What changed in this filing

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Item 1A. Risk Factors

2021-08-09 compared with 2021-05-04 · 148 added, 118 removed, 981 unchanged (21% of the section changed)

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As a result, we have not been profitable and have incurred significant operating losses in every reporting period since our inception.

For the three months ended March 31, 2021, we reported a net loss of $78.3 million.

For the six months ended June 30, 2021, we reported a net loss of $162.1 million.

We do not expect to generate product revenues in the near future, if at all.

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In addition, as a young business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors.

Because of the anticipated completion of our BLA filing for tab-cel ® in the third quarter of 2021 and a potential approval decision on the same in the first half of 2022, we plan to begin transitioning from a company with a research and development focus to a company capable of supporting commercial activities.

Because of the anticipated completion of our BLA filing for tab-cel ® in the first quarter of 2022 and a potential approval decision on the same in the second half of 2022, we plan to begin transitioning from a company with a research and development focus to a company capable of supporting commercial activities.

We may not be successful in such a transition.

We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control.

We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year due

to a variety of factors, many of which are beyond our control.

Accordingly, any of our quarterly or annual periods’ results are not indicative of future operating performance .

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In addition, other unanticipated costs may arise.

Because the design and outcome of our ongoing, planned and anticipated clinical studies is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates.

the design and outcome of our ongoing, planned and anticipated clinical studies is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates.

Our future capital requirements depend on many factors, including:

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the emergence of competing technologies or other adverse market developments.

We believe that our existing cash, cash equivalents and short-term investments as of March 31, 2021, together with projected revenues from U.S.

tab-cel ® sales, if approved, will be sufficient to fund our operations into 2023, including expenses related to the BLA filing and potential commercial launch of tab-cel ® in the U.S.

As of March 31, 2021, we had total cash, cash equivalents and short-term investments of $435.2 million.

We believe that our existing cash, cash equivalents and short-term investments as of June 30, 2021 will be sufficient to fund our planned operations into 2023.

As of June 30, 2021, we had total cash, cash equivalents and short-term investments of $373.4 million.

However, our operating plan may change as a result of many factors currently unknown to us, and we may need additional funds sooner than planned.

We do not have any committed external source of funds other than reimbursements, milestone and royalty payments that we may receive under the Bayer License Agreement, Bayer Tech Transfer Agreement and Bayer Manufacturing Agreement.

We do not have any committed external source of funds other than reimbursements, milestone and royalty payments that we may receive under the Bayer Agreements.

While we expect to continue to opportunistically seek access to additional funds through additional public or private equity offerings or debt financings, through potential collaborations, partnering or other strategic arrangements, or a combination of the foregoing, additional funds may not be available when we need them on terms that are acceptable to us, or at all.

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The success of our product candidates will depend on many factors, including the following:

completion of preclinical and clinical studies with positive results;

receipt of regulatory approvals from applicable authorities;

completion of preclinical and clinical studies with positive results, demonstrating the safety, purity, and potency of our product candidates to the satisfaction of the FDA or other regulatory agencies;

receipt of regulatory approvals from applicable authorities, including required authorizations for clinical trials and marketing authorizations;

protecting our rights in our intellectual property portfolio, including by obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;

establishing or making arrangements with third-party manufacturers or completing our own manufacturing facility for clinical and commercial manufacturing purposes;

establishing or making arrangements with third-party manufacturers or qualifying our own manufacturing facility for clinical and commercial manufacturing purposes;

developing manufacturing and distribution processes for our novel T-cell product candidates and next-generation CAR T programs;

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In connection with these measures, we may be subject to claims based upon, arising out of, or related to COVID-19 and our actions and responses thereto, including any determinations that we may make to continue to operate or to re-open our offices and facilities where permitted by applicable law.

The effects of current and potential future state executive orders, local shelter-in-place orders, government-imposed quarantines, our work-from-home policies and potential return-to-office strategy and other similar, and perhaps more severe, actions may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course .

Further quarantines, shelter-in-place or similar restrictions and other actions taken by foreign, federal, state and local governments, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur or could be reinstated, related to the ongoing COVID-19 pandemic or other infectious diseases, could impact our manufacturing capabilities and third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which would disrupt our supply chain.

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In addition, there have been and may continue to be interruptions in the supply of leukapheresis collections, which supply raw materials used in our products.

Our clinical trials may be affected by health epidemics and have been affected by the ongoing COVID-19 pandemic.

Clinical site initiation and patient enrollment have experienced delays as a result of the ongoing COVID-19 pandemic, including due to the prioritization of hospital resources toward COVID-19 and away from clinical trials or as a result of changing practice patterns that impact the diseases our trials address.

Our clinical trials may also be affected by health epidemics and have been affected by the ongoing and evolving COVID-19 pandemic.

Clinical site initiation and patient enrollment have experienced delays as a result of the ongoing and evolving COVID-19 pandemic, including due to the prioritization of hospital resources toward COVID-19 and away from clinical trials or as a result of changing practice patterns that impact the diseases our trials address.

Some patients may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services or if patients contract COVID-19 or are forced to quarantine.

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COVID-19-related travel restrictions may also interrupt key clinical trial activities, such as clinical trial site data monitoring and efficacy, safety and translational data collection, processing and analyses.

At the outset of the COVID-19 pandemic, we observed a temporary slow-down in stem cell and solid organ transplant volumes, which may have decreased the eligible patient population for the tab- cel ® P hase 3 study .

In April 2020, we initiated a temporary pause in the screening and enrollment of patients in our RCT of ATA188 in patients with progressive MS.

Although we were able to resume the screening and enrollment of patients in our RCT of ATA188 and enrolled the first patient in the study in June 2020 , the ongoing COVID-19 pandemic may require us to institute another pause in the screening and enrollment of patients in our RCT.

In April 2020, we initiated a temporary pause in the screening and enrollment of patients in our EMBOLD study of ATA188 in patients with PMS.

Although we were able to resume the screening and enrollment of patients in our EMBOLD study and enrolled the first patient in the study in June 2020, the ongoing COVID-19 pandemic may require us to institute another pause in the screening and enrollment of patients in our EMBOLD study.

Similarly, our ability to recruit and retain principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may be adversely impacted.

In addition, while the potential economic impact brought by, and the duration of, the COVID-19 pandemic and the various actions taken in response to it may be difficult to assess or predict, the pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

In addition, while the potential economic impact brought by, and the duration of, the ongoing and evolving COVID-19 pandemic and the various actions taken in response to it may be difficult to assess or predict, the pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.

While we expect the ongoing COVID-19 pandemic to continue to adversely affect our business operations, the extent of the impact on our clinical development and regulatory efforts and the value of and market for our common stock will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements in the U.S.

While we expect the ongoing and evolving COVID-19 pandemic to continue to adversely affect our business operations, the extent of the impact on our clinical development and regulatory efforts and the value of and market for our common stock will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements in the U.S.

and in other countries, and the effectiveness of actions taken globally to contain and treat COVID-19.

In addition, to the extent the evolving effects of the ongoing COVID-19 pandemic adversely affect our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties described elsewhere in this “Risk Factors” section.

In addition, to the extent the evolving effects of the ongoing and evolving COVID-19 pandemic adversely affect our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties described elsewhere in this “Risk Factors” section.

Our future success is dependent on the regulatory approval of our product candidates.

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The novel nature of our product candidates may create further challenges in obtaining regulatory approval.

For example, the FDA and comparable foreign regulatory authorities have limited experience with regulating the development and commercialization of T-cell immunotherapies, particularly allogeneic T-cell product candidates, and CAR T therapies.

CAR T therapies , including assessing the comparability of different versions of such product candidates .

In addition, approval policies, regulations, regulatory positions or the type and amount of clinical and other data necessary to gain approval may change during the course of a product candidate’s clinical development and throughout regulatory interactions, and may vary among jurisdictions , particularly for novel therapies .

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failure to demonstrate positive benefit/risk profile of the product candidate for its proposed indication;

failure of clinical sites to conduct the study in accordance with applicable regulatory requirements;

failure of clinical studies to meet the level of statistical significance required for approval;

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The FDA or a comparable foreign regulatory authority may require more information, including additional CMC information, preclinical or clinical data to support approval, which may delay or prevent approval and our commercialization plans, or we may decide to abandon the development program.

If we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request (including failing to approve the most commercially promising indications), may grant approval contingent on the performance of costly post-marketing clinical studies, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.

For example, we recently received feedback from the FDA regarding specific next steps required for submission of the BLA for tab-cel ® for patients with EBV+ PTLD, which are:

(i) Type B CMC meeting where we will provide data on substantially all lots made to date, which we believe should enable the FDA to make a final determination on such data package to support comparability;

and (ii) Type B clinical meeting to review updated clinical data from the ALLELE study.

We have requested such meetings with the FDA in order to progress towards BLA submission, but we cannot be certain of the timing or outcome of such meetings.

In addition, if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request (including failing to approve the most commercially promising indications), may grant approval contingent on the performance of costly post-marketing clinical studies, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.

In addition, the clinical study requirements of the FDA, EMA and other regulatory agencies and the criteria these regulators use to determine the safety and efficacy of a product candidate are determined according to the type, complexity, novelty and intended use and market of the potential products.

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Approvals by the EMA and FDA for existing autologous CAR T therapies, such as Novartis’s Kymriah ® and Gilead’s Yescarta ® , may not be indicative of what these regulators may require for approval of our therapies.

We have multiple clinical trials of our product candidates currently ongoing.

If an adverse safety issue, clinical hold or other adverse finding occurs in one or more of our clinical trials, such event could adversely affect our other clinical trials of the same or related product candidates.

Moreover, our product candidates may not perform successfully in clinical studies or may be associated with adverse events that distinguish them from those that have previously been approved, such as existing autologous CAR T therapies.

For instance, allogeneic product candidates may result in adverse events not experienced with autologous products.

Our development and commercialization activities could be harmed or delayed by governmental or regulatory delays due to limitations on the availability of governmental and regulatory agency personnel to review regulatory filings or engage with us, as a result of the COVID-19 pandemic, changes to governmental regulatory requirements, policies, guidelines or priorities, reallocation, or availability of government resources, or for other reasons, which may significantly delay the FDA’s, or other regulatory agency, ability to review and process any submissions we have filed or may file or cause other regulatory delays.

Our development and commercialization activities could be harmed or delayed by governmental or regulatory delays due to limitations on the availability of governmental and regulatory agency personnel to review regulatory filings or engage with us, caused by global health concerns, including the ongoing and evolving COVID-19 pandemic, changes to governmental regulatory requirements, policies, guidelines or priorities, reallocation, or availability of government resources, or for other reasons, which may significantly delay the FDA’s, or other regulatory agency, ability to review and process any submissions we have filed or may file or cause other regulatory delays.

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

It is unclear how FDA’s policies and guidance will impact any inspections of our facilities, including our clinical trial sites .

Even if a product candidate were to successfully obtain approval from the FDA and comparable foreign regulatory authorities, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements.

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Likewise, a number of companies in the pharmaceutical and biotechnology industries, including those with greater resources and experience than us, have suffered significant setbacks in clinical studies, even after seeing promising results in earlier preclinical studies or clinical studies.

Despite the results reported in earlier preclinical studies or clinical studies for our product candidates, we do not know whether the clinical studies we may conduct, or clinical studies in progress, will demonstrate adequate efficacy and safety to result in regulatory approval to market tab-cel ® , ATA188, any product candidates resulting from our next-generation CAR T programs or any of our other product candidates in any particular jurisdiction.

Despite the results reported in earlier preclinical studies or clinical studies for our product candidates, there can be significant variability in safety and efficacy results between different clinical trials of the same product candidate due to numerous factors, we do not know whether the clinical studies we may conduct, or clinical studies in progress, will demonstrate adequate efficacy and safety to result in regulatory approval to market tab-cel ® , ATA188, any product candidates resulting from our next-generation CAR T programs or any of our other product candidates in any particular jurisdiction.

Tab-cel ® has been predominantly evaluated in single-center studies under investigator-sponsored INDs held by MSK and in our EAP, utilizing different response criteria and endpoints from those we may utilize in later clinical studies.

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feedback from the FDA, the IRB, data safety monitoring boards or comparable foreign authorities, or results from earlier stage or concurrent preclinical and clinical studies, that might require modification to the protocol for a study;

a decision by the FDA, the IRB, comparable foreign authorities, or us, or a recommendation by a data safety monitoring board or comparable foreign authority, to suspend or terminate clinical studies at any time for safety issues or for any other reason;

unacceptable benefit/risk profile, unforeseen safety issues or adverse side effects;

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disruptions caused by man-made or natural disasters or public health pandemics or epidemics, including, for example, the ongoing COVID-19 pandemic.

As an example, we activated additional clinical sites over the course of 2018 and increased HLA coverage during this period.

As an example, we activated additional clinical sites for the ALLELE study of tab-cel ® over the course of 2018 and increased HLA coverage during this period.

As a result, enrollment in our studies was limited in the early part of 2018 and increased through the course of the year as we increased clinical sites and HLA coverage.

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Reliance on CROs entails risks to which we would not be subject if we conducted our clinical studies ourselves, including reliance on the CRO for clinical site initiation and monitoring, the possibility that the CRO does not maintain the financial resources to meet its obligations under our agreements, the possibility of breach of these agreements by the CRO because of factors beyond our control, including a failure to properly perform their obligations under these agreements, and the possibility of termination or nonrenewal of the agreements by the CROs, based on their own business priorities, at a time that is costly or damaging to us.

Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our regulatory responsibilities.

If we experience delays or quality issues in the conduct, completion or termination of any clinical study of our product candidates, the approval and commercial prospects of such product candidate will be harmed, and our ability to generate product revenues from such product candidate will be delayed.

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we may be forced to suspend marketing of that product;

regulatory authorities, IRBs, or other clinical trial oversight bodies may place a hold on any ongoing clinical trials;

regulatory authorities may withdraw or change their approvals of that product;

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we could be sued and held liable for harm caused to subjects or patients;

our products may be seized, or we may be required to recall our products;

our products may become less competitive in the marketplace;

our reputation may suffer.

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The FDA often approves new cancer therapies initially only for use in patients with relapsed or refractory metastatic disease.

We expect to initially seek approval of tab-cel ® and our other product candidates in this setting.

Subsequently, for those products that prove to be sufficiently beneficial, if any, we would expect to seek approval in earlier lines of treatment and potentially as a first line therapy, but there is no guarantee that our product candidates, even if approved, would be approved for earlier lines of therapy, and, prior to any such approvals, we will have to conduct additional clinical trials.

We expect to initially seek approval of tab-cel ® and our other oncology product candidates in this setting.

Subsequently, for those products that prove to be sufficiently beneficial, if any, we may seek approval for earlier lines of treatment and potentially as a first line therapy, but there is no guarantee that our product candidates, even if approved, would be approved for earlier lines of therapy, and, prior to any such approvals, we will have to conduct additional clinical trials.

Our projections of both the number of people who have the diseases we are targeting, as well as the subset of people with these diseases in a position to receive second or later lines of therapy, and who have the potential to benefit from treatment with our product candidates, are based on our current beliefs and estimates.

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Additionally, the potentially addressable patient population for our product candidates may be limited or may not be amenable to treatment with our product candidates.

For instance, we expect our lead product candidate, tab-cel ® , to initially target a small patient population that suffers from aggressive EBV+PTLD who have failed rituximab or rituximab plus chemotherapy.

For instance, we expect our lead product candidate, tab-cel ® , to initially target a patient population that suffers from aggressive EBV+PTLD who have failed rituximab or rituximab plus chemotherapy.

At the outset of the COVID-19 pandemic, we initially observed a temporary slow-down in stem cell and solid organ transplant volumes.

These reductions were transient, but if a reduction in such volumes resumes, it could result in lower PTLD incidence and thus reduce the demand for tab-cel ® .

Even if we obtain significant market share for our product candidates, because the potential target populations are small, we may never achieve profitability without obtaining regulatory approval for additional indications.

Even if we obtain significant market share for our product candidates,

because the potential target populations are small , we may never achieve profitability without obtaining regulatory approval for additional indications .

We may not be able to obtain or maintain orphan drug exclusivity for our product candidates.

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Orphan drug exclusivity may be lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.

In the US, FDA may still approve a later marketing application blocked by an ongoing period of orphan drug exclusivity in limited circumstances such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the biological product was designated.

As a result, even if one of our product candidates receives orphan exclusivity, the FDA can still approve or license other drugs or biological products that have a different active ingredient for use in treating the same indication or disease.

Further, the FDA can waive orphan exclusivity if we are unable to manufacture sufficient supply of our product.

Even if we obtain orphan drug exclusivity for a product, that exclusivity may not be maintained or effectively protect the product from competition because different drugs can be approved for the same condition.

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BTD by the FDA and PRIME designation by the EMA may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval.

Although we have obtained BTD and PRIME designation for tab-cel ® for EBV+ PTLD in the U.S.

Although we have obtained BTD and PRIME designation for tab-cel ® for rituximab-refractory EBV+ PTLD in the U.S.

and the EU, respectively, this may not lead to faster development or regulatory review and does not increase our likelihood of success.

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For product candidates that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the study can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens.

Biologics designated as breakthrough therapies by the FDA may also be eligible for priority review.

Based on our BTD, we intend to pursue a rolling submission strategy for our BLA for tab-cel ® for EBV+ PTLD in the U.S.

While the rolling review process may provide the opportunity for ongoing communications with and feedback from the FDA, the FDA may raise issues and pose questions to us that may delay the initiation and completion of our BLA submission, acceptance of the complete BLA for filing, and approval of the BLA, thereby potentially delaying the approval process.

Biologics designated as breakthrough therapies by the FDA may also be eligible for other expedited review programs, such as priority review.

Based on our BTD, we may pursue a rolling submission strategy for our BLA for tab-cel ® for EBV+ PTLD in the U.S.

While rolling review process may provide the opportunity for ongoing communications with and feedback from the FDA, it may not result in a faster timeline to marketing approval or result in approval at all.

The FDA may raise issues and pose questions to us that may delay the initiation and completion of our BLA submission, acceptance of the complete BLA for filing, and approval of the BLA.

We may not be able to provide a satisfactory or a timely response to FDA questions or we may not be able to timely gather the required data to prepare our BLA submissions as we plan.

If we are unable to address all questions or concerns the FDA may raise or if we do not have timely access to the data required for the preparation of the BLA, we may not be able to timely initiate and complete our BLA and ultimately receive FDA approval.

In addition, the FDA retains discretion to decide not to review the portions of our BLA submitted under the rolling review process until the submission is deemed to be complete.

In addition, even if we submit our BLA under the rolling review process, the FDA may decide not to review portions of our BLA under the rolling review process until the submission is deemed to be complete.

PRIME designation supports the development and accelerated review by the EMA of new therapies to treat patients with unmet medical need.

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The regulatory approval process outside the U.S.

generally includes all of the risks associated with obtaining FDA approval.

generally includes all of the risks associated with obtaining FDA approval and may include additional risks.

Clinical studies accepted in one country may not be accepted by regulatory authorities in other countries.

In addition, many countries outside the U.S.

require that a product be

approved for reimbursement before it can be approved for sale in that country.

require that a product be approved for reimbursement before it can be approved for sale in that country.

A product candidate that has been approved for sale in a particular country may not receive reimbursement approval in that country.

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on a timely basis, if at all.

Approval by the FDA does not ensure approval by regulatory or payor authorities in other countries or jurisdictions, and approval by one regulatory or payor authority outside the U.S.

does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA.

Approval by and regulatory agency or payor does not ensure approval by any other regulatory or payor authorities in other countries or jurisdictions.

We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any market.

If we are unable to obtain approval of any of our product candidates by regulatory or payor authorities in the EU , the U.K., Asia or elsewhere, the commercial prospects of that product candidate may be significantly diminished.

If we are unable to obtain approval of any of our product candidates by regulatory or payor authorities in the US, EU, the U.K., Asia or elsewhere, the commercial prospects of that product candidate may be significantly diminished.

Even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties.

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These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance by us and/or our CMOs and CROs for any post-approval clinical studies that we conduct.

They also include any post-approval requirements or commitments imposed by FDA as a condition of approval, or any risk evaluation or mitigation strategies (REMS), if applicable.

The safety profile of any product will continue to be closely monitored by the FDA and comparable foreign regulatory authorities after approval.

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seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall.

The occurrence of any event or penalty described above may inhibit our ability to successfully commercialize our products.

The occurrence of any event or penalty described above may also generate negative publicity or inhibit our ability to successfully commercialize our products.

Advertising and promotion of any product candidate that obtains approval in the U.S.

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Part of our business strategy is to expand our product candidate pipeline by identifying and validating new product candidates, which we may develop ourselves, in-license or otherwise acquire from others.

In addition, in the event that our existing product candidates do not receive regulatory approval or are not successfully commercialized, then the success of our business will depend on our ability to expand our product pipeline through in-licensing or other acquisitions.

We may be unable to identify relevant product candidates.

If we do identify such product candidates, we may be unable to reach acceptable terms with any third party from which we desire to in-license or acquire them.

Any product candidates we identify, acquire, in-license, or develop may not be safe or effective for their targeted diseases, and may not receive marketing authorization in a timely manner, or at all.

Bayer is generally responsible for the conduct and funding of the development and commercialization of ATA2271 and ATA3271 .

Pursuant to the Bayer License Agreement, Bayer holds an exclusive, field-limited license to ATA2271 and ATA3271.

As a result, other than the development of ATA2271 through Phase 1, Bayer is generally responsible for the development and obtaining and maintaining regulatory approval of ATA2271 and ATA3271.

We do not control the development activities being conducted or that may be conducted in the future by Bayer, including, but not limited to, the timing of initiation, termination or completion of clinical trials, the analysis of data arising out of those clinical trials or the timing of release of data concerning those clinical trials, which may impact our ability to report on Bayer’s results.

As a result, other than the development of ATA2271 through Phase 1, Bayer is generally responsible for the development and obtaining and maintaining regulatory approval and commercialization of ATA2271 and ATA3271.

Although we have joint governance and certain decision making rights, we do not control the development activities being conducted or that may be conducted in the future by Bayer, including, but not limited to, the timing of initiation, termination or completion of clinical trials, the analysis of data arising out of those clinical trials or the timing of release of data concerning those clinical trials, which may impact our ability to report on Bayer’s results.

Bayer may conduct these activities more slowly or in a different manner than we would if we controlled the development of ATA2271 after Phase 1 and ATA3271.

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However, we cannot control whether Bayer will devote sufficient attention and resources to the development of ATA2271 and/or ATA3271 or will proceed in an expeditious manner.

Even if the FDA or other regulatory agencies approve ATA2271 and/or ATA3271, Bayer may elect not to proceed with the commercialization of the resulting product in one or more countries.

Even if the FDA or other regulatory agencies approve ATA2271 and/or ATA3271, Bayer may elect not to proceed with the commercialization of the resulting product in one or more countries, unless otherwise specified in the Bayer License Agreement.

In March 2021, we entered into the Bayer Manufacturing Agreement for the supply of allogenic mesothelin-directed CAR T-cell therapies for clinical trials.

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Our CMOs or partners are not our employees, and except for remedies available to us under our agreements with our CMOs or partners, we cannot directly control whether or not they devote sufficient time and resources, including experienced staff, to the manufacturing of supply for our ongoing clinical, nonclinical and preclinical programs.

Our CMOs for tab-cel ® will need to be prepared to undergo pre-approval inspection in connection with our anticipated BLA, and we cannot be certain that we will be able to adequately support them through such inspection nor that they will successfully pass any such inspection.

To meet our projected supply needs for clinical and commercial materials to support our activities through regulatory approval and commercial manufacturing of tab-cel ® , ATA188, any product candidates resulting from our next-generation CAR T programs or any other product candidates, we will need to transition the manufacturing of these materials to a CMO or our own facility.

Our CMOs for tab-cel ® will need to be prepared to undergo pre-approval inspection in connection with our anticipated BLA, and we cannot be certain that we will successfully pass any such inspection.

any other product candidates, we will need to transition the manufacturing of these materials to a CMO or our own facility.

Regardless of where production occurs, we will need to develop relationships with suppliers of critical starting materials or reagents, increase the scale of production and demonstrate comparability of the material produced at these facilities to the material that was previously produced.

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If any issued third-party patents were held by a court of competent jurisdiction to cover aspects of our materials, formulations, methods of manufacture or methods for treatment, we could be forced, including by court order, to cease developing, manufacturing or commercializing the relevant product candidate until the relevant patent expired.

Alternatively, we may desire or be required to obtain a license from such third party in order to use the infringing technology and to continue developing, manufacturing or marketing the infringing product candidate.

Alternatively, we may desire or be required to obtain

a license from such third party in order to use the infringing technology and to continue developing, manufacturing or marketing the infringing product candidate.

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

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If there is any conflict, dispute, disagreement or issue of nonperformance between us and our counterparties regarding our rights or obligations under these license agreements, including any conflict, dispute or disagreement arising from our failure to satisfy diligence or payment obligations, we may be liable to pay damages and our counterparties may have a right to terminate the affected license.

The termination of any license agreement with one of our partners would materially adversely affect our ability to utilize the intellectual property that is subject to that license agreement in our drug discovery and development efforts, our ability to enter into future collaboration, licensing and/or marketing agreements for one or more affected product candidates and our ability to commercialize the affected product candidates.

The termination of any license agreement with one of our partners would materially adversely affect our ability to utilize the intellectual

property that is subject to that license agreement in our drug discovery and development efforts, our ability to enter into future collaboration, licensing and/or marketing agreements for one or more affected product candidates and our ability to commercialize the affected product candidates.

Furthermore, a disagreement under any of these license agreements may harm our relationship with the partner, which could have negative impacts on other aspects of our business.

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These agreements are designed to protect our proprietary information.

Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, or outside scientific advisors might intentionally or inadvertently disclose our trade secrets or confidential, proprietary information to competitors.

Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, or outside scientific advisors might intentionally or

inadvertently disclose our trade secrets or confidential, proprietary information to competitors.

In addition, competitors may otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.

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A primary trend in the healthcare industry is cost containment.

Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications.

Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement

for particular medications .

Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products.

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We cannot be sure that coverage and adequate reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be.

countries such as the U.S., greater cost-shifting from the payor to the patient is also a trend, and higher patient copayments or other administrative burdens could lead to reduced demand from patients or healthcare professionals.

In some countries such as the U.S., greater cost-shifting from the payor to the patient is also a trend, and higher patient copayments or other administrative burdens could lead to reduced demand from patients or healthcare professionals.

This could particularly be the case in a challenging economic climate, such as during the ongoing COVID-19 pandemic.

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A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.

This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013, and, due to subsequent legislative amendments, will remain in effect through 2030 unless additional Congressional action is taken.

COVID-19 relief legislation suspended the 2% Medicare sequester from May 1, 2020 through March 31, 2021, and extended the sequester by one year, through 2030.

This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013, and, due to subsequent legislative amendments, will remain in effect into 2031 unless additional Congressional action is taken.

COVID-19 relief legislation suspended the 2% Medicare sequester from May 1, 2020 through December 31, 2021.

In January 2013, the American Taxpayer Relief Act of 2012 (the ATRA) was enacted which, among other things, further reduced Medicare payments to several providers, including hospitals and outpatient clinics, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

There remain judicial and Congressional challenges to numerous elements of the Affordable Care Act, as well as efforts by both the executive and legislative branches of the federal government to repeal or replace certain aspects of the Affordable Care Act.

For example, President Trump signed Executive Orders designed to delay or eliminate the implementation of certain provisions of the Affordable Care Act or otherwise circumvent some of the requirements for health insurance mandated by the Affordable Care Act.

There have been judicial and Congressional challenges to numerous elements of the Affordable Care Act, as well as efforts by both the executive and legislative branches of the federal government to repeal or replace certain aspects of the Affordable Care Act.

In addition, the U.S.

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Congress has not passed comprehensive repeal legislation, it has enacted laws that modify certain provisions of the Affordable Care Act, such as removing penalties, starting January 1, 2019, for not complying with the Affordable Care Act’s individual mandate to carry health insurance, eliminating the implementation of certain mandated fees, and increasing the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D.

In December 2018, a Texas District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act (the Tax Act) .

In December 2019, the U.S.

Court of Appeals for the 5 th Circuit upheld the Texas District Court ruling that the individual mandate was unconstitutional and remanded the case back to the Texas District Court to determine whether the remaining provisions of the Affordable Care Act are invalid as well.

The United States Supreme Court is currently reviewing this case, but it is unknown when a decision will be reached.

Although the United States Supreme Court has not yet ruled on the constitutionality of the Affordable Care Act, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the Affordable Care Act marketplace.

O n June 17, 2021, the U.S.

Supreme Court dismissed the most recent legal challenge to the law brought by several states arguing that, without the individual mandate, the entire Affordable Care Act was unconstitutional.

The Supreme Court dismissed the lawsuit without ruling on the merits of the states’ constitutionality arguments.

While the legal challenge to the Affordable Care Act was pending , on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the Affordable Care Act marketplace.

The executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the Affordable Care Act.

In the future, there may be additional challenges and/or amendments to the Affordable Care Act.

It is unclear how the United States Supreme Court ruling, other such litigation, and the healthcare form measures of the Biden administration will impact the Affordable Care Act and our business .

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For example, in the U.S., there have been several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.

At the federal level, the Trump administration’s budget proposal for the fiscal year 2021 included a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs.

In March 2020, the Trump administration sent “principles” for drug pricing to Congress, calling for legislation that would, among other things, cap Medicare Part D beneficiary out-of-pocket pharmacy expenses, provide an option to cap Medicare Part D beneficiary monthly out-of-pocket expenses, and place limits on pharmaceutical price increases.

Additionally, in May 2018, the Trump administration previously laid out a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contained additional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out-of-pocket costs of drug products paid by consumers.

On July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that attempt to implement several of the administration’s proposals.

On November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers.

For example, the Consolidated Appropriations Act of 2021 included several drug price reporting and transparency measures, such as a new requirement for certain Medicare plans to develop tools to display Medicare Part D prescription drug benefit information in real time and for group and health insurance issuers to report information on pharmacy benefit and drug costs to the Secretaries of Health and Human Services, Labor, and the Treasury.

There have also been recent administrative developments in the U.S.

related to drug pricing.

In addition, the Rebate Rule creates new safe harbor protection for certain (i) point-of-sale discounts from pharmaceutical manufacturers to Medicare Part D plans, Medicaid managed care organizations, and their contracted pharmacy benefit managers, and (ii) fees for certain services that PBMs provide to pharmaceutical manufacturers.

Implementation of the Rebate Rule is uncertain due, at least in part, to a change in the U.S.

presidential administration and ongoing litigation challenging the Rebate Rule.

The litigants have stipulated to a delay of all provisions of the Rebate Rule until January 1, 2023 and have agreed to hold the case in abeyance pending further review of the Rebate Rule by the Biden administration.

Further, on November 20, 2020, CMS issued an interim final rule implementing President Trump’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021.

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District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule.

However, it is unclear whether the Biden administration will work to reverse these measures or pursue similar policy initiatives.

At the state level, legislatures have increasingly passed legislation and implemented

regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, to encourage importation from other countries and bulk purchasing.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, to encourage importation from other countries and bulk purchasing.

Furthermore, the increased emphasis on managed healthcare in the U.S.

and on country and regional pricing and reimbursement controls in the EU will put additional pressure on product pricing, reimbursement and usage, which may adversely affect our future product sales.

These pressures can arise from rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical reimbursement policies and pricing in general .

These pressures can arise from rules and practices of managed care groups, other insurers, judicial decisions and governmental laws and regulations related to

Medicare, Medicaid and healthcare reform, pharmaceutical reimbursement policies and pricing in general .

Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.

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In addition, a number of companies and academic institutions are developing product candidates for EBV+ PTLD and other EBV-driven diseases including:

Viracta Therapeutics, Inc., which is conducting a Phase 1b/2 clinical study for nanatinostat (formerly named tractinostat, or VRx-3996) in combination with antiviral drug valganciclovir in relapsed/refractory EBV + lymphomas;

Viracta Therapeutics, Inc., which is conducting a pivotal, Phase 2 clinical study for nanatinostat (formerly named tractinostat, or VRx-3996) in combination with antiviral drug valganciclovir in relapsed/refractory EBV + lymphomas;

AlloVir (formerly known as ViraCyte), which has completed a Phase 2 clinical study for Viralym-M (ALVR105), an allogeneic, multi-virus T-cell product that targets six viruses in allogeneic HSCT recipients with ≥1 treatment-refractory infection, including EBV, has initiated a pivotal study for Virus-Associated Hemorrhagic-Cystitis, as well as a Phase 2 proof of concept trial for the prevention of BKV, CMV, AdV, EBV, HHV06 and JCV in post-allogeneic HSCT patients;

and Tessa Therapeutics Pte Ltd., which has a Phase 2 autologous and Phase 1 allogeneic CD30-CAR-T product candidate being evaluated in CD30+ lymphomas.

and Tessa Therapeutics Pte Ltd., is conducting a pivotal, Phase 2 clinical study for its autologous CD30-CAR T and a Phase 1 clinical study for its allogeneic CD30-CAR-T product candidate, both being evaluated in CD30+ lymphomas.

Competition in the MS market is high with at least 20 therapies, including four generics or bioequivalents, approved in the U.S.

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and/or EU for the treatment of relapsing forms of MS.

There are numerous development candidates in Phase 3 studies for both relapsing and/or progressive forms of MS and additional novel agents could be approved in either or both indications in the future including TG Therapeutics’ anti-CD20 monoclonal antibody ublituximab , EMD Serono’s Bruton’s tyrosine kinase (BTK) inhibitor, evobrutinib , Roche’s BTK inhibitor, fenebrutinib , Sanofi’s BTK inhibitor, SAR442168 and AB Science’s tyrosine kinase inhibitor, masitinib.

There are numerous development candidates in Phase 3 studies for both relapsing and/or progressive forms of MS and additional novel agents could be approved in either or both indications in the future including TG Therapeutics’ anti-CD20 monoclonal antibody ublituximab (PDUFA 03/2022), EMD Serono’s Bruton’s tyrosine kinase (BTK) inhibitor, evobrutinib, Roche’s BTK inhibitor, fenebrutinib, Sanofi’s BTK inhibitor, tolebrutinib and AB Science’s tyrosine kinase inhibitor, masitinib.

Medicinova is planning to initiate a Phase 3 study of its PDE inhibitor, ibudilast (MN166) in non-active SPMS.

There are currently five autologous CAR T therapies approved in the U.S.

There are currently f ive autologous CAR T therapies approved in the U.S.

Novartis’ Kymriah ® ( tisagenlecleucel ), Gilead/Kite’s Yescarta ® ( axicabtagene ciloleucel ) and Tecartus TM ( brexucabtagene autoleucel ) and Bristol-Myers Squibb’s Breyanzi ® ( lisocabtagene maraleucel ) and Abecma ( idecabtagene vicleucel ) with bluebird bio .

There are many CAR -mediated cell therapies in development, and, although the majority are autologous, they include allogeneic and off-the-shelf cell therapies.

There are multiple allogeneic CAR platforms being developed with differences in approaches to minimize instances of donor cells recognizing the patient’s body as foreign or rejection of the donor cells by the patient’s body.

There are multiple allogeneic CAR platforms being developed with differences in approach es to minimize instances of donor cells recognizing the patient’s body as foreign or rejection of the donor cells by the patient’s body.

These approaches include the use of gene-editing to remove or inhibit the TCR and the use of cell types without a TCR.

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It is possible that some of these other approaches will have more favorable characteristics than the approach we utilize, which would result in them being favored by potential partners or customers over our products.

Depending on the diseases that we target in the future, we may face competition from both autologous and allogeneic CAR therapies and other modalities (e.g., small molecules, antibodies) in the indication of interest.

Depending on the diseases that we target in the future, we may face competition from both autologous and allogeneic CAR therapies and other modalities (e.g.

, small molecules, antibodies) in the indication of interest .

Many of the approved or commonly used drugs and therapies for our current or future target diseases, including EBV+ PTLD and MS, are well established and are widely accepted by physicians, patients and third-party payors.

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These appreciable advantages could render our product candidates obsolete or noncompetitive before we can recover the expenses of development and commercialization.

We expect the product candidates we develop will be regulated as biological products (biologics) and therefore they may be subject to competition sooner than anticipated.

We expect the product candidates we develop will be regulated as biological products (biologics), and they may be subject to competition sooner than anticipated.

The Biologics Price Competition and Innovation Act of 2009 (BPCIA) was enacted as part of the Affordable Care Act to establish an abbreviated pathway for the approval of biosimilar and interchangeable biological products.

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Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the reference product was approved under a BLA.

During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product.

The law is complex and is still being interpreted and implemented by the FDA.

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We may need to grow the size of our organization, and we may experience difficulties in managing this growth.

As of March 31, 2021, we had 480 employees.

As of June 30, 2021, we had 558 employees.

We have made the decision to grow the size of our organization in order to support our continued development and potential commercialization of our product candidates.

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Our stock price has fluctuated in the past and can be expected to be volatile in the future.

From January 1, 2019 through March 31, 2021, the reported sale price of our common stock has fluctuated between $4.52 and $41.97 per share.

From January 1, 2019 through June 30, 2021, the reported sale price of our common stock has fluctuated between $4.52 and $41.97 per share.

The stock market in general and the market for biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

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decreased demand for any product candidates or products that we may develop;

termination of clinical study sites or entire study programs;

clinical holds or termination of clinical study sites or entire study programs;

injury to our reputation and significant negative media attention;

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The actual or perceived failure by us, our customers, our vendors, or other relevant third parties to address or comply with these laws, regulations, and obligations could increase our compliance and operational costs, expose us to regulatory scrutiny, actions, fines and penalties, cause regulators to reject, limit or disrupt our clinical trial activities, result in reputational harm, lead to a loss of customers, reduce the use of our products, result in litigation and liability, and otherwise cause a material adverse effect on our business, financial condition, and results of operations.

For example, the EU adopted the General Data Protection Regulation (EU) 2016/679 (GDPR), which imposes onerous and comprehensive privacy, data protection, and data security obligations onto data controllers and processors, including, as applicable, contractual privacy, data protection, and data security commitments, expanded disclosures to data subjects about how their personal information is used, honoring individuals’ data protection rights, limitations on retention of personal information, additional requirements pertaining to sensitive information (such as health data) and pseudonymized (i.e., key-coded) data, data breach notification requirements, higher standards for obtaining consent from data subjects, changes to informed consent practices, and more detailed notices for clinical trial subjects and investigators.

Penalties for non-compliance with the GDPR can be significant and include fines in the amount of the greater of €20 million or four percent of global turnover and restrictions or prohibitions on data processing, which could impair our ability to do business in the EU, reduce demand for our services and adversely impact our business and results of operations.

The GDPR also provides that EU member states may introduce further laws and regulations limiting the processing of genetic, biometric, or health data, which could limit our ability to collect, use and share European data, cause our compliance costs to increase, require us to change our practices, adversely impact our business, and harm our financial condition.

Assisting our customers, partners, and vendors in complying with the GDPR, or complying with the GDPR ourselves, may cause us to incur substantial operational costs or require us to change our business practices.

European privacy, data protection, and data security laws, including the GDPR, generally restrict the transfer of personal information from the European Economic Area ( EEA ) to the United States and most other countries unless the parties to the transfer have implemented specific safeguards to protect the transferred personal information.

For example, the EU adopted the General Data Protection Regulation (EU) 2016/679 (EU GDPR), in May 2018 which has direct effect in all EU member states and has extraterritorial effect where organizations outside of the EU process personal information of individuals in the EU in relation to the offering of goods or services to those individuals (“targeting test”) or monitoring of their behavior (“monitoring test”).

As such, the EU GDPR applies to us to the extent we are established in an EU Member State or we meet the requirements of either the targeting test or the monitoring test.

These laws impose onerous and comprehensive privacy, data protection, and data security obligations onto data controllers and processors, including, as applicable:

(i) contractual privacy, data protection, and data security commitments, including the requirement to implement appropriate technical and organizational measures to safeguard personal information;

(ii) establishing means for individuals to exercise their data protection rights;

(iii) limitations on retention of personal information;

(iv) additional requirements pertaining to sensitive information (such as health data) and pseudonymized (i.e., key-coded) data;

(v) data breach notification requirements to supervisory authorities without undue delay (and no later than 72 hours where feasible) and/or concerned individuals;

(vi) higher standards for obtaining valid consent from data subjects and changes to consent practices (vii)obligations to consider data protection as any new products or services are developed;

and (viii) the provisions of more detailed privacy notices for clinical trial subjects and investigators.

Penalties for non-compliance with the EU GDPR can be significant and include fines in the amount of the greater of €20 million or four percent of consolidated global turnover and restrictions or prohibitions on data processing, which could impair our ability to do business in the EU, reduce demand for our services and adversely impact our business and results of operations.

The EU also confers a private right of action on data subjects and

consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations of the EU GDPR.

The EU GDPR also provides that EU member states may introduce further laws and regulations limiting the processing of genetic, biometric, or health data, which could limit our ability to collect, use and share European data, cause our compliance costs to increase, require us to change our practices, adversely impact our business, and harm our financial condition.

Assisting our customers, partners, and vendors in complying with the EU GDPR, or complying with the EU GDPR ourselves, may cause us to incur substantial operational costs or require us to change our business practices.

There may also be a risk that the measures will not be implemented correctly or that individuals within the business will not be fully compliant with the required procedures .

European privacy, data protection, and data security laws, including the EU GDPR, restricts the transfer of personal information from the European Economic Area (EEA) to the United States and other countries that the European Commission does not recognize as having “adequate” data protection laws unless the parties to the transfer have implemented an appropriate data transfer mechanism in accordance with the EU GDPR.

Data protection laws in the U.K.

and Switzerland impose similar restrictions.

There is uncertainty on how to implement such safeguards and how to conduct such transfers in compliance with the GDPR, and certain safeguards may not be available or applicable with respect to some or all of the personal information processing activities necessary to research, develop and market our products and services.

One of the primary safeguards allowing U.S.

(as discussed below) and Switzerland impose similar restrictions.

One of the primary mechanisms allowing U.S.

companies to import personal information from Europe has been certification to the EU-U.S.

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However, the EU-U.S.

Privacy Shield framework was invalidated in July 2020 in a decision by the Court of Justice of the EU and the Swiss-U.S.

Privacy Shield Framework was declared as inadequate by the Swiss Federal Data Protection and Information Commissioner.

The decision by the Court of Justice and the announcement by the Swiss Commissioner both raised questions about whether one of the primary alternatives to the Privacy Shield frameworks, the European Commission’s Standard Contractual Clauses, can lawfully be used for personal information transfers from Europe to the United States or most other countries.

Authorities in the U.K.

may similarly invalidate use of the EU-U.S.

Privacy Shield and raise questions on the viability of the Standard Contractual Clauses.

In November 2020, EU regulators proposed a new set of Standard Contractual Clauses, which impose additional obligations and requirements with respect to the transfer of EU personal data to other jurisdictions, which may increase the legal risks and liabilities under the GDPR and local EU laws associated with cross-border data transfers, and result in material increased compliance and operational costs.

Privacy Shield framework was invalidated in July 2020 in a decision by the Court of Justice of the EU (“CJEU”) subsequent guidance required additional compliance efforts to analyze international data flows and take steps to ensure adequate protections for personal information transferred to the U.S.

and other certain jurisdictions, including by implementing supplementary measures that provide privacy protections in addition to those provided under the Standard Contractual Clauses (or SCCs).

Similarly, the Swiss-U.S.

Privacy Shield Framework was declared as inadequate by the Swiss Federal Data Protection and Information Commissioner in light of the CJEU’s July 2020 decision.

Moreover, new versions of the European Commission’s SCCs, now the primary mechanism for the lawful transfer of personal information from Europe to the United States and other countries have been released requiring additional compliance and implementation efforts.

If we are unable to implement a valid solution for personal information transfers to the United States and other countries, we will face increased exposure to regulatory actions, substantial fines, and injunctions against processing or transferring personal information from Europe, and we may be required to increase our data processing capabilities in Europe at significant expense.

Inability to import personal information from Europe to the United States or other countries may decrease demand for our products and services as our customers that are subject to the GDPR may seek alternatives that do not involve personal information transfers out of Europe.

At present, there are few, if any, viable alternatives to the Privacy Shield and the Standard Contractual Clauses.

In addition, it is unclear whether the transfer of personal information from the EU to the U.K.

will continue to remain lawful under the GDPR in light of Brexit.

Pursuant to a post-Brexit trade deal between the U.K.

and the EU, transfers of personal information from the EEA to the U.K.

are not considered restricted transfers under the GDPR for a period of up to six months from January 1, 2021.

However, unless the EU Commission makes an adequacy finding with respect to the U.K.

before the end of that period, the U.K.

will be considered a “third country” under the GDPR and transfers of European personal information to the U.K.

will require an adequacy mechanism to render such transfers lawful under the GDPR.

Additionally, although U.K.

privacy, data protection and data security law is designed to be consistent with the GDPR, uncertainty remains regarding how data transfers to and from the U.K.

will be regulated notwithstanding Brexit.

Other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our services and operating our business.

Inability to import personal information from Europe to the United States or other countries may decrease demand for our products and services as our customers that are subject to the EU GDPR may seek alternatives that do not involve personal information transfers out of Europe.

Moreover, where we rely on SCCs, we must now evaluate and implement supplementary measures that provide privacy protections additional to those provided under SCCs.

This evaluation will, in particular, include an assessment as to whether the types of personal data transferred pursuant to SCCs may be subject to government surveillance in the data importer’s country and an assessment as to whether the data importer can meet its contractual obligations under the SCCs.

Further, following a referendum in June 2016 in which voters in the United Kingdom approved an exit from the EU, the United Kingdom government initiated a process to leave the EU, known as Brexit.

Following December 31, 2020, the EU GDPR’s data protection obligations continue to apply to the United Kingdom in substantially unvaried form under the so called “UK GDPR” by virtue of section 3 of the European Union (Withdrawal) Act 2018.

Under the UK GDPR, companies not established in the United Kingdom but who process personal data in relation to the offering of goods or services to individuals in the United Kingdom, or to monitor their behavior will be subject to the UK GDPR – the requirements of which are (at this time) largely aligned with those under the EU GDPR and as such, may lead to similar compliance and operational costs with potential fines of up to £17.5 million or 4% of global turnover.

Other countries outside of Europe continue to enact or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our services and operating our business.

For example, Brazil recently enacted the General Data Protection Law (Lei Geral de Proteção de Dados Pessoais or LGPD) (Law No.

13,709/2018), which broadly regulates the processing of personal information and imposes compliance obligations and penalties comparable to those of the GDPR.

13,709/2018), which broadly regulates the processing of personal information and imposes compliance obligations and penalties comparable to those of the EU GDPR.

Regulation of privacy, data protection and data security has also become more stringent in the United States.

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The CCPA may increase our compliance costs and potential liability.

Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent state privacy, data protection and data security legislation in the U.S., which could increase our potential liability and adversely affect our business.

The CCPA will be expanded substantially on January 1, 2023, when the California Privacy Rights Act of 2020 (CPRA) becomes fully operative.

The CPRA will, among other things, give California residents the ability to limit use of certain sensitive personal information, further restrict the use of cross-contextual advertising, establish restrictions on the retention of personal information, expand the types of data breaches subject to the CCPA’s private right of action, provide for increased penalties for CPRA violations concerning California residents under the age of 16, and establish a new California Privacy Protection Agency to implement and enforce the new law.

Other states have already passed similar comprehensive privacy laws that will also go into effect in 2023, and several more are considering their own versions of privacy legislation, demonstrating a strong trend towards more stringent state privacy, data protection and data security legislation in the U.S., which could increase our potential liability and adversely affect our business.

Compliance with U.S.

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Additionally, the increased usage of computers operated on home networks due to the shelter-in-place or similar restrictions related to the COVID-19 pandemic may make our systems more susceptible to security breaches.

Although we take measures to protect sensitive data from unauthorized access, use or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to personnel error, malfeasance, or other malicious or inadvertent disruptions.

For example, in March 2021, MSK provided notice that MSK was one of many customers impacted by a data breach at Accellion, Inc., which provides a document-sharing system.

MSK subsequently notified us that certain documents related to one of our discontinued programs were subject to the breach, which compromise we deemed immaterial.

Although we take measures to protect sensitive data from unauthorized access, use or disclosure, we and our third party service providers frequently defend against and respond to cyber attacks, and our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to personnel error, malfeasance, or other malicious or inadvertent disruptions.

Any such breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, manipulated, publicly disclosed, lost, or stolen.

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We may not be able to anticipate all types of security threats, and we may not be able to implement preventative measures effective against all such security threats.

We also may not be effective in responding to contain or mitigate the risks of an attack.

The techniques used by cyber criminals change frequently, may not be recognized until launched, and can originate from a wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations, hostile foreign governments or agencies, or cybersecurity researchers.

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For example, if such an event were to occur and cause interruptions in our operations, or those of our third-party vendors and other contractors and consultants, it could result in a material disruption of our programs and the development of our services and technologies could be delayed.

Furthermore, significant disruptions of our internal information technology systems or those of our third-party vendors and

other contractors and consultants, or security breaches could result in the loss, misappropriation, and/or unauthorized access, use, or disclosure of, or the prevention of access to, confidential information (including trade secrets or other intellectual property, proprietary business information, and personal information), which could result in financial, legal, business, and reputational harm to us.

Furthermore, significant disruptions of our internal information technology systems or those of our third-party vendors and other contractors and consultants, or security breaches could result in the loss, misappropriation, and/or unauthorized access, use, or disclosure of, or the prevention of access to, confidential information (including trade secrets or other intellectual property, proprietary business information, and personal information), which could result in financial, legal, business, and reputational harm to us.

For example, any such event that leads to unauthorized access, use, or disclosure of personal information, including personal information regarding our customers or employees, could harm our reputation directly, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information, which could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business.

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Our ability to obtain clinical supplies of product candidates could be disrupted, if the operations of these suppliers are affected by a man-made or natural disaster or other business interruption, including, for example, the ongoing COVID-19 pandemic.

Unregistered Sales of Equity Securities and Use of Proceeds

Unregister ed Sales of Equity Securities and Use of Proceeds

Defaults Upon Senior Securities

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

What changed 10-Q

Item 1A. Risk Factors