conduct clinical trials in foreign countries, subjecting us to additional risks and challenges, including, patient and data privacy standards such as GDPR and in particular, as a result of the engagement of foreign medical institutions and foreign CROs, who may be less experienced with regard to regulatory matters applicable to us and may have different standards of medical care.

With regard to certain of the foregoing clinical trial operations and stages in the manufacturing and distribution chain of our compounds, we rely on vendors.

With regard to certain of the foregoing clinical trial operations and stages in the manufacturing and distribution chain of our compounds, we rely on vendors.

In most cases we use a primary vendor and have identified, in some cases, secondary vendors.

In particular, our current business structure contemplates, at least in the foreseeable future, use of a primary commercial supplier for Endoxifen drug substance.

The use of primary vendors for core operational activities, such as, manufacturing, the resulting lack of diversification, expose us to the risk of a material interruption in service related to these primary, outside vendors.

In particular, our current business structure contemplates, at least in the foreseeable future, use of a primary commercial supplier for the (Z)-endoxifen drug substance.

The use of primary vendors for core operational activities, such as, manufacturing, and the resulting lack of diversification, exposes us to the risk of a material interruption in service related to these primary, outside vendors.

As a result, our exposure to this concentration risk could harm our business.

 Although we monitor the compliance of our third-party service providers performing the aforementioned services, we cannot be certain that such service providers will consistently comply with applicable regulatory requirements or that they will otherwise timely satisfy their obligations to us.

Any such failure and/or  any failure by us to monitor their services or to plan for and manage our short- and long-term requirements underlying such services could result in shortage of the compound, delays in or cessation of clinical trials, failure to obtain or revocation of product approvals or authorizations, product recalls, withdrawal or seizure of  products, suspension of an applicable wholesale distribution authorization, and/or distribution of products, operating restrictions, injunctions, suspension of licenses, other administrative or judicial sanctions (including civil penalties and/or criminal prosecution), and/or unanticipated related expenditures to resolve shortcomings.

Any such failure and/or any failure by us to monitor their services or to plan for and manage our short- and long-term requirements underlying such services could result in shortage of the required compound, delays in or cessation of clinical trials, failure to obtain or revocation of product approvals or authorizations, product recalls, withdrawal or seizure of products, suspension of an applicable wholesale distribution authorization, and/or distribution of products, operating restrictions, injunctions, suspension of licenses, other administrative or judicial sanctions (including civil penalties and/or criminal prosecution), and/or unanticipated related expenditures to resolve shortcomings.

Such consequences could have a significant impact on our business, financial condition, operating results, or prospects. 

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Potential trial delays may arise from, but are not limited to:

the effects of the ongoing coronavirus pandemic, including access to clinical trial sites both by study participants and our clinical research organizations;

the effects of the ongoing coronavirus pandemic, including access to clinical trial sites both by study participants and our clinical research organizations, diversion of healthcare resources to address COVID-19, which could limit the availability of medical facilities for our clinical trials, and supply chain disruptions which could have a material adverse effect on the availability or cost of materials for our product candidates;

failure to obtain on a timely basis, or at all, approval from the applicable institutional review board or ethics committee to open a clinical study;

lower than anticipated patient enrollment for reasons such as existing conditions, eligibility criteria or if patients perceive a lack of benefit to enroll in the study for whatever reason;

delays in reaching agreements on acceptable terms with prospective CROs;

lower than anticipated patient enrollment or delays in patient enrollment, including due to the size and nature of the patient population, existing conditions, patient eligibility criteria defined in the protocol, proximity of patients to trial sites, the design of the trial, our ability to recruit clinical trial investigators with the appropriate competencies and expertise, competing clinical trials for similar or alternate therapeutic treatments, clinicians’

and patients’

perception of a lack of benefit to enroll in the study for whatever reason, our ability to obtain and maintain patient consents and patients dropping out of the trial;

delays in reaching agreements on acceptable terms with prospective CRO/vendors; 

failure of CROs or other third-parties to effectively and timely monitor, oversee, and maintain the clinical trials.

complying with design protocols of any applicable special protocol assessment we receive from the FDA;

severe or unexpected drug-related side effects experienced by patients in a clinical trial;

availability of materials provided by third parties necessary to manufacture our product candidates;

changes in regulatory requirements, or additional regulatory requirements.

clinical trials may fail to demonstrate adequately the efficacy and safety of our product candidates, which would prevent or delay regulatory approval and commercialization.

Even if our clinical trials are completed as planned, we cannot be certain that their results will support our product candidate claims or that the FDA or foreign authorities will agree with our conclusions.

Success in pre-clinical studies and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the later trials will replicate the results of prior trials and pre-clinical studies.

The clinical trial process may fail to demonstrate that our product candidates are safe and effective for the proposed indicated uses.

If the FDA concludes that our clinical trials have failed to demonstrate safety and effectiveness, we would not receive FDA approval to market that product candidate in the U.S.

for the indications sought.

In addition, it could cause us to abandon the product candidate and might delay development of other product candidates.

Any delay or termination of our clinical trials would delay or preclude the filing of any submissions with the FDA and, ultimately, our ability to commercialize our product candidates and generate revenues.

It is also possible that patients enrolled in clinical trials could experience adverse side effects that are not currently part of a product candidate’s profile.

Our products and services may expose us to possible litigation and product liability claims.

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adverse events related to drugs and therapies we are developing.

A successful product liability claim, or the costs and time commitment involved in defending against a product liability claim, could have a material adverse effect on our business.

Any successful product liability claim may prevent us from obtaining adequate product liability insurance in the future on commercially desirable or reasonable terms.

An inability to obtain sufficient insurance coverage at an acceptable cost, or otherwise, to protect against potential product liability claims could prevent or inhibit the commercialization of our products. 

A successful product liability claim, or the costs and time commitment involved in defending against a product liability claim, could have a material adverse effect on our business.

Regardless of the merit or outcome of a claim, it may result in decreased demand for our product candidates, reputational harm, withdrawal of clinical trial participants, investigations by regulators, withdrawal of prior governmental approvals, substantial monetary awards to patients, loss of revenue and the inability to commercialize our product candidates.

Although we currently carry clinical trial insurance and product liability insurance which we believe to be reasonable, it may not be adequate to cover all liability that we may incur.

An inability to renew our policies or to obtain sufficient insurance at an acceptable cost and on commercially desirable or reasonable terms, if at all, including due to a successful product liability claim, could prevent or inhibit the commercialization of our products.

Business disruptions, including natural disasters and pandemics, could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our operations are based primarily in Seattle, Washington.

These operations could be subject to power shortages, telecommunications failures, water shortages, floods, earthquakes, fires, extreme weather conditions, pandemics or epidemics and other natural or man-made disasters or business interruptions, for which we maintain customary insurance policies that we believe are appropriate.

In addition, outbreaks of viruses, infectious diseases or pandemics (including, COVID-19), terrorist acts or acts of war, could cause damage or cause disruptions to us, our employees, facilities, contractors and collaborators, which could have a material adverse effect on our business, financial condition and results of operations.

The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses.

Our ability to manufacture clinical supplies of our product candidates could be disrupted if our suppliers are affected by any of the above events.

We may have limited recourse against third parties if the non-compliance is due to factors outside of the manufacturer’s control.

Our ability to use  

net operating loss carryforwards and research tax credits to reduce future tax payments may be limited or restricted.

We have generated significant net operating loss carryforwards (NOLs), and research and development tax credits (R&D credits) as a result of our incurrence of losses and our conduct of research activities since inception.

We generally are able to carry NOLs and R&D credits forward to reduce our tax liability in future years.

However, our ability to utilize the NOLs and R&D credits is subject to the rules of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code), respectively.

Those sections generally restrict the use of NOLs and R&D credits after an “ownership change.”

An ownership change occurs if, among other things, the stockholders (or specified groups of stockholders) who own or have owned, directly or indirectly, 5% or more of a corporation’s common stock or are otherwise treated as 5% stockholders under Section 382 of the Code and the U.S.

Treasury Department regulations promulgated thereunder increase their aggregate percentage ownership of that corporation’s stock by more than 50 percentage points over the lowest percentage of the stock owned by these stockholders over the applicable testing period.

In the event of an ownership change, Section 382 of the Code imposes an annual limitation on the amount of taxable income a corporation may offset with NOL carry forwards and Section 383 of the Code imposes an annual limitation on the amount of tax a corporation may offset with business credit (including R&D credits) carryforwards.

We have experienced ownership changes in the past, and there can be no assurance that we will not experience ownership changes in the future.

As a result, our NOLs and business credits (including R&D credits) may be subject to limitations, and we may be required to pay taxes earlier and in larger amounts than would be the case if our NOLs or R&D credits were freely usable.

Risks Related to our Intellectual Property

If we are not able to protect our proprietary technology, others could compete against us more directly, which would harm our business.

Our commercial success will depend, in part, on our ability to obtain additional patents and licenses and to protect our existing patent position, both in the U.S.

Our commercial success will depend, in part, on our ability to obtain additional patents and licenses and to protect our existing patent position, both in the U.S.

and in other countries, for therapeutics and related technologies, processes, methods, compositions, and other inventions that we believe are patentable, all of which provide limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage.

As of January 15, 2022, we own and are pursuing 83 (11 U.S.

and 72 international applications) pending provisional and non-provisional patent applications.

As of January 31, 2023, we own and are pursuing 75 pending provisional and non-provisional patent applications (19 U.S., including one allowed U.S.

application, and 56 international applications, including two allowed international applications) and two issued patents (one U.S.

patent issued in February 2023 and one international patent).

We continue to evaluate the full range of our technologies and file new patent applications.

 Our ability to preserve our trade secrets, trademarks and other intellectual property rights is also important to our long-term success.

 Our ability to preserve our trade secrets, trademarks and other intellectual property rights is also important to our long-term success.

Our success depends in part on obtaining patent protection for our products and processes, preserving trade secrets, patents, copyrights and trademarks, operating without infringing the proprietary rights of third-parties, and acquiring licenses for technology or products.

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Patents may also be issued to third-parties, which could interfere with our ability to bring our therapeutics to market.

As the patent and landscape for products for breast disorders, including breast cancers, grows more crowded and becomes more complex we may find it more difficult to obtain patent protection for our products including those related to Endoxifen.

As the patent landscape for products for breast disorders, including breast cancers, grows more crowded and becomes more complex we may find it more difficult to obtain patent protection for our products, including those related to (Z)-endoxifen.

 The laws of some foreign countries do not protect our proprietary rights to the same extent as U.S.

laws, and we may encounter significant problems in protecting our proprietary rights in these countries.

The patent positions of diagnostic companies and pharmaceutical and biotechnology companies, including our patent position, are generally highly uncertain and particularly after the Supreme Court decisions, Mayo Collaborative Services v.

Even in the U.S., the patent positions of diagnostic companies and pharmaceutical and biotechnology companies, including our patent position, are generally highly uncertain, particularly after the Supreme Court decisions Mayo Collaborative Services v.

Prometheus Laboratories , 132 S.

1289 (2012), Association for Molecular Pathology v.

Myriad Therapeutics, Inc., 133 S.

2107 (2013), Alice Corp.

Myriad Therapeutics, Inc.

2107 (2013), and Alice Corp.

CLS Bank International , 134 S.

2347 (2014), and Athena Diagnostics, Inc.

2347 (2014), and the Federal Circuit Court decisions Athena Diagnostics, Inc.

Mayo Collaborative Servs., LLC , 915 F.3d 743 (Fed.

2019) and Amgen Inc.

Sanofi , 987 F.3d 1080 (Fed.

Our patent positions also involve complex legal and factual questions, for which important legal principles remain unresolved.

No consistent policy regarding the breadth of claims allowed in such companies’

No consistent policy regarding the breadth of claims allowed in pharmaceutical and biotechnology companies’

patents has emerged to date in the U.S.

Furthermore, in the biotechnology and pharmaceutical fields, courts frequently render opinions that may affect the patentability of certain inventions or discoveries, including opinions that may affect the patentability of methods for diagnostics, personalized medicine, and analysis and comparison of DNA and, therefore, any patents issued to us may be challenged, deemed unenforceable, invalidated or circumvented.

We will be able to protect our proprietary rights from unauthorized use by third- parties only to the extent that our proprietary technologies and any future tests and products are covered by valid and enforceable patents or are effectively maintained as trade secrets.

In addition, our patent applications may never issue as patents, and the claims of any issued patents may not afford meaningful protection for our products, technology or tests.

In addition, our patent applications may never issue as patents, and the claims of any issued patents may not afford meaningful protection for our products, technology or tests.

 The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:

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any of our patent applications will result in issued patents;

other parties will not challenge any patents issued to us or any of our patents will be valid or enforceable;

other parties will not challenge any patents issued to us;

any of our patents will be valid or enforceable;

any patents issued to us and collaborators will provide a basis for commercially viable therapeutics, will provide us with any competitive advantages or will not be challenged by third-parties;

the patents of others will not have an adverse effect on our business.

our patents and patent applications or patents and patent applications that we license from others, if any will survive legal challenges, and remain valid and enforceable.

If a third-party files a patent application with claims to a drug we have discovered or developed, a derivation proceeding may be initiated regarding competing patent applications.

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 United States Patent and Trademark Office (USPTO) and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent process.

 United States Patent and Trademark Office (USPTO) and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent process.

Periodic maintenance fees, renewal fees, annuity fees, and various other governmental fees on any issued patents and/or applications are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patents and/or applications.

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patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

As is the case with other biotechnology and pharmaceutical companies, our success is heavily dependent on intellectual property, particularly on obtaining and enforcing patents.

As is the case with other biotechnology and pharmaceutical companies, our success is heavily dependent on our intellectual property, particularly on obtaining and enforcing patents.

Obtaining and enforcing patents in the biotechnology and pharmaceutical industries involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain.

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Each proceeding has different eligibility criteria and different patentability challenges that can be raised.

In this regard, the IPR process permits any person (except a party who has been litigating the patent for more than a year) to challenge the validity of U.S.

patents on the grounds that it was anticipated or made obvious by prior art.

In this regard, the IPR process permits any person (except a party who has been litigating the patent for more than a year) to challenge the validity of a U.S.

patent on the grounds that it was anticipated or made obvious by prior art consisting of patents or printed publications.

As a result, non-practicing entities associated with hedge funds, pharmaceutical companies who may be our competitors and others have challenged certain valuable pharmaceutical U.S.

patents based on prior art through the IPR process.

A decision in such a proceeding adverse to our interests could result in the loss of valuable patent rights which would have a material adverse effect on our business, financial condition, results of operations and growth prospects.

A decision in such a proceeding adverse to our interests could result in the loss of valuable patent rights, which would have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Any potential future changes to the U.S.

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In particular, on March 20, 2012, the U.S.

Supreme Court issued the Prometheus and Alice decision, holding that several claims drawn to measuring drug metabolite levels from patient samples were not patentable subject matter.

The full impact of the Prometheus and Alice decision on diagnostic and certain method claims is uncertain.

Supreme Court issued the Mayo Collaborative Services v.

Prometheus Laboratories, Inc.

decision, holding that several claims drawn to measuring drug metabolite levels from patient samples were not patentable subject matter.

The full impact of the Mayo Collaborative Services v.

Prometheus Laboratories, Inc.

decision on diagnostic and certain method claims is uncertain.

In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents once obtained.

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

Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop.  

Our current patent portfolio may not include all patent rights needed for the full development and commercialization of our products.

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We may not be able to secure such a license on acceptable terms.

Litigation or patent derivation proceedings may need to be brought against third parties, as discussed below, to enforce any of our patents or other proprietary rights, or to determine the scope and validity or enforceability of the proprietary rights of such third parties. 

Litigation or patent derivation proceedings may need to be brought against third-parties, as discussed below, to enforce any of our patents or other proprietary rights, or to determine the scope and validity or enforceability of the proprietary rights of such third-parties.

Third-party claims alleging intellectual property infringement may prevent or delay our drug discovery and development efforts.

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Because patent applications can take many years to issue and may be confidential for eighteen months or more after filing, there may be currently pending third-party patent applications which may later result in issued patents that our products may infringe, or which such third-parties claim are infringed by our products and services.

Parties making claims against us for infringement or misappropriation of their intellectual property rights may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our products.

Parties making claims against us for infringement or misappropriation of their intellectual property rights may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our products.

Defense of these claims, regardless of their merit, would involve substantial expenses and would be a substantial diversion of employee resources from our business.

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that also claim technology related to our products, we may have to participate in derivation proceedings in the USPTO to determine the priority of invention.

Third parties may also attempt to initiate reexamination, post-grant review or inter partes review of our patents in the USPTO.

We may also become involved in similar proceedings in the patent offices in other jurisdictions regarding our intellectual property rights with respect to our products and technology.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

We have received confidential and proprietary information from third parties.

We have received confidential and proprietary information from third parties.

In addition, we employ individuals who were previously employed at other diagnostic, medical device or pharmaceutical companies.

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Similar changes and revisions can also occur in foreign countries.

For example, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently cleared products on a timely basis.

For example, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions which, may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently cleared products on a timely basis.

Any change in the laws or regulations that govern the clearance and approval processes relating to our current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market and distribute existing products.

Significant delays in receiving clearance or approval, or the failure to receive clearance or approval for our new products would have an adverse effect on our ability to expand our business.

 The FDA recently announced the Coronavirus Treatment Acceleration Program.

That program may not, however, lead to a faster review or approval of our FDA submissions including for our COVID-19 studies.

Our inadvertent or unintentional failure to comply with the complex government regulations concerning privacy patients, data subjects, and of medical records could subject us to fines and adversely affect our reputation.

Our inadvertent or unintentional failure to comply with the complex government regulations concerning patients'  privacy, data subjects, and of medical records could subject us to fines and adversely affect our reputation.

Federal privacy regulations, among other things, restrict our ability to use or disclose protected health information in the form of patient-identifiable laboratory data, without written patient authorization, for purposes other than payment, treatment, or healthcare operations as defined under HIPAA, except for disclosures for various public policy purposes and other permitted purposes outlined in the privacy regulations.

The privacy regulations provide for significant fines and other penalties for wrongful use or disclosure of protected health information, including potential civil and criminal fines and penalties.

Although the HIPAA statute and regulations do not expressly provide for a private right of damages, we could incur damages under state laws, for example, California Consumer Privacy Act, to private parties for the wrongful use or disclosure of confidential health information or other private personal information.

We intend to implement policies and practices that we believe will make us compliant with the privacy regulations.

However, the documentation and process requirements of the privacy regulations are complex and subject to interpretation.

Failure to comply with the privacy regulations could subject us to sanctions or penalties, loss of business, and negative publicity.

Applicable privacy regulations provide for significant fines and other penalties for wrongful use or disclosure of protected health information, including potential civil and criminal fines and penalties.

Although HIPAA and its implementing regulations do not expressly provide for a private right of damages, we could incur damages under state laws, for example, the California Consumer Privacy Act, as amended by the California Privacy Rights Act to private parties for the wrongful use or disclosure of confidential health information or other personal information.

We intend to implement policies and practices that we believe will make us compliant with applicable privacy regulations.

However, the documentation and process requirements of applicable privacy regulations are complex and subject to interpretation.

Failure to comply with applicable privacy regulations could subject us to sanctions or penalties, loss of business, and negative publicity.

The HIPAA privacy regulations establish a “floor”

of minimum protection for patients as to their medical information and do not supersede state laws that are more stringent.

Therefore, we are required to comply with both HIPAA privacy regulations and various state privacy laws.

The failure to do so could subject us to regulatory actions, including significant fines or penalties, and to private actions by patients, as well as to adverse publicity and possible loss of business.

Therefore, we are required to comply with both HIPAA privacy regulations and various state privacy laws, which vary from state to state, are sometimes contradictory with one another, and are often more restrictive than HIPAA.

Additionally, the documentation and process requirements of such laws are complex and subject to interpretation.

The failure to comply with applicable privacy laws could subject us to regulatory actions, including significant fines or penalties, and to private actions by patients, as well as to adverse publicity and possible loss of business.

In addition, federal and state laws and judicial decisions provide individuals with various rights for violation of the privacy of their medical information by healthcare providers such as us.

The collection and use of personal data including personal health data of individuals in the E.U.

regardless of citizenship or residence is governed by the provisions of the General Data Protection Regulation 2016/679 (commonly known as GDPR) which came into effect on May 25, 2018 with no transition period, and which has penalties for noncompliance.

The collection and processing of personal data, including personal health data related to individuals in the E.U.

regardless of citizenship or residence is governed by the provisions of the General Data Protection Regulation 2016/679 (GDPR) which provides for significant penalties for noncompliance.

GDPR supersedes the Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995.

GDPR regulates the protection of individuals in E.U.

with regard to the processing of personal data and on the free movement of such data within E.U.

and outside the E.U.

and European Economic Area ("EEA") areas.

GDPR imposes a number of requirements including an obligation to seek the consent of individuals to whom the personal data relates, the information that must be provided to the individuals, notification of data processing obligations to the competent national data protection authorities of individual E.U.

Member States, and the security and confidentiality of the personal data.

No personal data may be processed unless this processing is done under one of six lawful bases specified by the regulation (consent, contract, public task, vital interest, legitimate interest or legal requirement).

When the processing is based on consent the data subject has the right to revoke it at any time.

Failure to comply with the requirements of GDPR, and the related national data protection laws of the E.U.

Member States may result in fines and other administrative penalties, litigation, government enforcement actions (which could include civil and/or criminal penalties), and harm our business.

Moreover, patients about whom we or our partners obtain information, as well as the providers who share this information with us, may have contractual rights that may limit our ability to use this information.

Claims that we have violated patient’s or any individual’s rights or breached our contractual obligations, even if ultimately we are not found liable, could be expensive and time-consuming to defend, and could result in adverse publicity and harm our business.

Further, from January 1, 2021, companies have to comply with the GDPR and also the United Kingdom GDPR, or UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law.

The GDPR regulates (i) the processing of personal data carried out in the context of the activities of a company established in the E.U.;

and (ii) the processing of personal data carried out by a company not established in the E.U.

where such processing relates to (a) the offering of goods or services to data subjects who are in the E.U.

or (b) the monitoring of the behavior of data subjects who are in the E.U.

The GDPR imposes a number of requirements, including an obligation to rely on a legal basis (such as the consent of individuals to whom the personal data relates), the information that must be provided to the individuals, notification obligations to the competent national data protection authorities, and the security and confidentiality of the personal data.

Member States may also impose additional requirements in relation to health, genetic and biometric data through their national implementing legislation.

Further, from January 1, 2021, companies have to comply with the GDPR and also the United Kingdom GDPR, or UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law.

The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of £17.5 million or 4% of global turnover.

The European Commission has adopted an adequacy decision in favor of the UK, enabling data transfers from EU member states to the UK without additional safeguards.

However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission re-assesses and renews/ extends that decision, and remains under review by the Commission during this period.

The relationship between the UK and the EU in relation to certain aspects of data protection law remains unclear, and it is unclear how UK data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from the UK will be regulated in the long term.

The European Commission has adopted an adequacy decision in favor of the UK, enabling data transfers from E.U.

member states to the UK without additional safeguards.

However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission re-assesses and renews/ extends that decision and remains under review (and may be modified or revoked) by the Commission during this period.

The relationship between the UK and the E.U.

in relation to certain aspects of data protection law remains unclear, and it is unclear how UK data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from the UK will be regulated in the long term.

These changes may lead to additional costs and increase our overall risk exposure.

Failure to comply with the requirements of GDPR and/or UK GDPR, and the related national data protection laws of the E.U.

Member States or the UK may result in fines and other administrative penalties, litigation, government enforcement actions (which could include civil and/or criminal penalties), and harm our business.

Claims that we have violated patient’s or any individual’s rights or breached our contractual obligations, even if ultimately we are not found liable, could be expensive and time-consuming to defend, and could result in adverse publicity and harm our business.

If we experience a significant disruption in our information technology systems or breaches of data security, our business could be adversely affected.

We rely on information technology systems to keep financial records, manage our manufacturing operations, fulfill customer orders, capture laboratory data, maintain corporate records, communicate with staff and external parties and operate other critical functions.

Our information technology systems are potentially vulnerable to disruption due to breakdown, malicious intrusion and computer viruses or other disruptive events including but not limited to natural disaster.

We rely on information technology systems to keep financial records, manage our manufacturing operations, fulfill customer orders, capture laboratory data, maintain corporate records, communicate with staff and external parties and operate other critical functions.

Our information technology systems are potentially vulnerable to disruption due to breakdown, malicious intrusion and computer viruses or other disruptive events, including, but not limited to, natural disasters, terrorist attacks, utility outages, theft, viruses, phishing, malware, design defects, human error and complications encountered as existing systems are maintained, repaired, replace or upgraded.

If we were to experience a prolonged system disruption in our information technology systems or those of certain of our vendors, it could negatively impact our ability to serve our customers, which could adversely impact our business.

Although we maintain offsite back-ups of our data, if operations at our facilities were disrupted, it may cause a material disruption in our business if we are not capable of restoring function on an acceptable timeframe.

In addition, our information technology systems are potentially vulnerable to data security breaches —

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Such data security breaches could lead to the loss of trade secrets or other intellectual property or could lead to the public exposure of personal information (including sensitive personal information) of our employees, customers and others, any of which could have a material adverse effect on our business, reputation, financial condition and results of operations.

In addition, any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, including state data protection regulations and the E.U.

GDPR, and other regulations, the breach of which could result in significant penalties.

GDPR and the UK GDPR, and other regulations, the violation of which could result in significant penalties.

In addition, these breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above.

Although we utilize various procedures and controls to mitigate our exposure to these risks, cyber attacks and other cyber events are evolving, unpredictable and increasing in sophistication.

Moreover, we have no control over the information technology systems of our third-party partners, including suppliers, manufacturers, service providers and others with which our systems may connect and communicate.

As a result, the occurrence of a cyber incident could go unnoticed for a period time.

We have cybersecurity insurance coverage in the event we become subject to various cyber attacks, however, we cannot ensure that it will be sufficient to cover any particular losses we may experience.

Any cyber incident could have a material adverse effect on our business, financial condition and results of operations.

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It is also possible that the government could attempt to hold us liable under fraud and abuse laws for improper claims submitted by us if it were found that we knowingly participated in the arrangement that resulted in submission of the improper claims.

In addition to the PPACA, the effect of which cannot presently be quantified, various healthcare reform proposals have also emerged from federal and state governments.

In addition to the Patient Protection and Affordable Care Act (“PPACA”), the effect of which cannot presently be quantified, various healthcare reform proposals have also emerged from federal and state governments.

Changes in healthcare policy could adversely affect our business.

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in which we may do business, or the effect any future legislation or regulation will have on us.

The taxes imposed by the new federal legislation and the expansion in government’s effect on the U.S.

healthcare industry may result in decreased profits to us, lower reimbursements by payors for our products or reduced medical procedure volumes, all of which may adversely affect our business, financial condition and results of operations.

The continued spread of coronavirus globally could adversely impact our operations and clinical trials.

Public health pandemics, epidemics or outbreaks could adversely impact our business. 

The ongoing COVID-19 pandemic and related supply-chain disruptions are affecting the United States and global economies and may affect our operations and those of third parties on which we rely, including causing possible disruptions in the supply of the Company’s Endoxifen, AT-H201, AT-301 and the conduct of current and future clinical trials.

In addition, the COVID-19 pandemic may affect the operations of the U.S.

FDA and other health authorities including similar entities/agencies in Sweden and Australia, which could result in delays in meetings, reviews and approvals.

The evolving COVID-19 pandemic could also directly or indirectly impact the pace of enrollment in our clinical trials for at least the next several months and possibly longer as patients may avoid or may not be able to travel to healthcare facilities and physicians’

offices except for a health emergency.

Such facilities and offices may also be required to focus limited resources on non-clinical trial activities, including treatment of COVID-19 patients, and may not be available, in whole or in part, for clinical trial activities related to our products under development.

We have not experienced any delay in drug supply for our ongoing and planned clinical studies, including studies of Endoxifen, AT-301 and AT-H201.

Additionally, while the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce the Company’s ability to access capital, which could negatively impact the Company’s short-term and long-term liquidity.

The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change.

We do not yet know the full extent of potential delays or impacts on our business, financing or clinical trial activities or on healthcare systems or the global economy as a whole.

However, these effects could have a material adverse impact on the Company’s liquidity, capital resources, operations, financial position and business and those of the third parties on which we rely.

We will continue to monitor future enrollment in studies for potential restrictions on site visits, mammograms or the impositions of new restrictions on trials as a result of the COVID-19 pandemic.

The continued spread of the coronavirus globally could adversely impact our operations that are dependent on third-party service providers for a number of critical operational activities including, in particular, 

regulatory (FDA, MPA, TGA) meetings and approvals could be delayed;

protocol review groups (IRB, HREC, IEC, etc.) meetings and approvals could be delayed;

our drug supply chain could be interrupted and shipping may incur new surcharges;

enrollment in our clinical studies could slow or be halted;

operations in general could be disrupted with potential infection of employees and consultants and difficulties with a remote work force;

quarantines of people and drugs needed for our studies could adversely affect operations;

our stock price could be adversely impacted and access to capital could be more challenging;

our ability to access our facilities and timely prepare and file regulatory reports with the SEC.

The end of the COVID-19 pandemic may make our COVID-19 programs obsolete.

Although many public health authorities have said that COVID-19 will continue to be present in circulation for the foreseeable future, the end of the pandemic and the shift to an endemic phase would likely reduce the need for our COVID-19 product candidates and may make them obsolete or unnecessary.

It is possible that our development timeline for these programs will exceed the duration of the pandemic such that we do not realize a positive return on these investments.

To the extent that the stock market has placed value in our COVID-19 programs, positive developments relating to the end of the pandemic could have a negative impact on our stock price.

Risks Related to the Securities Markets and Investment in our Securities

The taxes imposed by any new federal legislation and the expansion in government’s effect on the U.S.

healthcare industry, including the Inflation Reduction Act enacted in August 2022, may result in decreased profits to us, lower reimbursements by payors for our products or reduced medical procedure volumes, all of which may adversely affect our business, financial condition and results of operations.

We face significant competition from other biotechnology and pharmaceutical companies.

Our product candidates face, and will continue to face, intense competition from large pharmaceutical and biotechnology companies, as well as academic and research institutions.

We compete in an industry that is characterized by (i) rapid technological change, (ii) evolving industry standards, (iii) emerging competition and (iv) new product introductions.

Our competitors have existing products that compete with our product candidates and they may develop and commercialize additional products that will compete with our product candidates.

Because competing companies and institutions may have greater financial resources than us, they may be able to provide broader services and product lines, make greater investments in research and development or carry on broader R&D initiatives.

Our competitors also have greater development capabilities than we do and have substantially greater experience in undertaking preclinical and clinical testing of product candidates, obtaining regulatory approvals and manufacturing and marketing pharmaceutical products.

Even if we obtain regulatory approval for our products, we may not be the first to market and that may affect the price or demand for our potential products.

Existing or future competing products may provide greater therapeutic convenience or clinical or other benefits for a specific indication, or fewer side effects, than our potential products or may offer comparable performance at a lower cost.

Additionally, the availability and price of our competitors’

products could limit the demand and the price we are able to charge for our potential products thereby reducing or eliminating our commercial opportunity.

We may not be able to implement our business plan if the acceptance of our potential products is inhibited by price competition or the reluctance of physicians to switch from existing methods of treatment to our potential products, or if physicians switch to other new products or choose to reserve our potential products.

Additionally, a competitor could obtain orphan product exclusivity from the FDA with respect to such competitor’s product, which may prevent us from obtaining approval from the FDA for such potential products for the same indication for a period of time.

If our potential products fail to capture and maintain market share, we may not achieve sufficient product revenues and our business will suffer.

Our employees and third-party partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk of employees’

or our third-party partners’

fraud or other misconduct.

Misconduct by our employees or partners could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards, comply with federal and state healthcare fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized activities to us.

Employee and third-party misconduct could involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our business and our reputation.

It is not always possible to identify and deter such misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.

If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could have a material adverse effect on our business, financial condition and results of operations, and result in the imposition of significant fines or other sanctions against us.

Our business  

involves risk associated with handling hazardous and other dangerous materials.

Our research and development activities involve the controlled use of hazardous materials, chemicals, human blood and tissue, animal blood and blood products, animal tissue, and biological waste.

The risk of accidental contamination or injury from these materials cannot be completely eliminated.

The failure to comply with current or future regulations could result in the imposition of substantial fines against the Company, suspension of production, alteration of our manufacturing processes or cessation of operations.

Risks Related to the Securities Markets and Investment in our 

Our shares of common stock are listed on the Nasdaq Capital Market, but we cannot guarantee that we will be able to satisfy the continued listing standards going forward.

Although our shares of common stock are listed on The Nasdaq Capital Market, we cannot ensure that we will be able to satisfy the continued listing standards of The Nasdaq Capital Market going forward.

If we cannot satisfy the continued listing standards going forward, Nasdaq may commence delisting procedures against us, which could result in our stock being removed from listing on The Nasdaq Capital Market.

If our stock price does not satisfy the $1.00 minimum bid price requirement or we otherwise fail to satisfy other continued listing requirements (and such other continued listing requirements may be enhanced during the period our stock price is below the $1.00 minimum bid requirement including a requirement that we maintain at least $5 million in stockholders’

equity rather than the $2.5 million that is typically required for continued listing), we may be delisted from Nasdaq, which could adversely affect our stock price, liquidity, and our ability to raise funding.

Our common stock has at times trades below the $1.00 minimum bid requirement.

Although our shares of common stock are listed on the Nasdaq Capital Market (Nasdaq), we cannot ensure that we will be able to satisfy the continued listing standards of Nasdaq going forward, including its $1.00 minimum bid price requirement.

If we cannot satisfy the continued listing standards going forward, Nasdaq may commence delisting procedures against us, which could result in our stock being removed from listing on Nasdaq.

On October 5, 2022, we received a letter from Nasdaq stating we are not in compliance with Listing Rule 5550(a)(2) because our common stock failed to maintain a minimum closing bid price of $1.00 per share for 30 consecutive business days. We have until April 3, 2023, to either regain compliance, or request additional time to regain compliance.

If we are unable to regain compliance with Nasdaq Listing Rule 5550(a)(2), and if our stock price continues not to satisfy the $1.00 minimum bid price requirement or we otherwise fail to satisfy other continued listing requirements, we may be delisted from Nasdaq, which could adversely affect our stock price, liquidity, and our ability to raise funding. 

We have offered and sold a considerable amount of common shares in recent financings.

Any additional or anticipated sales of shares by us, holders of our warrants to purchase common stock or other stockholders may cause the trading price of our common stock to decline.

We have offered and sold a considerable amount of our common stock in past financings.

Any additional or anticipated sales of shares by us, holders of our warrants to purchase common stock or other stockholders may cause the trading price of our common stock to decline.

Additional issuances of shares by us may result in dilution to the interests of other holders of our common stock.

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Our stock price is highly volatile.

During the one year prior to February 18, 2022, our stock price has ranged from $1.20 to $8.62 per share. 

In addition to the factors discussed in this report, the trading price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

In addition to the factors discussed in this Annual Report, the trading price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control including:

price and volume fluctuations in the overall stock market;

changes in operating results and performance and stock market valuations of other biopharmaceutical companies generally;

macroeconomic industry, geopolitical and market conditions, including, but not limited to, rising interest rates, the inflationary environment, recessionary fears and rising geopolitical tensions;

financial or operational projections we may provide to the public, any changes in these projections or our failure to meet these projections;

changes in government regulation;

our inclusion or removal from certain stock indices;

developments in patent or other proprietary rights;

new products by our competitors;

announcements of changes in our senior management or directors;

other events, including those resulting from war, incidents of terrorism, natural disasters, pandemics, including COVID-19, or responses to these events;

changes in accounting principles;

results of clinical studies;

regulatory and FDA actions, including inspections and warning letters;

actions of securities analysts who initiate or maintain coverage of us, and changes in financial estimates by any securities analysts who follow our Company, or our failure to meet these estimates or the expectations of investors;

any ongoing litigation that we are currently involved in or litigation that we may become involved in in the future;

coverage of us, and changes in financial estimates by any securities analysts who follow our Company, or our failure to meet these estimates or the expectations of investors;

any ongoing litigation that we are currently involved in or litigation that we may become involved in the future;

additional shares of our common stock being sold into the market by us or our existing stockholders or warrant holders or the anticipation of such sales;

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As a result, an investment in our common stock may decrease in value.

The ownership of our common stock may become  

concentrated among a small number of stockholders, and if our principal stockholders, directors, and officers choose to act together, they may be able to significantly influence management and operations, which may prevent us from taking actions that may be favorable to stockholders.

Our ownership may become concentrated among a small number of stockholders.

These stockholders, acting together, will have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors and any proposed merger, consolidation or sale of all or substantially all of our assets.

This concentration of ownership could have the effect of delaying, deferring, or preventing a change in control of the Company or impeding a merger or consolidation, takeover or other business combination that could be favorable to you.

These stockholders, acting together, could have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors and any proposed merger, consolidation or sale of all or substantially all of our assets.

This concentration of ownership could also have the effect of delaying, deferring, or preventing a change in control of the Company or impeding a merger or consolidation, takeover or other business combination that could be favorable to stockholders.

We are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls.

If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of the Sarbanes-Oxley Act in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the trading price of our common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities is listed, the Securities and Exchange Commission, or other regulatory authorities, which could require additional financial and management resources. 

Our Stockholder Rights Agreement, the anti-takeover provisions in our charter documents and Delaware law could delay or prevent a change in control which could limit the market price of our common stock and could prevent or frustrate attempts by our stockholders to replace or remove current management and the current Board of Directors.

Our Stockholder Rights Agreement that we adopted in May 2014, our amended and restated certificate of incorporation, and amended and restated bylaws contain provisions that could delay or prevent a change in control or changes in our Board of Directors that our stockholders might consider favorable.

These provisions include the establishment of a staggered Board of Directors, which divides the board into three classes, with directors in each class serving staggered three-year terms.

If we identify material weaknesses in our internal control over financial reporting, or if we are unable to comply with the requirements of the Sarbanes-Oxley Act in a timely manner or assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the trading price of our common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the Securities and Exchange Commission, or other regulatory authorities, which could require additional financial and management resources.

Our Stockholder Rights Agreement, which we adopted in May 2014, our amended and restated certificate of incorporation, as amended, and our amended and restated bylaws contain provisions that could delay or prevent a change in control or changes in our Board of Directors (our Board) that our stockholders might consider favorable.

These provisions include a staggered Board, which divides the Board into three classes, with directors in each class serving staggered three-year terms.

The existence of a staggered board can make it more difficult for a third-party to effect a takeover of our Company if the incumbent Board does not support the transaction.

These and other provisions in our corporate documents, our Shareholder Rights Plan and Delaware law might discourage, delay or prevent a change in control or changes in the Board of Directors of the Company.

These provisions could also discourage proxy contests and make it more difficult for an investor and other stockholders to elect directors not nominated by our Board.

Furthermore, the existence of these provisions, together with certain provisions of Delaware law, might hinder or delay an attempted takeover other than through negotiations with the Board of Directors.

These and other provisions in our corporate documents, including our Shareholder Rights Plan and Delaware law might discourage, delay or prevent a change in control or changes in our Board.

These provisions could also discourage proxy contests and make it more difficult for activist investors and other stockholders to elect directors not nominated by our Board.

Furthermore, the existence of these provisions, together with certain provisions of Delaware law, might hinder or delay an attempted takeover other than through negotiations with our Board.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price  of our common stock and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business.

Multiple securities and industry analysts currently cover us.

If one or more of the analysts downgrade our common stock or publish inaccurate or unfavorable research about our business, the price of our common stock would likely decline.

If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which could cause the price of our common stock and trading volume to decline.

UNRESOLVED STAFF COMMENTS

1 unchanged sentence

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