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The following is a summary of the principal factors that cause an investment in the company to be speculative or risky:
−Removed: • A significant portion of revenue growth in 2021 is as a result of the receipt of purchase orders from Pfizer for CDX-616.
−Removed: Revenues in 2022 and in future years from our sales of CDX-616 to Pfizer are subject to a number of factors which are outside of our control and may not materialize.
−Removed: • We do not have a long term sale and purchase agreement with Pfizer for CDX-616 and we currently expect that future orders for quantities of CDX-616 by Pfizer will continue to be based on the needs of Pfizer for quantities of CDX-616.
• We have a history of net losses and we may not achieve or maintain profitability.
• We are dependent on our collaborators, and our failure to successfully manage these relationships could prevent us from developing and commercializing many of our products.
−Removed: • We are dependent on a limited number of customers, including Pfizer.
−Removed: • The ongoing COVID-19 pandemic has adversely affected and may continue in the future to, directly or indirectly, adversely affect our business, results of operations and financial condition.
+Added: • Our biotherapeutic programs are early stage, highly regulated and expensive.
+Added: • If either Nestlé Health Science or Takeda terminate their development programs under their respective license agreements with us, any potential revenue from those license agreements will be significantly reduced or non-existent.
+Added: • We may need additional capital in the future in order to expand our business.
+Added: • We are dependent on a limited number of customers.
• Our product supply agreements with customers have finite duration and may not be extended or renewed.
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• If we are unable to develop and commercialize new products for the target markets, our business and prospects will be harmed.
−Removed: • Our biotherapeutic programs are early stage, highly regulated and expensive.
−Removed: • If either Nestlé Health Science or Takeda terminate their development programs under their respective license agreements with us, any potential revenue from those license agreements will be significantly reduced or non-existent.
−Removed: • Our efforts to deploy our technology platform in the fine chemicals market may fail.
−Removed: • We may need additional capital in the future in order to expand our business.
−Removed: • We have investments in non-marketable securities, which may subject us to significant impairment charges.
• Competitors and potential competitors who have greater resources and experience than we do may develop products and technologies that make ours obsolete.
+Added: • The ongoing COVID-19 pandemic has adversely affected and may continue in the future to, directly or indirectly, adversely affect our business, results of operations and financial condition.
+Added: • Revenues in in future years from our sales of CDX-616 to Pfizer are subject to a number of factors which are outside of our control and may not materialize.
+Added: • We have investments in non-marketable securities, which may subject us to significant impairment charges.
• Ethical, legal and social concerns about genetically engineered products and processes could limit or prevent the use of our products, processes, and technologies and limit our revenues.
−Removed: • If we engage in any acquisitions, we will incur a variety of costs and may potentially face numerous risks that could adversely affect our business and operations.
• We use hazardous materials in our business and we must comply with environmental laws and regulations.
• Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.
+Added: • As a public reporting company, we are subject to rules and regulations established from time to time by the SEC and Nasdaq regarding our internal controls over financial reporting.
+Added: We may not complete needed improvements to our internal controls over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our common stock and your investment.
+Added: • If we engage in any acquisitions, we will incur a variety of costs and may potentially face numerous risks that could adversely affect our business and operations.
• We or our customers may not be able to obtain regulatory approval for the use of our products in food and food ingredients, if required.
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• Results of preclinical studies and early clinical trials of product candidates may not be predictive of results of later studies or trials.
+Added: • We may not be able to maintain orphan drug designations for certain of our product candidates, and may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity.
+Added: • We have obtained rare pediatric disease designation for CDX-6512 and CDX-6210, however, there is no guarantee that such designation will result in approval of CDX-6512 or CDX-6210, and even if we obtain approval of CDX-6512 or CDX-6210 for the indication for which we have been awarded rare pediatric disease designation, there is no guarantee that such approval will result in an aware of a rare pediatric disease priority review voucher.
+Added: • Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain, or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved, or commercialized in a timely manner, or at all, which could negatively impact our business.
• Even if we obtain regulatory approval for any products that we develop alone or with collaborators, such products will remain subject to ongoing regulatory requirements.
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• The successful commercialization of product candidates developed by us or our partners will depend in part on the extent to which governmental authorities and health insurers establish adequate coverage, reimbursement levels and pricing policies.
+Added: • Recently enacted legislation, future legislation and healthcare reform measures may increase the difficulty and cost for our partners to obtain marketing approval for and commercialize product candidates developed by us.
• Compliance with European Union chemical regulations could be costly and adversely affect our business and results of operations.
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• We contract with third parties for the manufacturing and supply of product candidates, which supply may become limited or interrupted or may not be of satisfactory quality and quantity.
−Removed: • Our efforts to prosecute and protect our intellectual property may not be successful.
−Removed: • Our ability to compete may decline if we do not adequately protect our proprietary technologies or if we lose some of our intellectual property rights.
−Removed: • Third parties may claim that we are infringing their intellectual property rights or other proprietary rights, which may subject us to costly and time-consuming litigation.
+Added: • Our efforts to prosecute, maintain, protect and/or defend our intellectual property rights may not be successful.
+Added: • Our ability to compete may decline if we do not adequately prosecute, maintain, protect and/or defend our proprietary technology, products or services or our intellectual property rights.
+Added: • Third parties may claim that we are infringing, violating or misappropriating their intellectual property rights, which may subject us to costly and time-consuming litigation and prevent us from developing or commercializing our technology, products or services.
• We may be involved in lawsuits to protect or enforce our intellectual property rights, which could be expensive, time-consuming and unsuccessful.
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• If our biocatalysts are stolen, misappropriated or reverse engineered, others could use these biocatalysts to produce competing products.
+Added: • Confidentiality and non-use agreements with employees, consultants, advisors, and other third parties may not adequately prevent disclosures and non-use of trade secrets and other proprietary information.
• We are subject to anti-takeover provisions in our certificate of incorporation and bylaws and under Delaware law that could delay or prevent an acquisition of our company.
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• We face risks associated with our international business.
+Added: • Market and economic conditions may negatively impact our business, financial condition, and share price.
• Business interruptions resulting from disasters or other disturbances could delay us in the process of developing our products and could disrupt our sales.
−Removed: • Confidentiality agreements with employees and others may not adequately prevent disclosures of trade secrets and other proprietary information.
• We are dependent on information technology systems, infrastructure and data, and any failure of these systems could harm our business.
• Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations and financial condition.
−Removed: • Evolving expectations around ESG matters may expose us to reputational and other risks.
+Added: • Evolving expectations around environmental, social and governance matters may expose us to reputational and other risks.
Risks Relating to Our Business and Strategy
−Removed: A significant portion of our revenue growth in 2021 is as a result of the receipt of purchase orders from Pfizer for a proprietary enzyme product ("CDX-616") used by Pfizer in the manufacture of its active pharmaceutical ingredient nirmatrelvir for its COVID-19 antiviral therapeutic, PAXLOVID™ (nirmatrelvir tablets;
−Removed: ritonavir tablets).
−Removed: Revenues in 2022 and in future years from our sales of CDX-616 to Pfizer are subject to a number of factors which are outside of our control and may not materialize.
−Removed: Starting the first and second quarters of 2021, we began to receive purchase orders from Pfizer, Inc.
−Removed: (“Pfizer”) for large quantities of our proprietary enzyme product, CDX-616, for use by Pfizer in the manufacture of a critical intermediate for its proprietary active pharmaceutical ingredient, nirmatrelvir.
−Removed: Pfizer markets, sells and distributes nirmatrelvir, in combination with the active pharmaceutical ingredient ritonavir, as its PAXLOVID™ (nirmatrelvir tablets;
−Removed: ritonavir tablets) product, which received emergency use authorization (“EUA”) by the U.S.
−Removed: Food and Drug Administration (“FDA”) in late 2021 for the treatment of COVID-19 infections in humans.
−Removed: In 2021, we recognized $34.5 million in revenue from the sale of quantities of CDX-616 to Pfizer.
−Removed: In addition, as of December 31, 2021, we have received additional purchase orders from Pfizer for delivery of a significant quantity of CDX-616 in 2022.
−Removed: We have received and currently expect to receive additional purchase orders from Pfizer for significant quantities of CDX-616 during the course of 2022 for delivery in 2022 and 2023.
−Removed: Revenues in 2022 and in future years from our sales of CDX-616 to Pfizer and other potential customers (including sublicensees of Pfizer technology from The Medicines Patent Pool) are subject to a number of factors which are outside of our control, including, without limitation, the following, all of which could reduce or eliminate our sales of CDX-616, and therefore materially and adversely affect our business, results of operations and financial condition:
−Removed: • Pfizer has no future binding commitment to purchase any particular quantity or quantities of CDX-616 from us, and we are dependent upon Pfizer continuing to place orders with us (whether on a spot basis or under a long term agreement, when and if executed) for their requirements, if any, for CDX-616;
−Removed: • to our knowledge, sublicensees of Pfizer technology from The Medicines Patent Pool (MPP) have no obligation to purchase CDX-616 from us under their sublicenses with MPP;
−Removed: • the EUA granted by the FDA for the use of PAXLOVID™ for the treatment of COVID-19 infections in humans could be withdrawn at any time;
−Removed: • future vaccine development and usage and the development and usage of other new therapies for the treatment or elimination of COVID-19 may eliminate or reduce demand for PAXLOVID™;
−Removed: • new variants of COVID-19 may emerge which PAXLOVID™ is not effective in treating;
−Removed: • Pfizer may not ultimately receive full marketing authorization for PAXLOVID™ from the FDA and other international regulatory authorities;
−Removed: • Pfizer could reformulate or make changes in the manufacturing process for nirmatrelvir which would eliminate or reduce demand for the use of CDX-616 in its manufacture;
−Removed: • sublicensees of Pfizer technology for the manufacture, sale and distribution of PAXLOVID™ from the MPP may not utilize CDX-616 in the manufacture of nirmatrelvir;
−Removed: • national and regional governmental authorities (including those of the United States government) may mandate that raw materials and intermediates used in the manufacture of PAXLOVID™ to be marketed, sold and distributed within the borders of that country be domestically produced, which could eliminate or reduce demand for the use of CDX-616 in such country;
−Removed: • we may be unable (because of lack of available manufacturing capacity at our contract manufacturers, supply chain disruptions or an inability to obtain applicable regulatory approvals) to manufacture the quantities of CDX-616 that Pfizer may desire to purchase from us.
−Removed: We do not have a long term sale and purchase agreement with Pfizer for CDX-616.
−Removed: \Whether or not a long term-purchase and sale agreement is executed, we currently expect that future orders for quantities of CDX-616 by Pfizer will continue to be based on the needs of Pfizer for quantities of CDX-616 and there will be no minimum purchase obligation on the part of Pfizer.
−Removed: If Pfizer ceases to issue or delays the issuance of orders for CDX-616, our results of operations and financial condition will be materially and adversely affected.
−Removed: As of December 31, 2021, we have not yet executed a long term sale and purchase agreement with Pfizer for CDX-616.
−Removed: All of the orders for CDX-616 that we have received from Pfizer to date have been in the form of purchase orders for individual deliveries of quantities of CDX-616 at mutually agreed upon pricing.
−Removed: Whether or not a long term purchase and sale agreement is executed, we currently expect that future orders for quantities of CDX-616 by Pfizer will continue to be based on the then current needs of Pfizer for quantities of CDX-616 and there will be no minimum purchase obligation on the part of Pfizer.
−Removed: If Pfizer's demand for CDX-616 declines or is eliminated, and Pfizer ceases to issue or delays the issuance of orders for CDX-616, our results of operations and financial condition will be materially and adversely affected.
We have a history of net losses and we may not achieve or maintain profitability.
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As of December 31, 2022 and 2021, we had an accumulated deficit of $421.3 million and $387.7 million, respectively.
−Removed: If we are unable to expand our business, through new or expanded col laborations, development of new products or services, or increased sales of existing products and services, our net losses may increase and we may never achieve profitability.
+Added: If we are unable to expand o ur business, through new or expanded col laborations, development of new products or services, or increased sales of existing products and services, our net losses may increase and we may never achieve profitability.
In addition, some of our collaboration agreements, including our collaboration with Nestlé Health Science and Takeda, and our performance enzyme agreements, including the agreements with GSK, Merck and Novartis, provide for milestone payments, usage payments, and/or future royalty payments, which we will only receive if we and our collaborators develop and commercialize products.
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Finally, our business could be negatively affected if any of our collaborators or suppliers undergoes a change of control or were to otherwise assign the rights or obligations under any of our agreements.
−Removed: We are dependent on a limited number of customers, including Pfizer.
−Removed: Our current revenues are derived from a limited number of key customers.
−Removed: For the years ended December 31, 2021 and 2020, customers that each individually contributed 10% or more of our total revenue accounted for 44% and 56% of our total revenues in 2021 and 2020, respectively.
−Removed: In particular, in 2021 Pfizer accounted for $34.5 million, or approximately 33%, of our total revenue.
−Removed: We expect a limited number of customers to continue to account for a significant portion of our revenues for the foreseeable future.
−Removed: This customer concentration increases the risk of quarterly fluctuations in our revenues and operating results.
−Removed: The loss or reduction of business from one or a combination of our significant customers could, materially adversely affect our revenues, financial condition and results of operations.
−Removed: The ongoing COVID-19 pandemic has adversely affected and may continue in the future to, directly or indirectly, adversely affect our business, results of operations and financial condition.
−Removed: The COVID-19 pandemic has had, and continues to have, a significant impact globally, prompting governments and businesses to take unprecedented measures in response.
−Removed: In the United States, the COVID-19 pandemic has and may continue in the future to, directly or indirectly, adversely affect our business, results of operations and financial condition, including as a result of compliance with governmental orders governing the operation of businesses during the pandemic, the temporary closure of our Redwood City, California facilities from mid-March 2020 through the end of April 2020 and disruption of our research and development operations.
−Removed: The extent and severity of the impact on our business and clinical trials will be determined largely by the extent of disruptions in the supply chains for our products and product candidates;
−Removed: disruptions in access by patients to therapies for which our products are components of the supply chain;
−Removed: delays in the performance of research and development ("R&D") service work, and delays in current and future clinical trials that we or our collaboration partners may conduct.
−Removed: In addition, the impact of the COVID-19 pandemic on the operations of the FDA and other health authorities may delay potential approvals of product candidates for which our products are components of the supply chain.
−Removed: To date, we and our collaboration partners have been able to continue to supply our enzymes to our customers worldwide, however there can be no guarantee this will continue.
−Removed: Furthermore, our ability to provide future R&D services will continue to be impacted as a result of governmental orders and any disruptions in operations of our customers with whom we collaborate.
−Removed: We believe that these disruptions have had a minimal impact on our revenue for the year ended December 31, 2021.
−Removed: The extent to which the pandemic may impact our business operations and operating results will continue to remain highly dependent on future developments, which are uncertain and cannot be predicted with confidence.
−Removed: In the future, our business could be materially adversely affected, directly or indirectly, by the widespread outbreak of contagious disease, including the ongoing COVID-19 pandemic.
−Removed: National, state and local governments in affected regions have implemented and may continue to implement safety precautions, including quarantines, border closures, increased border controls, travel restrictions, governmental orders and shutdowns, business closures, cancellations of public
−Removed: gatherings and other measures.
−Removed: Organizations and individuals are taking additional steps to avoid or reduce infection, including limiting travel and staying home from work.
−Removed: These measures are disrupting normal business operations both in and outside of affected areas and have had significant negative impacts on businesses and financial markets worldwide.
−Removed: The potential impact and duration of COVID-19 or another pandemic or public health crisis has had and could continue to have, significant repercussions across regional, national and global economies and financial markets, and could trigger a period of regional, national and global economic slowdown or regional, national or global recessions.
−Removed: The outbreak of COVID-19 in many countries continues to adversely impact regional, national and global economic activity and has contributed to significant volatility and negative pressure in financial markets.
−Removed: As a result, we may experience difficulty accessing debt and equity capital on attractive terms, or at all, due to the severe disruption and instability in the global financial markets.
−Removed: In addition, our customers may terminate or amend their agreements for the purchase of our products or services due to bankruptcy, lack of liquidity, lack of funding, operational failures, or other reasons.
−Removed: We continue to monitor our operations and applicable government recommendations, and we have made modifications to our normal operations because of the COVID-19 pandemic, including requiring most office-based employees to work remotely.
−Removed: Notwithstanding these measures, the COVID-19 pandemic could affect the health and availability of our workforce as well as those of the third parties we rely on taking similar measures.
−Removed: If members of our management and other key personnel in critical functions across our organization are unable to perform their duties or have limited availability due to COVID-19, we may not be able to execute on our business strategy and/or our operations may be negatively impacted.
−Removed: We may also experience limitations in employee resources, including because of sickness of employees or their families or the desire of employees to avoid contact with individuals or large groups of people.
−Removed: In addition, we have experienced and will continue to experience disruptions to our business operations resulting from quarantines, self-isolations and other restrictions on the ability of our employees to perform their jobs.
−Removed: While it is not possible at this time to estimate the entirety of the impact that the COVID-19 pandemic will have on our business, operations, employees, customers, suppliers or our collaboration partners, the continued spread of COVID-19 and the prevalence of more contagious and or virulent variants such as the Delta and Omicron variants, measures taken by governments, actions taken to protect employees and the broad impact of the pandemic on all business activities may materially and adversely affect our business, results of operations and financial condition.
−Removed: Our product supply agreements with customers have finite duration, may not be extended or renewed and generally do not require the customer to purchase any particular quantity or quantities of our products.
−Removed: Our product supply agreements with customers generally have a finite duration, may not be extended or renewed and generally do not require the customer to purchase any particular quantity or quantities of our products.
−Removed: While our products are not considered commodities and may not be easily substituted for by our customers, particularly when our products are used in the manufacture of active pharmaceutical ingredients, our customers may nevertheless terminate or fail to renew their product supply agreements with us or significantly curtail their purchases thereunder under certain circumstances.
−Removed: Any such termination or reduction could materially adversely affect our revenues, financial condition and results of operations.
−Removed: For the year ended December 31, 2021, we derived a majority of our product revenue from these product supply agreements.
−Removed: With respect to customers purchasing our products for the manufacture of active pharmaceutical ingredients ("API") for which they have exclusivity due to patent protection, the termination or expiration of such patent protection and any resulting generic competition may materially and adversely affect our revenues, financial condition or results of operations.
−Removed: With respect to customers purchasing our products for the manufacture of API, or lead to the manufacture of API, for which exclusivity due to patent protection has or is about to expire, we can expect that the quantity of our products sold to such customers for such products may decline as generic competition for the API increases.
−Removed: While we anticipate that we may, in some cases, also be able to sell products to these generic competitors for the manufacture of these APIs, or lead to
−Removed: the manufacture of these APIs, the overall effect on our revenues, financial condition and results of operations could be materially adverse.
−Removed: We are dependent on a limited number of contract manufacturers for large scale production of substantially all of our enzymes, including CDX-616.
−Removed: We are working to qualify new contract manufacturers to produce certain of our enzymes, including CDX-616, however those efforts may not be successful and therefore we may experience limitations on our ability to supply our enzymes to customers.
−Removed: Manufacturing of our enzymes is conducted primarily in four locations:
−Removed: our in-house facility in Redwood City, California, and at three third-party contract manufacturing organizations, Lactosan GmbH & Co.
−Removed: KG (“Lactosan”), in Kapfenberg, Austria, ACS Dobfar S.p.A.
−Removed: (“ACSD”) (formerly known as DPhar S.p.A.), in Anagni, Italy, and Alphazyme LLC in Florida, United States.
−Removed: Generally, we perform smaller scale manufacturing in-house and outsource the larger scale manufacturing to these contract manufacturers.
−Removed: We have limited internal capacity to manufacture enzymes.
−Removed: As a result, we are dependent upon the performance and capacity of third-party manufacturers for the larger scale manufacturing of the enzymes used in our pharmaceutical and fine chemicals business.
−Removed: Accordingly, we face risks of difficulties with, and interruptions in, performance by third party manufacturers, the occurrence of which could adversely impact the availability, launch and/or sales of our enzymes in the future.
−Removed: Enzyme manufacturing capacity limitations at our third party manufacturers and manufacturing delays could negatively affect our business, reputation, results of operations and financial condition.
−Removed: The failure of any contract manufacturer to supply us our required volumes of enzyme on a timely basis, or to manufacture our enzymes in compliance with our specifications or applicable quality requirements or in volumes sufficient to meet demand, would adversely affect our ability to sell pharmaceutical and fine and complex chemicals products, could harm our relationships with our collaborators or customers and could negatively affect our revenues and operating results.
−Removed: We may be forced to secure alternative sources of supply, which may be unavailable on commercially acceptable terms, and could cause delays in our ability to deliver products to our customers, increase our costs and decrease our profit margins.
−Removed: We currently have supply agreements in place with Lactosan, ACSD, and Alphazyme.
−Removed: In the absence of a supply agreement, a contract manufacturer will be under no obligation to manufacture our enzymes and could elect to discontinue their manufacture at any time.
−Removed: If we require additional manufacturing capacity and are unable to obtain it in sufficient quantity, we may not be able to increase our product sales, or we may be required to make substantial capital investments to build that capacity or to contract with other manufacturers on terms that may be less favorable than the terms we currently have with our suppliers.
−Removed: If we choose to build our own additional manufacturing facility, it could take two years or longer before our facility is able to produce commercial volumes of our enzymes.
−Removed: Any resources we expend on acquiring or building internal manufacturing capabilities could be at the expense of other potentially more profitable opportunities.
−Removed: In addition, if we contract with other manufacturers, we may experience delays of several months in qualifying them, which could harm our relationships with our collaborators or customers and could negatively affect our revenues or operating results.
−Removed: If we are unable to develop and commercialize new products for the pharmaceutical, fine chemicals, biotherapeutics, diagnostics and life science tools markets, our business and prospects will be harmed.
−Removed: We plan to launch new products for the pharmaceutical, fine chemicals, biotherapeutics, diagnostics and other life science tools markets.
−Removed: These efforts are subject to numerous risks, including the following:
−Removed: • customers in these markets may be reluctant to adopt new manufacturing processes that use our enzymes;
−Removed: • we may be unable to successfully develop the enzymes or manufacturing processes for our products in a timely and cost-effective manner, if at all;
−Removed: • we may face difficulties in transferring the developed technologies to our customers and the contract manufacturers that we may use for commercial scale production of intermediates and enzymes in these markets;
−Removed: • the contract manufacturers that we may use may be unable to scale their manufacturing operations to meet the demand for these products and we may be unable to secure additional manufacturing capacity;
−Removed: • customers may not be willing to purchase these products for these markets from us on favorable terms, if at all;
−Removed: • we may face product liability litigation, unexpected safety or efficacy concerns and product recalls or withdrawals;
−Removed: • changes in laws or regulations relating to the pharmaceutical industry or the industries into which we sell our fine chemicals products, including the food industry, could cause us to incur increased costs of compliance or otherwise harm our business;
−Removed: • our customers’ products may experience adverse events or face competition from new products, which would reduce demand for our products;
−Removed: • we may face pressure from existing or new competitive products;
−Removed: • we may face pricing pressures from existing or new competitors, some of which may benefit from government subsidies or other incentives.
Our biotherapeutic programs are early stage, highly regulated and expensive.
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If either Nestlé Health Science or Takeda terminate their development programs under their respective license agreements with us, any potential revenue from those license agreements will be significantly reduced or non-existent, and our results of operations and financial condition will be materially and adversely affected.
−Removed: We have invested significant time and financial resources in the development of CDX-6114 and other product candidates for the treatment of HPA now included in the Nestlé License Agreement as well as in the development of candidates for the treatment of Fabry disease and Pompe disease which are now included in the Takeda Agreement.
+Added: We have invested significant time and financial resources in the development of CDX-6114 and other product candidates for the treatment of hyperphenylalaninemia now included in the Nestlé License Agreement as well as in the development of candidates for the treatment of Fabry disease and Pompe disease which are now included in the Takeda Agreement.
Under the Nestlé License Agreement, we are eligible to receive payments from Nestlé Health Science that include (i) development and approval milestones of up to $85.0 million, (ii) sales-based milestones of up to $250.0 million in the aggregate, which aggregate amount is achievable if net sales exceed $1.0 billion in a single year, and (iii) tiered royalties, at percentages ranging from the mid-single digits to low double-digits, of net sales of product.
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this may not be possible, or we may not be able to do so on terms which are acceptable to us, in which case it may be necessary for us to limit the size or scope of one or more of our programs or increase our expenditures and seek additional funding by other means.
−Removed: Our efforts to deploy our technology platform in the fine chemicals market may fail.
−Removed: We have recently begun to use our CodeEvolver ® protein engineering technology platform to develop new products in the fine chemicals markets.
−Removed: We do not know if we can successfully compete in this new market.
−Removed: This new market is well established and consists of numerous large, well-funded entrenched market participants who have long and established track records and customer relationships.
−Removed: We have currently developed products in the food sector of this market and these products, or any other products that we may develop in the future for the fine chemicals market may not succeed in displacing current products.
−Removed: If we succeed in commercializing new products for the fine chemicals market, we may not generate significant revenues and cash flows from these activities.
−Removed: The failure to successfully deploy products in the fine chemicals space may limit our growth and have a material adverse effect on our financial condition, operating results and business prospects.
We may need additional capital in the future in order to expand our business.
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Although we believe that, based on our current level of operations, our existing cash, cash equivalents and equity securities will provide adequate funds for ongoing operations, planned capital expenditures and working capital requirements for at least the next 12 months, we may need additional capital if our current plans and assumptions change.
−Removed: Our need for additional capital will depend on many factors, including the financial success of our performance enzyme business, our spending to develop and commercialize new and existing products and the amount of collaboration funding we may receive to help cover the cost of such expenditures, the effect of any acquisitions of other businesses, technologies or facilities that we may make or develop in the future, our spending on new market opportunities, including opportunities in the fine chemicals markets, and the filing, prosecution, enforcement and defense of patent claims.
+Added: Our need for additional capital will depend on many factors, including the financial success of our performance enzyme business, our spending to develop and commercialize new and existing products and the amount of collaboration funding we may receive to help cover the cost of such expenditures, the effect of any acquisitions of other businesses, technologies or facilities that we may make or develop in the future, our spending on new market opportunities, including opportunities in the biotherapeutics markets, and the filing, prosecution, enforcement and defense of patent claims.
If our capital resources are insufficient to meet our capital requirements, and we are unable to enter into or maintain collaborations with partners that are able or willing to fund our development efforts or commercialize any products that we develop or enable, we will have to raise additional funds to continue the development of our technology and products and complete the commercialization of products, if any, resulting from our technologies.
−Removed: In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
+Added: In addition, we may choose to raise additional capital due to market conditions or strategic considerations, such as funding investments in our biotherapeutics business, even if we believe we have sufficient funds for our current or future operating plans.
We may seek to obtain such additional capital through equity offerings, debt financings, credit facilities and/or strategic collaborations.
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If adequate funds are not available, we will not be able to successfully execute our business plan or continue our business.
−Removed: We have investments in non-marketable securities, which may subject us to significant impairment charges.
−Removed: We have investments in illiquid non-marketable equity securities acquired in private transactions.
−Removed: At December 31, 2021, 5.7% of our consolidated assets consisted of investment securities, which are illiquid investments.
−Removed: Investments in illiquid, or non-marketable, securities are inherently risky and difficult to value.
−Removed: We account for our non-marketable equity securities under the measurement alternative.
−Removed: Under the measurement alternative, the carrying value of our non-marketable equity investments is adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment.
−Removed: We evaluate our investment in non-marketable securities when circumstances indicate that we may not be able to recover the carrying value.
−Removed: We may impair these securities and establish an allowance for a credit loss when
−Removed: we determine that there has been an “other-than-temporary” decline in estimated fair value of the equity security compared to its carrying value.
−Removed: The impairment analysis requires significant judgment to identify events or circumstances that would likely have a material adverse effect on the fair value of the investment.
−Removed: Because over 5% of our total assets consisted of non-marketable investment securities, any future impairment charges from the write down in value of these securities could have a material adverse effect on our financial condition or results of operations.
+Added: We are dependent on a limited number of customers.
+Added: Our current revenues are derived from a limited number of key customers.
+Added: For the years ended December 31, 2022 and 2021, customers that each individually contributed 10% or more of our total revenue accounted for 56% and 44% of our total revenues in 2022 and 2021, respectively.
+Added: We expect a limited number of customers to continue to account for a significant portion of our revenues for the foreseeable future.
+Added: This customer concentration increases the risk of quarterly fluctuations in our revenues and operating results.
+Added: The loss or reduction of business from one or a combination of our significant customers could, materially adversely affect our revenues, financial condition and results of operations.
+Added: Our product supply agreements with customers have finite duration, may not be extended or renewed and generally do not require the customer to purchase any particular quantity or quantities of our products.
+Added: Our product supply agreements with customers generally have a finite duration, may not be extended or renewed and generally do not require the customer to purchase any particular quantity or quantities of our products.
+Added: While our products are not considered commodities and may not be easily substituted for by our customers, particularly when our products are used in the manufacture of active pharmaceutical ingredients, our customers may nevertheless terminate or fail to renew their product supply agreements with us or significantly curtail their purchases thereunder under certain circumstances.
+Added: Any such termination or reduction could materially adversely affect our revenues, financial condition and results of operations.
+Added: For the year ended December 31, 2022, we derived a majority of our product revenue from these product supply agreements.
+Added: With respect to customers purchasing our products for the manufacture of active pharmaceutical ingredients (“API”) for which they have exclusivity due to patent protection, the termination or expiration of such patent protection and any resulting generic competition may materially and adversely affect our revenues, financial condition or results of operations.
+Added: With respect to customers purchasing our products for the manufacture of API, or lead to the manufacture of API, for which exclusivity due to patent protection has or is about to expire, we can expect that the quantity of our products sold to such customers for such products may decline as generic competition for the API increases.
+Added: While we anticipate that we may, in some cases, also be able to sell products to these generic competitors for the manufacture of these APIs, or lead to the manufacture of these APIs, the overall effect on our revenues, financial condition and results of operations could be materially adverse.
+Added: We are dependent on a limited number of contract manufacturers for large scale production of substantially all of our enzymes, including CDX-616.
+Added: We are working to qualify new contract manufacturers to produce certain of our enzymes, including CDX-616, however those efforts may not be successful and therefore we may experience limitations on our ability to supply our enzymes to customers.
+Added: Manufacturing of our enzymes is conducted primarily in four locations:
+Added: our in-house facility in Redwood City, California, and at three third-party contract manufacturing organizations, Lactosan GmbH & Co.
+Added: KG (“Lactosan”), in Kapfenberg, Austria, ACS Dobfar S.p.A.
+Added: (“ACSD”) (formerly known as DPhar S.p.A.), in Anagni, Italy, and Alphazyme LLC in Florida, United States.
+Added: Generally, we perform smaller scale manufacturing in-house and outsource the larger scale manufacturing to these contract manufacturers.
+Added: We have limited internal capacity to manufacture enzymes.
+Added: As a result, we are dependent upon the performance and capacity of third-party manufacturers for the larger scale manufacturing of the enzymes used in our pharmaceutical and life sciences businesses.
+Added: Accordingly, we face risks of difficulties with, and interruptions in, performance by third party manufacturers, the occurrence of which could adversely impact the availability, launch and/or sales of our enzymes in the future.
+Added: Enzyme manufacturing capacity limitations at our third-party manufacturers and manufacturing delays could negatively affect our business, reputation, results of operations and financial condition.
+Added: The failure of any contract manufacturer to supply us our required volumes of enzyme on a timely basis, or to manufacture our enzymes in compliance with our specifications or applicable quality requirements or in volumes sufficient to meet demand, would adversely affect our ability to sell pharmaceutical and fine and complex chemicals products, could harm our relationships with our collaborators or customers and could negatively affect our revenues and operating results.
+Added: We may be forced to secure alternative sources of supply, which may be unavailable on commercially acceptable terms, and could cause delays in our ability to deliver products to our customers, increase our costs and decrease our profit margins.
+Added: We currently have supply agreements in place with Lactosan, ACSD and Alphazyme.
+Added: In the absence of a supply agreement, a contract manufacturer will be under no obligation to manufacture our enzymes and could elect to discontinue their manufacture at any time.
+Added: If we require additional manufacturing capacity and are unable to obtain it in sufficient quantity, we may not be able to increase our product sales, or we may be required to make substantial capital investments to build that capacity or to contract with other manufacturers on terms that may be less favorable than the terms we currently have with our suppliers.
+Added: If we choose to build our own additional manufacturing facility, it could take two years or longer before our facility is able to produce commercial volumes of our enzymes.
+Added: Any resources we expend on acquiring or building internal manufacturing capabilities could be at the expense of other potentially more profitable opportunities.
+Added: In addition, if we contract with other manufacturers, we may experience delays of several months in qualifying them, which could harm our relationships with our collaborators or customers and could negatively affect our revenues or operating results.
+Added: If we are unable to develop and commercialize new products for the pharmaceutical, biotherapeutics, diagnostics and life science tools markets, our business and prospects will be harmed.
+Added: We plan to launch new products for the pharmaceutical, biotherapeutics, diagnostics and other life science tools markets.
+Added: These efforts are subject to numerous risks, including the following:
+Added: • customers in these markets may be reluctant to adopt new manufacturing processes that use our enzymes;
+Added: • we may be unable to successfully develop the enzymes or manufacturing processes for our products in a timely and cost-effective manner, if at all;
+Added: • we may face difficulties in transferring the developed technologies to our customers and the contract manufacturers that we may use for commercial scale production of intermediates and enzymes in these markets;
+Added: • the contract manufacturers that we may use may be unable to scale their manufacturing operations to meet the demand for these products and we may be unable to secure additional manufacturing capacity;
+Added: • customers may not be willing to purchase these products for these markets from us on favorable terms, if at all;
+Added: • we may face product liability litigation, unexpected safety or efficacy concerns and product recalls or withdrawals;
+Added: • our customers’ products may experience adverse events or face competition from new products, which would reduce demand for our products;
+Added: • we may face pressure from existing or new competitive products;
+Added: • we may face pricing pressures from existing or new competitors, some of which may benefit from government subsidies or other incentives.
Competitors and potential competitors who have greater resources and experience than we do may develop products and technologies that make ours obsolete or may use their greater resources to gain market share at our expense.
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Academic institutions such as the California Institute of Technology, the Max Planck Institute and the Austrian Centre of Industrial Biotechnology are also working in this field.
−Removed: Technological development by others may result in our products and technologies, as well as products developed by our customers using our biocatalysts, becoming obsolete.
+Added: Technological development by others may result in our technology, products and services , as well as products developed by our customers using our biocatalysts, becoming obsolete.
Our primary competitors in the performance enzymes for pharmaceutical products are companies marketing either conventional, non-enzymatic processes or biocatalytic enzymes to manufacturers of pharmaceutical intermediates and APIs, and also existing in-house technologies (both biocatalysts and conventional catalysts) within our client and potential client companies.
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The market for supplying enzymes for use in pharmaceutical manufacturing is quite fragmented.
−Removed: There is competition from large industrial enzyme companies, such as Novozymes, and Dupont, as well as subsidiaries of larger contract research/contract manufacturing organizations (“CRO/CMO”), such as DSM, Cambrex Corporation, Lonza, WuXi STA, and Almac Group Ltd.
−Removed: Some fermentation pathway design companies, like Ginkgo Bioworks and Zymergen, whose traditional focus has been to design microorganisms that express small molecule chemicals, could extend into designing organisms that express enzymes.
+Added: There is competition from large industrial enzyme companies, such as Novozymes and DuPont, as well as subsidiaries of larger contract research/contract manufacturing organizations, such as DSM, Cambrex Corporation, Lonza, WuXi STA and Almac Group Ltd.
+Added: Some fermentation pathway design companies, like Ginkgo Bioworks (who recently acquired Zymergen), whose traditional focus has been to design microorganisms that express small molecule chemicals, could extend into designing organisms that express enzymes.
There is also competition in the enzyme customization and optimization area from several smaller companies, such as BRAIN AG, Arzeda, c-LEcta GmbH and Evocatal GmbH.
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(“BioMarin”) and Daiichi Sankyo Company market Kuvan ® in the United States, Europe and Japan for the treatment of a certain type of PKU.
−Removed: In addition, BioMarin gained US FDA approval in 2018 and began commercial sales of Palynziq TM as
−Removed: an injectable enzyme substitution therapy for the potential treatment of PKU.
+Added: In addition, BioMarin gained US FDA approval in 2018 and began commercial sales of Palynziq TM as an injectable enzyme substitution therapy for the potential treatment of PKU.
Several companies, i.e., Synlogic, Homology Medicines and Rubius have reported clinical efforts to develop biotherapeutic candidates for PKU.
−Removed: Beyond targeting PKU, Takeda (who recently acquired Shire Plc), Genzyme / Sanofi S.A., BioMarin, and other companies market or are actively developing new enzyme therapeutics.
+Added: Beyond targeting PKU, Takeda (who acquired Shire Plc in 2019), Genzyme / Sanofi S.A., BioMarin and other companies market or are actively developing new enzyme therapeutics.
There are numerous companies that are developing other forms of therapeutics, such as small molecules, gene therapies, as well as therapies based on gene editing, which could compete with biotherapeutics.
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This failure could reduce our competitiveness and market share, adversely affect our results of operations and financial position, and prevent us from obtaining or maintaining profitability.
−Removed: Ethical, legal and social concerns about genetically engineered products and processes could limit or prevent the use of our products, processes, and technologies and limit our revenues.
−Removed: Some of our products and processes are genetically engineered or involve the use of genetically engineered products or genetic engineering technologies.
−Removed: If we and/or our collaborators are not able to overcome the ethical, legal, and social concerns relating to genetic engineering, our products and processes may not be accepted.
+Added: The ongoing COVID-19 pandemic has adversely affected and may continue in the future to, directly or indirectly, adversely affect our business, results of operations and financial condition.
+Added: The COVID-19 pandemic has had, and continues to have, a significant impact globally, prompting governments and businesses to take unprecedented measures in response.
+Added: In the United States, the COVID-19 pandemic has and may continue in the future to, directly or indirectly, adversely affect our business, results of operations and financial condition, including as a result of compliance with governmental orders governing the operation of businesses during the pandemic, the temporary closure of our Redwood City, California facilities from mid-March 2020 through the end of April 2020 and disruption of our research and development operations.
+Added: In the future, our business could be materially adversely affected, directly or indirectly, by the widespread outbreak of contagious disease, including the ongoing COVID-19 pandemic.
+Added: National, state and local governments in affected regions have implemented and may continue to implement safety precautions, including quarantines, border closures, increased border controls, travel restrictions, governmental orders and shutdowns, business closures, cancellations of public gatherings and other measures.
+Added: Organizations and individuals are taking additional steps to avoid or reduce infection, including limiting travel and staying home from work.
+Added: These measures are disrupting normal business operations both in and outside of affected areas and have had significant negative impacts on businesses and financial markets worldwide.
+Added: The potential impact and duration of COVID-19 or another pandemic or public health crisis has had and could continue to have, significant repercussions across regional, national and global economies and financial markets, and could trigger a period of regional, national and global economic slowdown or regional, national or global recessions.
+Added: The outbreak of COVID-19 in many countries continues to adversely impact regional, national and global economic activity and has contributed to significant volatility and negative pressure in financial markets.
+Added: As a result, we may experience difficulty accessing debt and equity capital on attractive terms, or at all, due to the severe disruption and instability in the global financial markets.
+Added: In addition, our customers may terminate or amend their agreements for the purchase of our technology, products and services due to bankruptcy, lack of liquidity, lack of funding, operational failures or other reasons.
+Added: Revenues in in future years from our sales of CDX-616 to Pfizer are subject to a number of factors which are outside of our control and may not materialize.
+Added: Starting the first and second quarters of 2021, we began to receive purchase orders from Pfizer, Inc.
+Added: (“Pfizer”) for large quantities of our proprietary enzyme product, CDX-616, for use by Pfizer in the manufacture of a critical intermediate for its proprietary active pharmaceutical ingredient, nirmatrelvir.
+Added: Pfizer markets, sells and distributes nirmatrelvir, in combination with the active pharmaceutical ingredient ritonavir, as its PAXLOVID™ (nirmatrelvir tablets;
+Added: ritonavir tablets) product, which received emergency use authorization (“EUA”) by the U.S.
+Added: Food and Drug Administration (“FDA”) in late 2021 for the treatment of mild-to-moderate COVID-19 in adults and pediatric patients (12 years of age and older weighing at least 40 kg) with positive results of direct severe acute respiratory syndrome coronavirus 2 (“SARS-CoV-2”) viral testing, and who are at high risk for progression to severe COVID-19, including hospitalization or death.
+Added: The FDA has the authority to issue an EUA under certain circumstances, such as during a public health emergency, pursuant to a declaration by the Secretary of the Department of Health and Human Services (“HHS”), that an emergency exists justifying the issuance of EUAs for certain types of products (referred to as EUA declarations).
+Added: On March 27, 2020, the Secretary of HHS declared that circumstances exist justifying authorization of drugs and biologics during the COVID-19 pandemic, subject to the terms of any EUA that is issued for a specific product.
+Added: Once an EUA declaration has been issued, the FDA can issue EUAs for products that fall within the scope of that declaration.
+Added: To issue an EUA, the FDA Commissioner must conclude that (1) the chemical, biological, radioactive or nuclear agent (“CBRN”) that is referred to in the EUA declaration can cause serious or life-threatening diseases or conditions;
+Added: (2) based on the totality of scientific evidence available, it is reasonable to believe that the product may be effective in diagnosing, treating, or preventing the disease or condition attributable to the CBRN and that the product’s known and potential benefits outweigh its known and potential risks;
+Added: and (3) there is no adequate, approved, and available alternative to the product.
+Added: the authorization to market products under an EUA is limited to the period of time the EUA declaration is in effect, and the FDA can revoke an EUA in certain circumstances.
+Added: The FDA’s policies regarding an EUA can change unexpectedly.
+Added: We cannot predict how long Pfizer’s EUA will remain in place.
+Added: The FDA’s policies regarding products used to diagnose, treat or mitigate COVID-19 remain in flux as the FDA responds to new and evolving public health information and clinical evidence.
+Added: Therefore, it is possible that Pfizer’s EUA may be revoked, which could adversely affect our financial condition and results of operations.
+Added: Revenues in 2023 and in future years from our sales of CDX-616 to Pfizer and other potential customers (including sublicensees of Pfizer technology from The Medicines Patent Pool (the “MPP”)) are subject to a number of factors which are outside of our control, including, without limitation, the following, all of which could reduce or eliminate our sales of CDX-616, and therefore materially and adversely affect our business, results of operations and financial condition:
+Added: • Pfizer has no future binding commitment to purchase any particular quantity or quantities of CDX-616 from us, and we are dependent upon Pfizer continuing to place orders with us (whether on a spot basis or under a long term agreement, when and if executed) for their requirements, if any, for CDX-616;
+Added: • to our knowledge, sublicensees of Pfizer technology from the MPP have no obligation to purchase CDX-616 from us under their sublicenses with the MPP;
+Added: • the EUA granted by the FDA for the use of PAXLOVID™ for the treatment of COVID-19 infections in humans could be withdrawn at any time;
+Added: • future vaccine development and usage and the development and usage of other new therapies for the treatment or elimination of COVID-19 may eliminate or reduce demand for PAXLOVID™;
+Added: • new variants of COVID-19 may emerge which PAXLOVID™ is not effective in treating;
+Added: • Pfizer may not ultimately receive full marketing authorization for PAXLOVID™ from the FDA and other international regulatory authorities;
+Added: • Pfizer could reformulate or make changes in the manufacturing process for nirmatrelvir which would eliminate or reduce demand for the use of CDX-616 in its manufacture;
+Added: • sublicensees of Pfizer technology for the manufacture, sale and distribution of PAXLOVID™ from the MPP may not utilize CDX-616 in the manufacture of nirmatrelvir;
+Added: • national and regional governmental authorities (including those of the United States government) may mandate that raw materials and intermediates used in the manufacture of PAXLOVID™ to be marketed, sold and distributed within the borders of that country be domestically produced, which could eliminate or reduce demand for the use of CDX-616 in such country;
+Added: • we may be unable (because of lack of available manufacturing capacity at our contract manufacturers, supply chain disruptions or an inability to obtain applicable regulatory approvals) to manufacture the quantities of CDX-616 that Pfizer may desire to purchase from us.
+Added: We have investments in non-marketable securities, which may subject us to significant impairment charges.
+Added: We have investments in illiquid non-marketable equity securities acquired in private transactions.
+Added: At December 31, 2022, 8.2% of our consolidated assets consisted of investment securities, which are illiquid investments.
+Added: Investments in illiquid, or non-marketable, securities are inherently risky and difficult to value.
+Added: We account for our non-marketable equity securities under the measurement alternative.
+Added: Under the measurement alternative, the carrying value of our non-marketable equity investments is adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment.
+Added: We evaluate our investment in non-marketable securities when circumstances indicate that we may not be able to recover the carrying value.
+Added: We may impair these securities and establish an allowance for a credit loss when we determine that there has been an “other-than-temporary” decline in estimated fair value of the equity security compared to its carrying value.
+Added: The impairment analysis requires significant judgment to identify events or circumstances that would likely have a material adverse effect on the fair value of the investment.
+Added: Because over 5% of our total assets consisted of non-marketable investment securities, any future impairment charges from the write down in value of these securities could have a material adverse effect on our financial condition or results of operations.
+Added: Ethical, legal and social concerns about genetically engineered products and processes could limit or prevent the use of our technology, products and processes and limit our revenues.
+Added: Some of our technology, products and services are genetically engineered or involve the use of genetically engineered products or genetic engineering technologies.
+Added: If we and/or our collaborators are not able to overcome the ethical, legal, and social concerns relating to genetic engineering, our technology, products and services may not be accepted.
Any of the risks discussed below could result in increased expenses, delays, or other impediments to our programs or the public acceptance and commercialization of products and processes dependent on our technologies or inventions.
1 unchanged sentence
• public attitudes about the safety and environmental hazards of, and ethical concerns over, genetic research and genetically engineered products and processes, which could influence public acceptance of our technologies, products and processes;
−Removed: • public attitudes regarding, and potential changes to laws governing ownership of genetic material, which could harm our intellectual property rights with respect to our genetic material and discourage collaborators from supporting, developing, or commercializing our products, processes and technologies;
+Added: • public attitudes regarding, and potential changes to laws governing ownership of genetic material, which could harm our intellectual property rights with respect to our genetic material and discourage collaborators from supporting, developing, or commercializing our technology, products and services ;
• governmental reaction to negative publicity concerning genetically modified organisms, which could result in greater government regulation of genetic research and derivative products.
4 unchanged sentences
Any adverse effect resulting from such a release could have a material adverse effect on our business and financial condition, and we may have exposure to liability for any resulting harm.
−Removed: If we engage in any acquisitions, we will incur a variety of costs and may potentially face numerous risks that could adversely affect our business and operations.
−Removed: We have made acquisitions in the past, and if appropriate opportunities become available, we expect to acquire additional businesses, assets, technologies, or products to enhance our business in the future.
−Removed: For example, in October 2010, we acquired substantially all of the patents and other intellectual property rights associated with Maxygen’s directed evolution technology.
−Removed: In connection with any future acquisitions, we could:
−Removed: • issue additional equity securities, which would dilute our current stockholders;
−Removed: • incur substantial debt to fund the acquisitions;
−Removed: • use our cash to fund the acquisitions;
−Removed: • assume significant liabilities including litigation risk.
−Removed: Acquisitions involve numerous risks, including problems integrating the purchased operations, technologies or products, unanticipated costs and other liabilities, diversion of management’s attention from our core businesses, adverse effects on existing business relationships with current and/or prospective collaborators, customers and/or suppliers, risks associated with entering markets in which we have no or limited prior experience and potential loss of key employees.
−Removed: We do not have extensive experience in managing the integration process and we may not be able to successfully integrate any businesses, assets, products, technologies, or personnel that we might acquire in the future without a significant expenditure of operating, financial and management resources, if at all.
−Removed: The integration process could divert management’s time from focusing on operating our business, result in a decline in employee morale and cause retention issues to arise from changes in compensation, reporting relationships, future prospects or the direction of the business.
−Removed: Acquisitions may also require us to record goodwill and non-amortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic impairment charges, incur amortization expenses related to certain intangible assets, and incur large and immediate write offs and restructuring and other related expenses, all of which could harm our operating results and financial condition.
−Removed: In addition, we may acquire companies that have insufficient internal financial controls, which could impair our ability to integrate the acquired company and adversely impact our financial reporting.
−Removed: If we fail in our integration efforts with respect to any of our acquisitions and are unable to efficiently operate as a combined organization, our business and financial condition may be adversely affected.
We use hazardous materials in our business and we must comply with environmental laws and regulations.
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For these reasons, we may not be able to utilize a material portion of the NOLs reflected in our financial statements, even if we attain profitability.
+Added: As a public reporting company, we are subject to rules and regulations established from time to time by the SEC and Nasdaq regarding our internal controls over financial reporting.
+Added: We may not complete needed improvements to our internal controls over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor confidence in our company and, as a result, the value of our common stock and your investment.
+Added: We are subject to the rules and regulations established from time to time by the Securities and Exchange Commission, and Nasdaq.
+Added: These rules regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal controls over financial reporting.
+Added: As part of these evaluations, material weaknesses in our internal controls over financial reporting may be identified.
+Added: A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
+Added: While we were able to remediate previously identified material weaknesses in our internal controls over financial reporting, there can be no guarantee we will not identify similar or other material weaknesses in the future and if such material weaknesses are identified, there can be no guarantee we would be able to remediate such material weaknesses.
+Added: Any material weaknesses in our internal controls may adversely affect our ability to record, process, summarize and accurately report timely financial information and, as a result, our consolidated financial statements may contain material misstatements or omissions.
+Added: Reporting obligations as a public company place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.
+Added: In addition, as a public company we are required to document and test our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal controls over financial reporting.
+Added: Likewise, our independent registered public accounting firm is required to provide an attestation report on the effectiveness of our internal controls over financial reporting in our Annual Reports on Form 10-K.
+Added: If our management is unable to certify the effectiveness of our internal controls or if our independent registered public accounting firm cannot deliver a report attesting to the effectiveness of our internal controls over financial reporting, or if we identify or fail to remediate material weaknesses in our internal controls, we could be subject to regulatory scrutiny and a loss of public confidence, which could seriously harm our reputation and the market price of our common stock.
+Added: In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to manage our business effectively or accurately report our financial performance on a timely basis, which could cause a decline in our common stock price and may seriously harm our business.
+Added: If we engage in any acquisitions, we will incur a variety of costs and may potentially face numerous risks that could adversely affect our business and operations.
+Added: We have made acquisitions in the past, and if appropriate opportunities become available, we expect to acquire additional businesses, assets, technologies, or products to enhance our business in the future.
+Added: For example, in October 2010, we acquired substantially all of the patents and other intellectual property rights associated with Maxygen’s directed evolution technology.
+Added: In connection with any future acquisitions, we could:
+Added: • issue additional equity securities, which would dilute our current stockholders;
+Added: • incur substantial debt to fund the acquisitions;
+Added: • use our cash to fund the acquisitions;
+Added: • assume significant liabilities including litigation risk.
+Added: Acquisitions involve numerous risks, including problems integrating the purchased operations, technologies or products, unanticipated costs and other liabilities, diversion of management’s attention from our core businesses, adverse effects on existing business relationships with current and/or prospective collaborators, customers and/or suppliers, risks associated with entering markets in which we have no or limited prior experience and potential loss of key employees.
+Added: We do not have extensive experience in managing the integration process and we may not be able to successfully integrate any businesses, assets, products, technologies or personnel that we might acquire in the future without a significant expenditure of operating, financial and management resources, if at all.
+Added: The integration process could divert management’s time from focusing on operating our business, result in a decline in employee morale and cause retention issues to arise from changes in compensation, reporting relationships, future prospects or the direction of the business.
+Added: Acquisitions may also require us to record goodwill and non-amortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic impairment charges, incur amortization expenses related to certain intangible assets, and incur large and immediate write offs and restructuring and other related expenses, all of which could harm our operating results and financial condition.
+Added: In addition, we may acquire companies that have insufficient internal financial controls, which could impair our ability to integrate the acquired company and adversely impact our financial reporting.
+Added: If we fail in our integration efforts with respect to any of our acquisitions and are unable to efficiently operate as a combined organization, our business and financial condition may be adversely affected.
Risks Related to Government Regulation and Clinical Product Development
22 unchanged sentences
In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions.
−Removed: To date, neither we nor our collaborators have submitted a BLA to FDA or similar drug approval submissions to comparable foreign regulatory authorities for any product candidate.
We and any collaborators must complete additional preclinical or nonclinical studies and clinical trials to demonstrate the safety, purity and potency (or efficacy) of our product candidates in humans to the satisfaction of the regulatory authorities before we will be able to obtain these approvals.
38 unchanged sentences
• changes in our financial priorities, greater than anticipated costs of completing a trial or our inability to continue funding the trial.
−Removed: In addition, disruptions caused by the COVID-19 pandemic may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical trials.
Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.
17 unchanged sentences
Preclinical and clinical drug development is expensive and can take many years to complete, and its outcome is inherently uncertain.
−Removed: Failure can occur at any time during the preclinical study or clinical trial process.
+Added: Failure can occur at any time during the drug development process.
Despite promising preclinical or clinical results, any product candidate can unexpectedly fail at any stage of preclinical or clinical development.
9 unchanged sentences
Any safety or efficacy concerns observed in any one of our preclinical studies or clinical trials in a targeted area could limit the prospects for regulatory approval of product candidates in that and other areas, which could have a material adverse effect on our business and prospects.
+Added: We may not be able to maintain orphan drug designations for certain of our product candidates, and may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity.
+Added: Regulatory authorities in some jurisdictions, including the U.S.
+Added: and Europe, may designate drugs for relatively small patient populations as orphan drugs.
+Added: Under the Orphan Drug Act of 1983, the FDA may designate a product candidate as an orphan product if it is intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the U.S., or a patient population of greater than 200,000 individuals in the U.S., but for which there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the U.S.
+Added: The FDA has granted orphan drug designation to CDX-6512 for the treatment of HCU and to CDX-6210 for the treatment of Maple Syrup Urine Disease (MSUD).
+Added: In the U.S., orphan designation entitles a party to financial incentives such as opportunities for grant funding for clinical trial costs, tax advantages and user-fee waivers.
+Added: In addition, if a product candidate that has orphan designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including a BLA, to market the same drug for the same disease or condition for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or where the manufacturer is unable to assure sufficient product quantity.
+Added: Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same disease condition.
+Added: Even after an orphan drug is approved, the FDA can subsequently approve the same drug for the same disease condition if such regulatory authority concludes that the later drug is clinically superior if it is shown to be safer, more effective or makes a major contribution to patient care.
+Added: Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process.
+Added: We have obtained rare pediatric disease designation for CDX-6512 and CDX-6120, however, there is no guarantee that such designation will result in approval of CDX-6512 or CDX-6210, and even if we obtain approval of CDX-6512 or CDX-6210 for the indications for which we have been awarded rare pediatric disease designation, there is no guarantee that such approval will result in an aware of a rare pediatric disease priority review voucher.
+Added: In 2012, Congress authorized the FDA to award priority review vouchers to sponsors of certain rare pediatric disease product applications.
+Added: This program is designed to encourage development of new drug and biological products for the prevention and treatment of certain rare pediatric diseases.
+Added: Specifically, under this program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease” that meets certain criteria may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product, even if that subsequent marketing application would not otherwise qualify for priority review on its own.
+Added: The sponsor of a rare pediatric disease product receiving a priority review voucher may transfer (including by sale) the voucher to another sponsor.
+Added: The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application.
+Added: The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the U.S.
+Added: within one year following the date of approval.
+Added: We have obtained rare pediatric disease designation for CDX-6512 for the treatment of HCU and for CDX-6210 for the treatment of MSUD.
+Added: Even though we have obtained rare pediatric disease designations, there is no guarantee that we will be able to obtain a priority review voucher, even if CDX-6512 and/or CDX-6210 are approved by the FDA.
+Added: Moreover, Congress included a sunset provision in the statute authorizing the rare pediatric disease priority review voucher program.
+Added: On December 27, 2020, the Rare Pediatric Disease Priority Review Voucher Program was extended, and under the current statutory sunset provisions, after September 30, 2024, FDA may only award a voucher for an approved rare pediatric disease product application if the sponsor has rare pediatric disease designation for the drug, and that designation was granted by September 30, 2024.
+Added: After September 30, 2026, FDA may not award any rare pediatric disease priority review vouchers (unless Congress amends the law to extend the program further).
+Added: Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain, or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved, or commercialized in a timely manner, or at all, which could negatively impact our business.
+Added: The ability of the FDA and other government agencies to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, a government agency’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the government agency’s ability to perform routine functions.
+Added: Average review times at the FDA and other government agencies have fluctuated in recent years as a result.
+Added: In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
+Added: Disruptions at the FDA and other agencies may also slow the time necessary for new drugs and biologics or modifications to approved drugs or biologics to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
+Added: For example, over the last several years, the United States government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.
+Added: Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
+Added: Even though the FDA has since resumed standard inspection operations of domestic facilities where feasible, the FDA has continued to monitor and implement changes to its inspectional activities to ensure the safety of its employees and those of the firms it regulates as it adapts to the evolving COVID-19 pandemic, and any resurgence of the virus or emergence of new variants may lead to further inspectional delays.
+Added: Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic.
+Added: If a prolonged government shutdown occurs, or if global health concerns continue to hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Even if we obtain regulatory approval for any products that we develop alone or with collaborators, such products will remain subject to ongoing regulatory requirements, which may result in significant additional expense.
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In the United States, the holder of an approved BLA must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process.
−Removed: Similar provisions apply in the European Union.
+Added: Similar provisions apply in the European Union (the “EU”).
Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.
−Removed: Similarly, in the European Union any promotion of medicinal products is highly regulated and, depending on the specific jurisdiction involved, may require prior vetting by the competent national regulatory authority.
+Added: Similarly, in the EU any promotion of medicinal products is highly regulated and, depending on the specific jurisdiction involved, may require prior vetting by the competent national regulatory authority.
In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP requirements and adherence to commitments made in the BLA or foreign marketing application.
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federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;
−Removed: federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying,
−Removed: concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services;
+Added: federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services;
similar to the U.S.
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federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;
−Removed: state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities;
−Removed: and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts;
−Removed: • similar healthcare laws and regulations in the EU and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of certain protected information, such as the General Data Protection Regulation (“GDPR”), which imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the European Economic Area (“EEA”) (including health data).
+Added: and state laws and regulations that require drug manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities.
Ensuring that our internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs.
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It is possible that a third-party payor may consider our product candidates as substitutable and only offer to reimburse patients for the less expensive product.
−Removed: Even if we show improved efficacy or improved convenience of administration with our product candidates, pricing of existing third-party
−Removed: therapeutics may limit the amount we will be able to charge for our product candidates.
+Added: Even if we show improved efficacy or improved convenience of administration with our product candidates, pricing of existing third-party therapeutics may limit the amount we will be able to charge for our product candidates.
These payors may deny or revoke the reimbursement status of a given product or establish prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return on our investment in our product candidates.
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As a result, increasingly high barriers are being erected to the entry of new products.
+Added: Recently enacted legislation, future legislation and healthcare reform measures may increase the difficulty and cost for our partners to obtain marketing approval for and commercialize product candidates developed by us.
+Added: In the United States and some foreign jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system, including cost-containment measures that may reduce or limit coverage and reimbursement for newly approved drugs and affect our ability to profitably sell any product candidates for which we develop and our partners obtain marketing approval.
+Added: In particular, there have been and continue to be a number of initiatives at the U.S.
+Added: federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare.
+Added: For example, in March 2010, the Affordable Care Act (the “ACA”) was enacted in the United States.
+Added: The ACA established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents;
+Added: extended manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;
+Added: expanded eligibility criteria for Medicaid programs;
+Added: expanded the entities eligible for discounts under the 340B drug pricing program;
+Added: increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;
+Added: established a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research;
+Added: and establishes a Center for Medicare & Medicaid Innovation at the Centers for Medicare & Medicaid Services to test innovative payment and service delivery models to lower Medicare and Medicaid spending.
+Added: Since its enactment, there have been executive, judicial and Congressional challenges to certain aspects of the ACA, and on June 17, 2021, the U.S.
+Added: Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.
+Added: Prior to the Supreme Court’s decision, President Biden had issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.
+Added: The executive order also instructed 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 ACA.
+Added: It is unclear how the healthcare reform measures will impact our business.
+Added: In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
+Added: In March 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminates the statutory cap on the Medicaid drug rebate, currently set at 100% of a drug’s average manufacturer price, beginning January 1, 2024.
+Added: Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs.
+Added: Such scrutiny has resulted in several recent congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient assistance programs, and reform government program reimbursement methodologies for products.
+Added: Most recently, the Inflation Reduction Act of 2022 (the “IRA”), included a number of significant drug pricing reforms, which include the establishment of a drug price negotiation program within the U.S.
+Added: Department of Health and Human Services (“HHS”) (beginning in 2026) that requires manufacturers to charge a negotiated “maximum fair price” for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers under Medicare Parts B and D to penalize price increases that outpace inflation (first due in 2023), and a redesign of the Part D benefit, as part of which manufacturers are required to provide discounts on Part D drugs (beginning in 2025).
+Added: The IRA permits the HHS Secretary to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
+Added: Additional drug pricing proposals could appear in future legislation.
+Added: Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.
+Added: At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
+Added: Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects.
+Added: In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.
+Added: This could reduce the ultimate demand for any product candidate we develop, if approved, or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects.
+Added: We expect that these new laws and other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product.
+Added: Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.
+Added: The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize any product candidates we develop, if approved.
Compliance with European Union chemical regulations could be costly and adversely affect our business and results of operations.
−Removed: Some of our products are subject to the European Union regulatory regime known as The Registration, Evaluation and Authorization of Chemicals (“REACH”).
−Removed: REACH mandates that certain chemicals manufactured in, or imported into, the European Union be registered and evaluated for their potential effects on human health and the environment.
−Removed: Under REACH, we and our contract manufacturers located in the European Union are required to register certain of our products based on the quantity of such product imported into or manufactured in the European Union and on the product’s intended end-use.
+Added: Some of our products are subject to the EU regulatory regime known as The Registration, Evaluation and Authorization of Chemicals (“REACH”).
+Added: REACH mandates that certain chemicals manufactured in, or imported into, the EU be registered and evaluated for their potential effects on human health and the environment.
+Added: Under REACH, we and our contract manufacturers located in the EU are required to register certain of our products based on the quantity of such product imported into or manufactured in the EU and on the product’s intended end-use.
The registration, evaluation and authorization process under REACH can be costly and time consuming.
−Removed: Problems or delays in the registration, evaluation or authorization process under REACH could delay or prevent the manufacture of some of our products in, or the importation of some of our products into, the European Union, which could adversely affect our business and results of operations.
+Added: Problems or delays in the registration, evaluation or authorization process under REACH could delay or prevent the manufacture of some of our products in, or the importation of some of our products into, the EU, which could adversely affect our business and results of operations.
In addition, if we or our contract manufacturers fail to comply with REACH, we may be subject to penalties or other enforcement actions, which could have a material adverse effect on our business and results of operations.
4 unchanged sentences
As a result, we are and expect to remain dependent on third parties to conduct clinical trials of our product candidates.
−Removed: Specifically, we expect CROs, clinical investigators, and consultants to play a significant role in the conduct of these trials and the
−Removed: subsequent collection and analysis of data.
+Added: Specifically, we expect CROs, clinical investigators, and consultants to play a significant role in the conduct of these trials and the subsequent collection and analysis of data.
However, we will not be able to control all aspects of their activities.
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In the event that any of our manufacturers fails to comply with such requirements or to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials becomes limited or interrupted for other reasons, we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilities or resources, or enter into an agreement with another third party, which we may not be able to do on commercially reasonable terms, if at all.
−Removed: In particular, any replacement of our manufacturers could require significant effort
−Removed: and expertise because there may be a limited number of qualified replacements.
+Added: In particular, any replacement of our manufacturers could require significant effort and expertise because there may be a limited number of qualified replacements.
In some cases, the technical skills or technology required to manufacture our product candidates may be unique or proprietary to the original manufacturer and we may have difficulty transferring such skills or technology to another third party and a feasible alternative may not exist.
11 unchanged sentences
Risks Related to Intellectual Property and Information Technology
−Removed: Our efforts to prosecute and protect our intellectual property may not be successful.
−Removed: We will continue to file and prosecute patent applications and maintain trade secrets in an ongoing effort to protect our intellectual property.
+Added: Our efforts to prosecute, maintain, protect and/or defend our intellectual property rights may not be successful.
+Added: We will continue to file and prosecute patent applications and maintain trade secrets in an ongoing effort to protect our intellectual property rights.
It is possible that our current patents, or patents which we may later acquire, may be successfully challenged or invalidated, in whole or in part.
−Removed: It is also possible that we may not obtain issued patents from our pending patent applications or other inventions we seek to protect.
+Added: It is also possible that we may not obtain issued patents from our pending patent applications.
We sometimes permit certain patents or patent applications to lapse or go abandoned under appropriate circumstances.
Due to uncertainties inherent in prosecuting patent applications, sometimes patent applications are rejected, and we subsequently abandon them.
−Removed: It is also possible that we may develop proprietary products or technologies in the future that are not patentable or that the patents of others will limit or altogether preclude our ability to conduct business.
+Added: It is also possible that we may develop proprietary technology, products or services in the future that are not patentable or that the patents of others will limit or altogether preclude our ability to conduct business.
In addition, any patent issued to us or to our licensor may provide us with little or no competitive advantage, in which case we may abandon such patent or license it to another entity, or terminate the license agreement.
−Removed: Our means of protecting our proprietary rights may not be adequate and our competitors may independently develop technology or products that are similar to ours or that compete with ours.
−Removed: Patent, trademark, copyright and trade secret laws afford only limited protection for our technology platform, services and products.
+Added: Our means of protecting our proprietary rights may not be adequate and our competitors may independently develop technologies, products or services that are identical or similar to ours or that compete with ours.
+Added: Patent, trademark, copyright and trade secret laws afford only limited protection for our technology, products and services .
The laws of many countries do not protect our proprietary rights to as great an extent as do the laws of the United States.
−Removed: Despite our efforts to protect our proprietary rights, unauthorized parties have in the past attempted, and may in the future attempt, to operate under aspects of our intellectual property, technology, services or products or to obtain and use information that we regard as proprietary.
+Added: Despite our efforts to protect our proprietary rights, unauthorized parties have in the past attempted, and may in the future attempt, to operate under the aspects of our intellectual property rights, or proprietary technology, products or services or products, or to obtain and use information that we regard as proprietary.
Third parties may also design around our proprietary rights, which may render our protected technology, services and products less valuable, if the design around is favorably received in the marketplace.
−Removed: In addition, if any of our products, services or technology is covered by third-party patents or other intellectual property rights, we could be subject to various legal actions.
−Removed: We cannot assure you that our technology platform, services and products do not infringe patents held by others or that they will not in the future.
+Added: In addition, if any of our technology, products and services is covered by third-party patents or other intellectual property rights, we could be subject to various legal actions.
+Added: We cannot assure that our technology products and/or services do not infringe, violate or misappropriate any patents or other intellectual property rights owned or controlled by others or that they will not in the future.
Litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement, invalidity, misappropriation, or other claims.
Any such litigation could result in substantial costs and diversion of our resources.
−Removed: Moreover, any settlement of or adverse judgment resulting from litigation relating to intellectual property could require us to obtain a license to continue to
−Removed: make, use or sell the products or technology that is the subject of the claim, or otherwise restrict or prohibit our use of the technology, product or services.
−Removed: Our ability to compete may decline if we do not adequately protect our proprietary technologies or if we lose some of our intellectual property rights.
−Removed: Our success depends in part on our ability to obtain patents and maintain adequate protection of our intellectual property for our technologies, services and products in the United States and other countries.
−Removed: We have adopted a strategy of seeking patent protection in the United States and in foreign countries with respect to certain of the technologies used in or relating to our services, products and processes.
+Added: Moreover, any settlement of or adverse judgment resulting from litigation relating to intellectual property rights could require us to obtain a license to continue to make, use, import, sell or offer for sale the technology, products or services that is the subject of the claim, or otherwise restrict or prohibit our use of the technology, products or services.
+Added: Our ability to compete may decline if we do not adequately prosecute, maintain, protect and/or defend our proprietary technology, products or services or our intellectual property rights.
+Added: Our success depends in part on our ability to obtain patents and maintain adequate protection of our intellectual property rights directed to our technology, products and services in the United States and other countries.
+Added: We have adopted a strategy of seeking patent protection in the United States and in foreign countries with respect to certain of the technology used in or relating to our products, services, and processes.
As such, as of December 31, 2022, we owned or controlled approximately 2,090 issued patents and pending patent applications in the United States and in various foreign jurisdictions.
Our patents and patent applications, if issued, as of December 31, 2022, have terms that expire between 2023 and approximately 2043.
−Removed: We also have l icense rights to a number of issued patents and pending patent applications in the United States and in various foreign jurisdictions.
−Removed: Our owned and licensed patents and patent applications include those directed to our enabling technologies and to the methods and products that support our business in the biotherapeutics, molecular diagnostics, food and other markets.
−Removed: We intend to continue to apply for patents relating to our technologies, methods, services and products as we deem appropriate.
+Added: We also have license rights to a number of issued patents and pending patent applications in the United States and in various foreign jurisdictions.
+Added: Our owned and licensed patents and patent applications include those directed to our enabling technology and to the methods and products that support our business in the biotherapeutics, pharma manufacturing, life sciences, food and other markets.
+Added: We intend to continue to apply for patents relating to our technology, methods, services and products as we deem appropriate.
Issuance of claims in patent applications and enforceability of such claims once issued involve complex legal and factual questions and, therefore, we cannot predict with any certainty whether any of our issued patents will survive invalidity claims asserted by third parties.
−Removed: Issued patents and patents issuing from pending applications may be challenged, invalidated, or circumvented.
+Added: Issued patents and patents issuing from pending applications may be challenged, invalidated, circumvented, rendered unenforceable or substantially narrowed in scope.
+Added: In addition, the inventorship and ownership of the patents and patent applications may be challenged by others.
Moreover, the United States Leahy-Smith America Invents Act (“AIA”), enacted in September 2011, brought significant changes to the United States patent system, which include a change to a “first to file” system from a “first to invent” system and changes to the procedures for challenging issued patents and disputing patent applications during the examination process, among other things.
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These proceedings could result in substantial cost to us even if the outcome is favorable.
−Removed: Even if successful, any interference may result in loss of certain claims.
+Added: Even if successful, any proceeding may result in loss of certain claims.
Any litigation or proceedings could divert our management's time and efforts.
1 unchanged sentence
Uncertainties resulting from initiation and continuation of any patent or related litigation could harm our ability to compete.
−Removed: We have not assessed the applicability of the AIA and new regulations on our patent portfolio.
−Removed: These changes could increase the costs and uncertainties surrounding the prosecution of our patent applications and the enforcement or defense of our patent rights.
Additional uncertainty may result from legal precedent handed down by the United States Federal Circuit Court and Supreme Court as they determine legal issues concerning the scope and construction of patent claims and inconsistent interpretation of patent laws by the lower courts.
1 unchanged sentence
Given that the degree of future protection for our proprietary rights is uncertain, we cannot ensure that:
−Removed: (i) we were the first to invent the inventions covered by each of our pending applications, (ii) we were the first to file patent applications for these inventions, or (iii) the proprietary technologies we develop will be patentable.
−Removed: In addition, unauthorized parties may attempt to copy or otherwise obtain and use our products or technology.
−Removed: Monitoring unauthorized use of our intellectual property is difficult, and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, particularly in certain foreign countries where the local laws may not protect our proprietary rights as fully as in the United States.
+Added: (i) we were the first to invent the inventions covered by each of our pending applications, (ii) we were the first to file patent applications for these inventions, or (iii) the proprietary technology, products or services we develop will be patentable.
+Added: In addition, unauthorized parties may attempt to copy or otherwise obtain and use our technology, products and services.
+Added: Monitoring unauthorized use of our intellectual property rights is difficult, and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, products or services, particularly in certain foreign countries where the local laws may not protect our proprietary rights as fully as in the United States.
Moreover, third parties could practice our inventions in territories where we do not have patent protection.
Such third parties may then try to import products made using our inventions into the United States or other countries.
−Removed: If competitors are able to use our technology, our ability to compete effectively could be harmed.
−Removed: In addition, others may independently develop and obtain patents for technologies that are similar to or superior to our technologies.
−Removed: If that happens, we may need to license these technologies, and we may not be able to obtain licenses on reasonable terms, if at all, which could cause harm to our business.
−Removed: Third parties may claim that we are infringing their intellectual property rights or other proprietary rights, which may subject us to costly and time consuming litigation and prevent us from developing or commercializing our products.
−Removed: Our commercial success also depends in part on our ability to operate without infringing patents and proprietary rights of third parties, and without breaching any licenses or other agreements that we have entered into with regard to our
−Removed: technologies, services, products and business.
−Removed: We cannot ensure that patents have not been issued to third parties that could block our ability to obtain patents or to operate as we would like.
−Removed: There may be patents in some countries that, if valid, may block our ability to make, use or sell our products in those countries, or import our products into those countries, if we are unsuccessful in circumventing or acquiring rights to these patents.
−Removed: There also may be claims in patent applications filed in some countries that, if granted and valid, may also block our ability to commercialize products or processes in these countries if we are unable to circumvent or license them.
+Added: If competitors are able to use our proprietary technology, products or services, our ability to compete effectively could be harmed.
+Added: In addition, others may independently develop and obtain patents for technologies, products or services that are similar to or superior to our technologies, products or services.
+Added: If that happens, we may need to license these technologies, products or services, and we may not be able to obtain licenses on reasonable terms, if at all, which could cause harm to our business.
+Added: Similarly, foreign courts have made, and will likely continue to make, changes in how the patent laws in their respective jurisdictions are interpreted.
+Added: Changes in patent laws and regulations in other countries or jurisdictions, changes in the governmental bodies that enforce them, or changes in how the relevant governmental authority enforces patent laws or regulations may weaken our ability to obtain new patents or to enforce patents that we own or may obtain in the future.
+Added: Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States.
+Added: For example, in some foreign jurisdictions, governments have the right to compel patent owners to grant others licenses to their intellectual property under certain circumstances.
+Added: In addition, any protection afforded by foreign patents may be more limited than that provided under U.S.
+Added: patent and intellectual property laws.
+Added: We may encounter significant problems in enforcing and defending our intellectual property both in the United States and abroad.
+Added: For example, if the issuance in a given country of a patent covering an invention is not followed by the issuance in other countries of patents covering the same invention, or if any judicial interpretation of the validity, enforceability or scope of the claims or the written description or enablement in a patent issued in one country is not similar to the interpretation given to the corresponding patent issued in other countries, our ability to protect our intellectual property rights in those countries may be limited.
+Added: Changes in either patent laws or in interpretations of patent laws in the United States and other countries may materially diminish the value of our intellectual property rights or narrow the scope of our patent protection.
+Added: We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by U.S.
+Added: and foreign legislative bodies.
+Added: Those changes may materially affect our patents or patent applications and our ability to obtain additional patent protection in the future.
+Added: Any of the foregoing could have a material adverse effect on our competitive position, business, financial condition, results of operations and prospects.
+Added: Third parties may claim that we are infringing, violating or misappropriating their intellectual property rights, which may subject us to costly and time consuming litigation and prevent us from developing or commercializing our technology, products or services.
+Added: Our commercial success also depends in part on our ability to operate without infringing, violating or misappropriating patents and other intellectual property rights of third parties, and without breaching any licenses or other agreements that we have entered into with regard to our technologies, products or services.
+Added: We cannot ensure that patents have not been issued, or will not be issued, to third parties that could block our ability to obtain patents or to operate as we would like.
+Added: There may be patents in some countries that, if valid, may block our ability to make, use, sell, or offer for sale our technology, products or services in those countries, or import our products into those countries, if we are unsuccessful in circumventing or acquiring rights to these patents.
+Added: There also may be claims in patent applications filed in some countries that, if granted and valid, may also block our ability to commercialize technology, products, services or processes in these countries if we are unable to circumvent or obtain rights to them.
The industries in which we operate and the biotechnology industry, in particular, are characterized by frequent and extensive litigation regarding patents and other intellectual property rights.
Many biotechnology companies have employed intellectual property litigation as a way to gain a competitive advantage.
−Removed: Our involvement in litigation or other intellectual property proceedings inside and outside of the United States, to defend our intellectual property rights or as a result of alleged infringement of the rights of others, may divert our management’s time from focusing on business operations and could cause us to spend significant amounts of money.
+Added: Any involvement in litigation or other intellectual property proceedings inside and outside of the United States to defend against claims that we infringe, misappropriate or violate the intellectual property of the rights of others may divert our management’s time from focusing on business operations and could cause us to spend significant amounts of money.
Any potential intellectual property litigation also could force us to do one or more of the following:
−Removed: • stop selling or using our products or technologies that use the subject intellectual property;
−Removed: • pay monetary damages or substantial royalties;
−Removed: • grant cross-licenses to third parties relating to our patents or proprietary rights;
−Removed: • obtain from the third party asserting its intellectual property rights a license to sell or use the relevant technology, which license may not be available on reasonable terms, or at all;
−Removed: • redesign those products or processes that use any allegedly infringing technology, or relocate the operations relating to the allegedly infringing technology to another jurisdiction, which may result in significant cost or delay to us, could be technically infeasible or could prevent us from selling some of our products in the United States or other jurisdictions.
−Removed: We are aware of some patents and patent applications relating to aspects of our technologies filed by, and issued to, third parties.
−Removed: We cannot assure you that if this third party intellectual property is asserted against us that we would ultimately prevail.
+Added: • stop making, using, selling or importing our technologies, products and services that use the subject intellectual property;
+Added: • pay monetary damages to the third party asserting claims against us;
+Added: • grant or transfer rights to third parties relating to our patents or other intellectual property rights;
+Added: • obtain from the third party asserting its intellectual property rights a license to make, sell, offer for sale, import or use the relevant technology, product or service, which license may not be available on reasonable terms, or at all;
+Added: • redesign those technologies, products, services or processes that use any allegedly infringing, misappropriating or violating intellectual property rights, or relocate the operations relating to the allegedly infringing misappropriating or violating intellectual property rights to another jurisdiction, which may result in significant cost or delay to us, could be technically infeasible or could prevent us from making, selling, offering for sale, using or importing some of our technologies, products or services in the United States or other jurisdictions.
+Added: We are aware of some patents and patent applications relating to aspects of our technologies, products or services filed by, and issued to, third parties.
+Added: We cannot assure that if such third party patents rights are asserted against us that we would ultimately prevail.
We may be involved in lawsuits to protect or enforce our intellectual property rights, which could be expensive, time-consuming and unsuccessful.
−Removed: Competitors may infringe our intellectual property rights or those of our licensors.
−Removed: To prevent infringement or unauthorized use, we have in the past filed, and may in the future be required to file, infringement claims, which can be expensive and time-consuming.
−Removed: In addition, in an infringement proceeding, a court may decide that the intellectual property that we own or in-license is not valid, is unenforceable and/or is not infringed.
−Removed: In addition, in legal proceedings against a third party to enforce a patent directed at one of our technologies, services or products, the defendant could counterclaim that our patent is invalid and/or unenforceable in whole or in part.
−Removed: In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.
+Added: Competitors may infringe, violate or misappropriate our intellectual property rights or those of our licensors.
+Added: To prevent infringement, violation, misappropriation or other unauthorized use, we have in the past filed, and may in the future be required to file, enforcement claims, which can be expensive and time-consuming.
+Added: In addition, in an enforcement proceeding, a court may decide that the intellectual property right that we own or control is not valid, is unenforceable and/or is not infringed, violated or misappropriated.
+Added: In addition, in legal proceedings against a third party to enforce a patent directed at one of our technologies, products or services, the defendant could counterclaim that our patent is invalid and/or unenforceable in whole or in part.
+Added: In patent enforcement litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.
Grounds for a patent validity challenge include an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement.
Grounds for an unenforceability assertion could include an allegation that someone connected with prosecution of the patent withheld relevant information from the United States Patent and Trademark Office (“USPTO”) or made a misleading statement during prosecution.
−Removed: Third parties may also raise similar claims before the USPTO, even outside the context of litigation.
+Added: Third parties may also raise similar claims before the USPTO, even outside the context of enforcement litigation.
The outcome following legal assertions of invalidity and unenforceability is unpredictable, and prior art could render our patents or those of our licensors invalid.
−Removed: If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on such product.
−Removed: Such a loss of patent protection would have a material adverse impact on our business.
+Added: If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on the respective technology, products or services.
+Added: Such a loss of patent protection could have a material adverse impact on our business.
Even if resolved in our favor, litigation or other legal proceedings relating to our intellectual property rights may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities.
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Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace.
−Removed: Furthermore, because of the substantial amount of discovery
−Removed: required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
+Added: Furthermore, because of the substantial amount of discovery required in connection with U.S.
+Added: intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
We may not be able to enforce our intellectual property rights throughout the world.
The laws of some foreign countries where we do business do not protect intellectual property rights to the same extent as the laws of the United States.
−Removed: Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions.
−Removed: The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property, particularly those relating to biotechnology and/or bioindustrial technologies.
−Removed: Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.
−Removed: This could make it difficult for us to stop the infringement of our patents or misappropriation of our other intellectual property rights.
+Added: Many companies have encountered significant problems in protecting and enforcing intellectual property rights in certain foreign jurisdictions.
+Added: The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property rights, particularly those relating to biotechnology technologies.
+Added: Accordingly, our efforts to protect and enforce our intellectual property rights in such countries may be inadequate.
+Added: This could make it difficult for us to stop the infringement, violation or misappropriation of our patents or other intellectual property rights.
Additionally, proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business.
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If our biocatalysts, or the genes that code for our biocatalysts, were stolen, misappropriated or reverse engineered, they could be used by other parties who may be able to reproduce these biocatalysts for their own commercial gain.
−Removed: If this were to occur, it may be difficult for us to challenge this type of use, especially in countries with limited intellectual property protection or in countries in which we do not have patents covering the misappropriated biocatalysts.
+Added: If this were to occur, it may be difficult for us to challenge this type of use, especially in countries with limited intellectual property rights protection or in countries in which we do not have patents covering the misappropriated biocatalysts.
+Added: Confidentiality and non-use agreements with employees, consultants, advisors and other third parties may not adequately prevent disclosures and non-use of trade secrets and other proprietary information.
+Added: In addition to patent protection, we also rely on other intellectual property rights, including protection of copyright, trade secrets, know-how and/or other proprietary information that is not patentable or that we elect not to patent.
+Added: However, trade secrets can be difficult to protect, and some courts are less willing or unwilling to protect trade secrets.
+Added: To maintain the confidentiality of our trade secrets and proprietary information, we rely in part on trade secret law and contractual agreements to protect our confidential and proprietary information and processes.
+Added: We generally enter into confidentiality and invention assignment agreements with our employees, consultants and third parties working on our behalf upon their commencement of a relationship with us.
+Added: However, trade secrets and confidential information are difficult to protect and we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary technology and processes and we may not enter into such agreements with all employees, consultants and third parties who have been involved in the development of our intellectual property rights.
+Added: Nevertheless, without our permission or awareness, our confidential and proprietary information may be disclosed to third parties, used by the respective individuals for purposes other than for the Company’s business, or obtained through illegal means, such that third parties could reverse engineer our biocatalysts, product candidates, and processes, to attempt to develop the same technology or develop substantially equivalent technology.
+Added: Costly and time-consuming litigation could be necessary to enforce and determine the scope of our confidential and proprietary rights, and failure to protect our trade secrets could adversely affect our competitive business position.
+Added: If any of our trade secrets were lawfully obtained, we may be unable to prevent them, or those to whom they communicate it, from using that technology or information to compete with us or disclosing it publicly.
+Added: Therefore, these events could have a material adverse effect ob our business, financial condition and results of operations.
+Added: In particular, a failure to protect our proprietary rights may allow competitors to copy our technology, which could adversely affect our pricing and market share.
+Added: In addition to contractual measures, we try to protect the confidential nature of our proprietary information by maintaining physical security of our premises and electronic security of our information technology systems.
+Added: Such security measures may not, for example, in the case of misappropriation of a trade secret by an employee, consultant or other third party with authorized access or with unauthorized access but an intent to steal, provide adequate protection for our proprietary information.
+Added: Our security measures may not prevent such employee, consultant or other third party from misappropriating our trade secrets and using them or providing them to a competitor, and recourse we take against such misconduct may not provide an adequate remedy to protect our interests fully.
+Added: While we use commonly accepted security measures, trade secret violations are often a matter of state law in the United States, and the criteria for protection of trade secrets can vary among different jurisdictions.
+Added: If the steps we have taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret.
Risks Related to Owning our Common Stock
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• our relationships with, and dependence on, collaborators in our principal markets;
−Removed: • our dependence on a limited number of customers, including Pfizer;
+Added: • our dependence on a limited number of customers,;
• our product supply agreements with customers have finite duration, may not be extended or renewed and generally do not require the customer to purchase any particular quantity or quantities of our products;
−Removed: • with respect to customers purchasing our products for the manufacture of active pharmaceutical products (API) for which they have exclusivity due to patent protection, the termination or expiration of such patent protection and any resulting generic competition may materially and adversely affect our revenues, financial condition or results of operations;
+Added: • with respect to customers purchasing our products for the manufacture of active pharmaceutical ingredients for which they have exclusivity due to patent protection, the termination or expiration of such patent protection and any resulting generic competition may materially and adversely affect our revenues, financial condition or results of operations;
• our dependence on a limited number of products in our performance enzymes business;
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• potential of GSK, Merck, Novartis or any other performance enzyme customer terminating their agreements with us;
−Removed: • our ability to deploy our technology platform in the fine chemicals market;
• the success of our customers’ products in the market and the ability of such customers to obtain regulatory approvals for products and processes;
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• our ability to protect against risks associated with the international aspects of our business;
−Removed: • the cost of compliance with European Union chemical regulations;
+Added: • the cost of compliance with EU chemical regulations;
• potential advantages that our competitors and potential competitors may have in securing funding or developing products;
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• results of regulatory tax examinations;
+Added: • market and economic conditions may negatively impact our business, financial condition, and share price;
• business interruptions due to natural disasters, disease outbreaks or other events beyond our control;
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• changes to tax law and related regulations could materially affect our tax obligations and effective tax rate;
−Removed: • our ability to use our net operating loss carryforwards to offset future taxable income.
+Added: • our ability to use our NOLs to offset future taxable income.
Due to the various factors mentioned above, and others, the results of any prior quarterly or annual periods should not be relied upon as indications of our future operating performance.
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• the need to comply with a variety of United States and foreign laws applicable to the conduct of international business, including import and export control laws and anti-corruption laws.
+Added: Market and economic conditions may negatively impact our business, financial condition, and share price.
+Added: Concerns about inflation, energy costs, geopolitical issues, the United States mortgage market and a declining real estate market, unstable global credit markets and financial conditions, and volatile oil prices have led to periods of significant economic instability, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth going forward, increased unemployment rates, and increased credit defaults in recent years.
+Added: Our general business strategy may be adversely affected by any such economic downturns, volatile business environments and continued unstable or unpredictable economic and market conditions.
+Added: In addition, if the market and economic conditions described above continue to deteriorate or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive.
+Added: Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and stock price.
+Added: Additionally, rising rates of inflation have increased the costs associated with conducting our business, including by causing substantial increases in the costs of materials, including raw materials and consumables, equipment, services, and labor.
+Added: Moreover, given the unpredictable nature of the current economic climate, including future changes in rates of inflation, it may be increasingly difficult for us to predict and control our future expenses, which may harm our ability to conduct our business.
Business interruptions resulting from disasters or other disturbances could delay us in the process of developing our products and could disrupt our sales.
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Any losses or damages we incur could have a material adverse effect on our cash flows and success as an overall business.
−Removed: Confidentiality agreements with employees and others may not adequately prevent disclosures of trade secrets and other proprietary information.
−Removed: We rely in part on trade secret and confidentiality protection to protect our confidential and proprietary information and processes.
−Removed: However, trade secrets and confidential information are difficult to protect.
−Removed: We have taken measures to protect our trade secrets and confidential and proprietary information, but these measures may not be effective.
−Removed: We require employees and consultants to execute confidentiality agreements upon the commencement of an employment or consulting arrangement with us.
−Removed: These agreements generally require that all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties.
−Removed: These agreements also generally provide that inventions conceived by the individual in the course of rendering services to us shall be our exclusive property.
−Removed: Nevertheless, our confidential and proprietary information may be disclosed, third parties could reverse engineer our biocatalysts and others may independently develop substantially equivalent confidential and proprietary information and techniques or otherwise gain access to our trade secrets.
−Removed: Costly and time-consuming litigation could be necessary to enforce and determine the scope of our confidential and proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.
We are dependent on information technology systems, infrastructure and data, and any failure of these systems could harm our business.
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If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, we could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions or the loss of or damage to intellectual property through security breach.
−Removed: If our data management systems do not effectively collect, store, process, and report relevant data for the operation of our business, whether due to equipment malfunction or constraints, software deficiencies, or human error, our ability to effectively plan, forecast, and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps materially.
+Added: If our information technology systems do not effectively collect, store, process and report relevant data for the operation of our business, whether due to equipment malfunction or constraints, software deficiencies, or human error, our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps materially.
+Added: Our information technology systems and those of our external vendors, strategic partners and other contractors or consultants are vulnerable to attack and damage or interruption from computer viruses and malware (e.g.
+Added: ransomware), malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, employee theft or misuse, human error, fraud, denial or degradation of service attacks, sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization.
Any such impairment could materially and adversely affect our financial condition, results of operations, cash flows and the timeliness with which we report our internal and external operating results.
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However, because the techniques used to obtain unauthorized access to or sabotage systems change frequently and may be difficult to detect, we may not be able to anticipate and prevent these intrusions or mitigate them when and if they occur.
−Removed: If a security breach or other incident were to result in the unauthorized access to or unauthorized use, disclosure, release or other processing of personal information, it may be necessary to notify individuals, governmental authorities, supervisory bodies, the media and other parties pursuant to privacy and security laws.
+Added: Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection and to remove or obfuscate forensic evidence.
+Added: We and certain of our external vendors are from time to time subject to cyberattacks and security incidents.
+Added: While we do not believe that we have experienced any significant system failure, accident, or security breach to date, if such an event were to occur, it could result in the unauthorized access to or unauthorized use, disclosure, release or other processing of personal information, it may be necessary to notify individuals, governmental authorities, supervisory bodies, the media and other parties pursuant to privacy and security laws.
Any security compromise affecting us, our service providers, vendors, strategic partners, other contractors, consultants or our industry, whether real or perceived, could harm our reputation, erode confidence in the effectiveness of our security measures and lead to regulatory scrutiny.
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If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our business.
−Removed: Furthermore, federal, state and international laws and regulations can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties, fines and significant legal liability, if our information technology security efforts
+Added: Furthermore, federal, state and international laws and regulations can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties, fines and significant legal liability, if our information technology security efforts fail.
We may also be exposed to a risk of loss or litigation and potential liability, which could materially and adversely affect our business, results of operations and financial condition.
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In the United States, HIPAA imposes, among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information.
−Removed: Certain states have also adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA.
+Added: Certain states have also adopted comparable privacy and security laws and regulations, which govern the privacy, processing and protection of health-related and other personal information.
Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
−Removed: For example, the CCPA went into effect on January 1, 2020 , and introduces new compliance burdens on organizations doing business in California that collect personal information about California residents.
+Added: For example, the California Consumer Privacy Act (“CCPA”) went into effect on January 1, 2020 , and introduces new compliance burdens on organizations doing business in California that collect personal information about California residents.
It creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal information.
The CCPA also provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
−Removed: Further, the CPRA recently passed in California.
+Added: Further, the California Consumer Privacy Act (“CCPA”) recently passed in California.
The CPRA will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data and opt outs for certain uses of sensitive data.
It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement.
−Removed: The majority of the provisions will go into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required.
−Removed: Similar laws have passed in Virginia and Colorado, and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States.
+Added: The majority of the provisions went into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required.
+Added: Similar laws have passed in Virginia, Colorado, Connecticut and Utah and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States.
These developments increase our compliance burden and our risk, including risks of regulatory fines, litigation and associated reputational harm.
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The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
−Removed: In Europe, the GDPR went into effect in May 2018 and imposes strict requirements for processing the personal data of individuals within the EEA.
+Added: In Europe, the General Data Protection Regulation (“GDPR”) went into effect in May 2018 and imposes strict requirements for processing the personal data of individuals within the European Economic Area (“EEA”).
The GDPR imposes stringent requirements for controllers and processors of personal data and increases our obligations, for example, by imposing higher standards when obtaining consent from individuals to process their personal data, requiring more robust disclosures to individuals, strengthening individual data rights, shortening timelines for data breach notifications, limiting retention periods and secondary use of information, increasing requirements pertaining to health data as well as pseudonymized (i.e., key-coded) data and imposing additional obligations when we contract with third-party processors in connection with the processing of personal data.
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Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the EU and the United States remains uncertain.
−Removed: For example, in July 2020, the Court of Justice of the EU (“CJEU”) limited how organizations could lawfully transfer personal data from the EU/EEA to the United States by
−Removed: invalidating the Privacy Shield for purposes of international transfers and imposing further restrictions on the use of standard contractual clauses (“SCCs”).
+Added: For example, in July 2020, the Court of Justice of the EU (“CJEU”) limited how organizations could lawfully transfer personal data from the EU/EEA to the United States by invalidating the Privacy Shield for purposes of international transfers and imposing further restrictions on the use of standard contractual clauses (“SCCs”).
+Added: In March 2022, the United States and EU announced a new regulatory regime intended to replace the invalidated regulations;
+Added: however, this new EU-US Data Privacy Framework has not been implemented beyond an executive order signed by President Biden on October 7, 2022 on Enhancing Safeguards for United States Signals Intelligence Activities.
The European Commission issued revised SCCs on June 4, 2021 to account for the decision of the CJEU and recommendations made by the European Data Protection Board.
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The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of €20 million (or up to £17.5 million for UK) or 4% of global turnover.
−Removed: The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, and it is unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term.
+Added: The relationship between the United Kingdom and the EU in relation to certain aspects of data protection law remains unclear, and it is unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term.
The European Commission has adopted an adequacy decision in favor of the United Kingdom, enabling data transfers from EU member states to the United Kingdom without additional safeguards.
However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission re-assesses and renews or extends that decision.
+Added: In September 2021, the United Kingdom government launched a consultation on its proposals for wide-ranging reform of United Kingdom data protection laws following Brexit and the response to this consultation was published in June 2022.
+Added: There is a risk that any material changes which are made to the United Kingdom data protection regime could result in the European Commission reviewing the United Kingdom adequacy decision, and the UK United Kingdom losing its adequacy decision if the European Commission deems the United Kingdom to no longer provide adequate protection for personal data.
Although we work to comply with applicable laws, regulations and standards, our contractual obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which we must comply.
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For example, some countries have adopted laws mandating that certain personal information regarding customers in their country be maintained solely in their country.
−Removed: Having to maintain local data centers and redesign product, service and business operations to limit Personal Information processing to within individual countries could increase our operating costs significantly.
+Added: Having to maintain local data centers and redesign product, service and business operations to limit processing of personal information to within individual countries could increase our operating costs significantly.
Any failure, or perceived failure, by us to comply with federal, state or international privacy, data-retention or data-protection-related laws, regulations, orders or industry self-regulatory principles could result in proceedings or actions against us by governmental entities or others, a loss of customer confidence, damage to our brand and reputation and a loss of customers, any of which could have an adverse effect on our business.
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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.