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Item 1A. Risk Factors

2023-03-24 compared with 2022-03-11 · 134 added, 124 removed, 241 unchanged (52% of the section changed)

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We are a clinical-stage biopharmaceutical company with a limited operating history on which to base your investment decision.

Investment in our biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that our lead product candidate, DKN-01, or any other products will fail to gain regulatory approval or become commercially viable.

Investment in our biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that our lead product candidates, DKN-01 and FL-301, or any other products will fail to gain regulatory approval or become commercially viable.

We do not currently have any products approved by regulatory authorities for marketing and have not generated any revenue from product sales.

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We expect to continue to incur significant expenses and operating losses for the foreseeable future.

We anticipate these losses to increase as we continue the research and development of, and seek regulatory approvals for DKN-01, and as we potentially begin to commercialize DKN-01, if it receives regulatory approval.

We anticipate these losses to increase as we continue the research and development of, and seek regulatory approvals for DKN-01, FL-301 and our preclinical programs, and as we potentially begin to commercialize DKN-01 and FL-301, if either product receives regulatory approval.

We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues.

If DKN-01 fails in clinical trials or does not gain regulatory approval, or if approved, fails to achieve market acceptance, we may never become profitable.

If DKN-01 or FL-301 fails in clinical trials or does not gain regulatory approval, or if approved, fails to achieve market acceptance, we may never become profitable.

Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

The timing of the milestone and royalty payments we may be entitled to receive from BeiGene, Ltd.

is uncertain and could adversely affect our cash flows and results of operations.

In January 2020, we entered into an option and license agreement, or the BeiGene Agreement, with BeiGene, Ltd., or BeiGene, pursuant to which we granted BeiGene the option to develop and commercialize DKN-01 in Asia (excluding Japan), Australia and New Zealand (the “BeiGene Territory”).

We may be entitled to receive additional payments upon the exercise of BeiGene’s option and the achievement of certain milestones and royalties upon BeiGene’s sales of DKN-01.

The receipt of these payments is inherently uncertain.

There can be no assurance that we will receive any future milestone or royalty payments from BeiGene.

We currently have no source of product revenue and may never become profitable.

We have not generated any product revenues, and we have no commercial products.

Our ability to generate revenue from product sales and achieve profitability will depend upon our ability to successfully gain regulatory approval and commercialize DKN-01 or other product candidates that we may in-license or acquire in the future.

Our ability to generate revenue from product sales and achieve profitability will depend upon our ability to successfully gain regulatory approval and commercialize DKN-01, FL-301, our preclinical programs, or other product candidates that we may in-license or acquire in the future.

Even if we are able to successfully achieve regulatory approval, we do not know when we will generate revenue from product sales, if at all.

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● initiate and successfully complete development activities, including enrollment of study participants and completion of the necessary clinical trials;

● complete and submit new drug applications, or NDAs, or biologics license applications, or BLAs, to the FDA and obtain regulatory approval for indications for which there is a commercial market;

● complete and submit new drug applications ( “ NDAs ” ), or biologics license applications ( “ BLAs ” ) to the FDA and obtain regulatory approval for indications for which there is a commercial market;

● complete and submit applications to, and obtain regulatory approval from, foreign regulatory authorities;

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● obtain adequate pricing, coverage and reimbursement from third parties, including government and private payors.

In addition, because of the numerous risks and uncertainties associated with product development, including that DKN-01 may not advance through development or achieve the endpoints of applicable clinical trials, we are unable to predict the timing or amount of increased expenses, or when or if we will be able to achieve or maintain profitability.

We will require additional capital to fund our operations and if we fail to obtain necessary financing, we may be unable to complete the development and potential commercialization of DKN-01 or acquire other products.

In addition, because of the numerous risks and uncertainties associated with product development, including that our product candidates may not advance through development or achieve the endpoints of applicable clinical trials, we are unable to predict the timing or amount of increased expenses, or when or if we will be able to achieve or maintain profitability.

Our operations have consumed substantial amounts of cash since inception.

We expect to continue to spend substantial amounts to advance the clinical development of DKN-01 and launch and commercialize our product candidates, if we receive regulatory

We expect to continue to spend substantial amounts to advance the clinical development of DKN-01 and FL-301 and launch and commercialize our product candidates, if we receive regulatory approval.

We will require additional capital for further development and potential commercialization.

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Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to the:

● receipt of stockholder approval for the conversion of the Series X Non-Voting Convertible Preferred Stock (the “ Series X Preferred Stock ” ) into common stock within six months of the date of issuance of the Series X Preferred Stock;

● initiation, progress, timing, costs and results of pre-clinical studies and clinical trials for our product candidates;

● costs and timing of additional clinical trial and commercial manufacturing activities;

● clinical development plans we establish for DKN-01 and any other future product candidates;

● clinical development plans we establish for DKN-01, FL-301 and any other future product candidates;

● preclinical development plans we establish for FL-302, FL-501 and any other future product candidates;

● number and characteristics of any new product candidates that we in-license and develop;

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If we are unable to fund our operations or otherwise capitalize on our business opportunities due to a lack of capital, our ability to become profitable will be compromised.

If we fail to obtain the required stockholder approval to convert the Series X Preferred Stock into common stock, we may be required to redeem the shares of Series X Preferred Stock at their as-converted fair market value.

In connection with the merger with Flame and pursuant to the Certificate of Designation of the Series X Preferred Stock, if stockholder approval for the conversion of the Series X Preferred Stock to common stock (the “Stockholder Approval”) is not obtained from the holders of our common stock within six months from the date of issuance of the Series X Preferred Stock, the Company will have an obligation to settle all of the then-outstanding shares of Series X Preferred Stock for cash at fair value.

There can be no assurance that the Stockholder Approval will be received.

Failure to receive the Stockholder Approval within six months from the date of issuance of the Series X Preferred Stock would have a material adverse effect on our financial position, and we could

be forced to seek additional funding, which may not be available on acceptable terms or at all, or reduce or eliminate certain clinical trials, programs and operating expenses, which would adversely affect our business prospects.

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

Until we can generate substantial revenue from product sales, if ever, we expect to seek additional capital through a combination of private and public equity offerings, debt financings, strategic collaborations and alliances and licensing arrangements.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of existing stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of existing stockholders.

To the extent that we raise additional capital through the sale or issuance of equity or convertible debt securities, the ownership interests of existing stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of existing stockholders.

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

If we raise additional funds through strategic collaborations and alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates in particular countries, or grant licenses on terms that are not favorable to us.

If we raise additional funds through strategic collaborations and alliances, licensing arrangements, or mergers with third parties, we may have to relinquish valuable rights to our product candidates in particular countries, or grant licenses on terms that are not favorable to us.

Risks Related to Our Business and Industry

The ongoing outbreak of the Coronavirus could have a material adverse impact on our business and operations, including on our development of our lead product candidate, DKN-01.

As a result of the continuing Coronavirus outbreak, or COVID-19, we may experience disruptions that could severely affect our business, including our plans to clinically develop DKN-01, our lead product candidate.

For example, widespread business interruptions and supply chain disruption resulting from COVID-19 may adversely affect our ability to manufacture clinical trial

material on a timely basis, or increase the cost of manufacturing and our ability to initiate, conduct, and complete critical clinical trials and laboratory operations relating to DKN-01.

Specifically, temporary closures or prioritization of COVID-19 related work at certain contract manufacturing facilities, laboratories, offices, or hospitals at which our manufacturing activities, nonclinical studies and clinical trials for DKN-01 are conducted could adversely affect our operations and our ability to manufacture clinical trial material, conduct nonclinical studies and clinical trials for DKN-01.

This could negatively affect our ability to advance DKN-01 and cause delays and increased expenses in our projected development timelines and cost.

We are continuing to monitor and assess the real and potential effects of the COVID-19 pandemic on our business, including with respect to our development of DKN-01.

However, the ultimate extent to which COVID-19 continues to impact our business will depend upon future developments which are highly uncertain and cannot be accurately predicted at this time.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.

Our recent acquisition of Flame Biosciences may not be successfully integrated into our operations or may not achieve its desired benefits.

On January 17, 2023, we acquired Flame Biosciences, a privately-held biotechnology company, and their clinical stage program FL-301, two preclinical programs FL-302 and FL-501, and cash balance.

We have no experience with external acquisitions of companies, and there can be no assurance that the merger will achieve its intended benefits in broadening our development pipeline and extending our cash runway.

The combined company may fail to realize the anticipated benefits of the merger for a variety of reasons, including the following:

● failure to successfully manage relationships with strategic partners, including NovaRock and Adimab;

● failure of the FL-301 first-in-human clinical trial in China being managed by NovaRock to demonstrate safety and desired levels of activity;

● failure of manufacturing campaigns for FL-301 and our preclinical programs to supply material for preclinical testing and clinical trials;

● inability to hire additional personnel to staff the new product development programs;

● inexperience with developing bispecific monoclonal antibodies;

● competition with other pharmaceutical and biotechnology companies on similar targets;

● inflation increasing our expected costs of preclinical and clinical development.

Unstable banking, market and economic conditions may have serious adverse consequences on our business, financial condition and share price.

On March 10, 2023, the Federal Deposit Insurance Corporation (“FDIC”) issued a press release stating that Silicon Valley Bank, Santa Clara, California (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver.

We maintained several accounts at SVB including checking accounts, cash deposits accounts, and cash sweep accounts that are invested in money market funds for which another banking institution is the custodian.

We also maintain similar accounts at other banks.

We may, from time to time, have bank deposits in excess of FDIC insured amounts.

If one or more of the banks in which we have accounts were to fail, or if the treatment of our cash sweep accounts were called into question in a bank receivership, it could have a disruptive impact on our business operations and could have a material adverse effect on our overall financial position.

The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates and uncertainty about economic stability.

For example, the COVID-19 pandemic resulted in widespread unemployment, economic slowdown and extreme volatility in the capital markets.

For example, due to inflation and economic pressures, the costs of our clinical trials and other development activities have increased substantially and may continue to increase.

In addition, the ongoing COVID-19 pandemic resulted in widespread unemployment, economic slowdown and extreme volatility in the capital markets.

Similarly, the current conflict between Ukraine and Russia has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets.

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

The failure to maintain the BeiGene Agreement or the failure of BeiGene to perform its obligations under the BeiGene Agreement could negatively impact our business.

Pursuant to the terms of the BeiGene Agreement, we granted to BeiGene the right to an exclusive license to develop, manufacture and commercialize DKN-01 in the BeiGene Territory.

We have limited control over the amount and timing of resources that BeiGene will dedicate to these efforts or BeiGene’s decision whether and when to exercise its option.

We are subject to a number of other risks associated with our dependence on the BeiGene Agreement with respect to DKN-01 in the BeiGene Territory, including:

● BeiGene may not comply with applicable regulatory guidelines with respect to developing, manufacturing or commercializing DKN-01, which could adversely impact sales or future development of DKN-01 in the BeiGene Territory or elsewhere;

● We and BeiGene could disagree as to future development plans and BeiGene may delay, fail to commence or stop future clinical trials or other development;

● There may be disputes between us and BeiGene, including disagreements regarding the BeiGene Agreement, that may result in (1) the delay of or failure to achieve developmental, regulatory and commercial objectives that would result in milestone or royalty payments, (2) the delay or termination of any future development or commercialization of sitravatinib in the BeiGene Territory, and/or (3) costly litigation or arbitration that diverts our management ’ s attention and resources;

● Business combinations or significant changes in BeiGene ’ s business strategy may adversely affect BeiGene ’ s ability or willingness to exercise its option or perform its obligations under the BeiGene Agreement;

● BeiGene may not properly defend our intellectual property rights, or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential litigation .

The BeiGene Agreement is also subject to BeiGene’s right to terminate without cause upon advance notice to us.

If the agreement is terminated early, we may not be able to find another collaborator for the further development and commercialization of DKN-01 in the BeiGene Territory on acceptable terms, or at all, and we may be unable to pursue continued development and commercialization of DKN-01 in the BeiGene Territory on our own.

The ongoing outbreak of COVID-19 could have a material adverse impact on our business and operations, including on our development of our lead product candidates, DKN-01 and FL-301.

As a result of the continuing COVID-19 pandemic, we may experience disruptions that could severely affect our business, including our plans to clinically develop our clinical stage product candidates, DKN-01 and FL-301.

We are continuing to monitor and assess the real and potential effects of the COVID-19 pandemic on our business, including with respect to our development of DKN-01 and FL-301.

However, the ultimate extent to which COVID-19 continues to impact our business will depend upon future developments which are highly uncertain and cannot be accurately predicted at this time.

The failure of BeiGene to perform its obligations to supply tislelizumab for the DisTinGuish trial could negatively impact our business.

In March 2023, BeiGene notified us that they did not intend to exercise their option under the Exclusive Option and License Agreement for DKN-01.

BeiGene committed to continue the clinical collaboration testing DKN-01 in combination with tislelizumab in patients with gastric cancer and to provide tislelizumab drug supply for the DisTinGuish trial.

If BeiGene were to delay or fail to supply tislelizumab, it could have a material adverse affect on our ability to complete the study as designed and on our business as a whole.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain.

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We may also experience numerous unforeseen events during, or as a result of, clinical trials that could delay or adversely affect our existing or future development programs, including:

● we may have delays in identifying and adding new investigators or clinical trial sites, we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites and our third-party clinical research organizations, or CROs, or we may experience a withdrawal of clinical trial sites;

● we may have delays in identifying and adding new investigators or clinical trial sites, we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites and our third - party clinical research organizations ( “ CROs ” ) or we may experience a withdrawal of clinical trial sites;

● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment may be slower than we anticipate or participants may drop out at a higher rate than we anticipate;

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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.

Any such change may require us to amend our clinical trial protocols, conduct additional studies that require regulatory or institutional review board, or IRB, approval, or otherwise cause delays in the approval or rejection of an application.

Any such change may require us to amend our clinical trial protocols, conduct additional studies that require regulatory or IRB approval, or otherwise cause delays in the approval or rejection of an application.

We have not obtained regulatory approval for any product candidate and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval.

Moreover, we have only completed early studies and enrolled limited numbers of patients for DKN-01.

DKN-01 will require additional preclinical and clinical development, as well as additional manufacturing development before we will be able to submit a marketing application to the FDA.

Moreover, we have only completed single-arm, uncontrolled studies for DKN-01, and FL-301 is in its first-in-human clinical trial.

Both DKN-01 and FL-301 will require additional preclinical and clinical development, as well as additional manufacturing development before we will be able to submit a marketing application to the FDA.

Moreover, should the FDA determine that a companion diagnostic device is required for use of our product candidates or should we decide to pursue the development of a companion diagnostic device for the use of our product candidates, further development work would be required for such a device, including, possibly the approval of an Investigational Device Exemption for the study of such a device from the FDA, compliance with the FDA’s device regulations, and either FDA clearance or approval of the device for commercial use.

Such development would potentially take additional time and be subject to the risk of FDA non-approval or clearance of the diagnostic.

Such development would require additional time and expense and be subject to the risk of FDA non-approval or clearance of the diagnostic.

Any delay in obtaining or failure to obtain required approvals could materially adversely affect our ability or the ability of any of our future collaborators to generate revenue from the particular product candidate, which could result in significant harm to our financial position and adversely impact our stock price.

Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, marketing, promotion, sale, and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by the European Medicines Agency, or EMA, and similar regulatory authorities outside the United States and Europe.

Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, marketing, promotion, sale, and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by the European Medicines Agency (“EMA”), and similar regulatory authorities outside the United States and Europe.

Failure to obtain marketing approval for a product candidate will prevent us from commercializing that product candidate.

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Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application.

In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate.

In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a

product candidate.

The number and types of preclinical studies and clinical trials that will be required for regulatory approval also varies depending on the product candidate, the disease or condition that the product candidate is designed to address, and the regulations applicable to any particular product candidate.

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, which may cause delays or limitations in the approval of or the decision not to approve an application.

It is possible that neither our lead product candidate, DKN-01, nor any product candidates we may seek to develop in the future will ever obtain the appropriate regulatory approvals necessary for us or any future collaborators to commence product sales.

Finally, even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications or uses than we request, may require significant safety warnings, including black box warnings, contraindications, and precautions, may grant approval contingent on the performance of costly post-marketing clinical trials, surveillance, or other requirements, including risk evaluation and mitigation strategies, or REMS, to monitor the safety or efficacy of the product, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.

It is possible that neither of our clinical stage product candidates, DKN-01 and FL-301, nor any product candidates we may seek to develop in the future will ever obtain the appropriate regulatory approvals necessary for us or any future collaborators to commence product sales.

Finally, even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications or uses than we request, may require significant safety warnings, including black box warnings, contraindications, and precautions, may grant approval contingent on the performance of costly post-marketing clinical trials, surveillance, or other requirements, including risk evaluation and mitigation strategies (“REMS”), to monitor the safety or efficacy of the product, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate.

Any of these scenarios could compromise the commercial prospects for our product candidates.

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● competition in recruiting and enrolling patients in clinical trials;

● efforts to facilitate timely enrollment in clinical trials;

● the patient referral practices of physicians;

● effectiveness of publicity created by clinical trial sites regarding the trial;

● patients ’ ability to comply with the specific instructions related to the trial protocol, proper documentation, and use of the biologic product;

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Undesirable side effects caused by our product candidates could cause us, IRBs, and other reviewing entities or regulatory authorities to interrupt, delay, or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities.

For example, if concerns are raised regarding the safety of a new therapeutic as a result of undesirable side effects identified during clinical or preclinical testing of a product candidate, the FDA may order us to cease further development, decline to approve that product candidate or issue a letter requesting additional data or

information prior to making a final decision regarding whether or not to approve it.

FDA requests for additional data or information can result in substantial delays in the approval of a new biologic.

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Risks Related to the Development and Commercialization of Our Product Candidates

The therapeutic safety and efficacy of DKN-01 is unproven, and we may not be able to successfully develop and commercialize DKN-01.

DKN-01 is a novel monoclonal antibody and its potential benefit as a therapeutic cancer drug is unproven.

Our ability to generate revenues from the sale of product, which we do not expect will occur in the short term, if ever, will depend on successful development and commercialization after approval, if achieved, which is subject to many potential risks.

DKN-01 may interact with human biological systems in unforeseen, ineffective or harmful ways.

If DKN-01 is associated with undesirable side effects or has characteristics that are unexpected, we may need to abandon its development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.

The therapeutic safety and efficacy of DKN-01 and FL-301 are unproven, and we may not be able to successfully develop and commercialize any of our products.

Both of our clinical stage products, DKN-01 and FL-301, are novel monoclonal antibodies and their potential benefit as a therapeutic cancer drug is unproven.

Our ability to generate revenues from product sales, which we do not expect will occur in the short term, if ever, will depend on successful development and commercialization after approval, if achieved, which is subject to many potential risks.

DKN-01 and FL-301 may interact with human biological systems in unforeseen, ineffective or harmful ways.

If our products are associated with undesirable side effects or have characteristics that are unexpected, we may need to abandon development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.

Many compounds that initially showed promise in early stage testing for treating cancer have later been found to be ineffective in later stage studies or cause side effects that prevented further development of the compound.

As a result of these and other risks described herein that are inherent in the development of novel therapeutic agents, we may never successfully develop, enter into or maintain third party licensing or collaboration transactions with respect to, or successfully commercialize DKN-01, in which case we will not achieve profitability and the value of our stock may decline.

Our future success is dependent primarily on the regulatory approval and commercialization of DKN-01, which is currently undergoing early stage clinical trials.

As a result of these and other risks described herein that are inherent in the development of novel therapeutic agents, we may never successfully develop, enter into or maintain third party licensing or collaboration transactions with respect to, or successfully commercialize DKN-01 or FL-301, in which case we will not achieve profitability and the value of our stock may decline.

Our future success is heavily dependent on the success of DKN-01.

We do not have any products that have gained regulatory approval.

Currently, our most advanced clinical-stage product candidate is DKN-01.

As a result, our business is substantially dependent on our ability to obtain regulatory approval for, and, if approved, to successfully commercialize DKN-01 in a timely manner.

We cannot commercialize the product in the U.S.

without first obtaining regulatory approval from the FDA;

similarly, we cannot commercialize the product outside of the U.S.

without first obtaining regulatory approval from comparable foreign regulatory authorities.

Before obtaining regulatory approvals for the commercial sale of the product for a target indication, we must demonstrate, with substantial evidence gathered in preclinical studies and well-controlled clinical trials, that the product is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate.

Currently, our most advanced clinical-stage product candidate is DKN-01, and it is currently in its first randomized, controlled clinical trial.

As a result, our business is substantially dependent on our ability to successfully develop, form strategic partnerships for, obtain regulatory approval for, and, if approved, to successfully commercialize DKN-01.

We must demonstrate, with substantial evidence gathered in preclinical studies and well-controlled clinical trials, that the product is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate.

Even if DKN-01 were to successfully obtain approval from the FDA and comparable foreign regulatory authorities, any approval might contain significant limitations, such as use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements.

If we are unable to obtain regulatory approval in one or more jurisdictions, or any approval contains significant limitations, we may not be able to obtain sufficient funding or generate sufficient revenue to continue the development of any other product candidate that we may discover, in-license, develop or acquire in the future.

If we are unable to successfully commercialize our products, we may not be able to earn sufficient revenues to continue our business.

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

If we are unable to obtain regulatory approval in one or more jurisdictions, or any approval contains significant limitations, we may not be able to obtain

sufficient funding or generate sufficient revenue to continue the development of any other product candidate that we may discover, in-license, develop or acquire in the future.

If we are unable to successfully develop or commercialize our products, we may not be able to earn sufficient revenues or generate sufficient funding to continue our business.

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

The development and commercialization of new drug products is highly competitive, especially in the oncology space in which we operate.

We face competition with respect to DKN-01 and will likely face competition with respect to any other product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide.

There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of cancer.

Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to our approach for DKN-01, and others are

based on entirely different approaches.

For example, there are several companies developing product candidates that target the same cancer pathways that we are targeting or that are testing product candidates in the same cancer indications that we are testing.

For example, Novartis AG, or Novartis, Merck & Co., or Merck, Pfizer, Inc., and Amgen, Inc.

have previously been developing anti-DKK1 monoclonal antibodies.

We face competition with respect to DKN-01 and FL-301, and will likely face competition with respect to any other product candidates that we may seek to develop in the future, from major pharmaceutical companies and biotechnology companies worldwide.

There are several companies that are marketing drugs and testing product candidates in the same cancer indications as we are.

Some of these competitive products and therapies are based on scientific mechanisms of action that are the same as or similar to our approaches for DKN-01 and FL-301.

For example, Novartis, Merck, Pfizer, and Amgen have previously been developing anti-DKK1 monoclonal antibodies.

In addition, Astellas, Zai Labs, Amgen, Transcenta, and Elevation Oncology, among other companies, are all currently developing or have developed antibodies targeting Claudin18.2.

More established companies may have a competitive advantage over us due to their greater size, cash flows, and institutional experience.

Compared to us, many of our competitors may have significantly greater financial, technical, and human resources.

As a result of these factors, our competitors may obtain regulatory approval of their products before we are able to, which may limit our ability to develop or commercialize DKN-01.

As a result of these factors, our competitors may obtain regulatory approval of their products before we are able to, which may limit our ability to develop or commercialize DKN-01 and FL-301.

Our competitors may also develop drugs that are safer, more effective, more widely used, and/or cheaper than ours, and may also be more successful than us in manufacturing and marketing their products.

These appreciable advantages could render DKN-01 non-competitive before we can recover the expenses of development and commercialization.

We may acquire other assets, form collaborations or make investments in other companies or technologies, that could harm our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.

As part of our business strategy, we may pursue acquisitions of assets, including preclinical or clinical stage product candidates, or enter into strategic alliances and collaborations to expand our existing programs and operations, such as we did with the BeiGene Agreement.

We may not maintain or complete these transactions on a cost-effective basis, or at all, and we may not realize the anticipated benefits of any such transaction, any of which could have a detrimental effect on our financial condition, results of operations and cash flows.

We may not be able to find suitable acquisition candidates, and if we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business and we may incur additional debt or assume unknown or contingent liabilities in connection therewith.

Any integration of an acquired company or assets may also disrupt our ongoing operations, require the hiring of additional personnel and the implementation of additional internal systems and infrastructure, and require management resources that would otherwise be focused on developing our existing business.

We may not be able to find or maintain suitable strategic alliance or collaboration partners or identify other investment opportunities, and we may experience losses related to any such investments.

To finance any acquisitions or collaborations, we may choose to issue debt or shares of our common stock as consideration.

These advantages could render our product candidates non-competitive before we can recover the expenses of development and commercialization.

As part of our business strategy, we intend to pursue acquisitions of assets, including preclinical or clinical stage product candidates, or enter into strategic alliances and collaborations to expand our existing programs and operations, such as we did with the merger with Flame Biosciences.

We may not realize the anticipated benefits of any such transaction, any of which could have a detrimental effect on our financial condition, results of operations and cash flows.

We may not be able to consistently find suitable acquisition candidates, and we may not be able to integrate these acquisitions successfully into our existing business.

Any integration of an acquired company or assets may also disrupt our ongoing operations, expose us to additional liabilities, require the hiring of additional personnel and the implementation of additional internal systems and infrastructure, and require intensive management resources.

To finance any acquisitions or collaborations, we may choose to issue shares of our common stock as consideration.

Any such issuance of shares would dilute the ownership of our stockholders.

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Risks Related to Our Dependence on Third Parties

We expect to rely on BeiGene to perform its obligations under the BeiGene Agreement and to develop and commercialize DKN-01 in the BeiGene Territory.

Pursuant to the terms of the BeiGene Agreement, we granted to BeiGene the right to an exclusive license to develop, manufacture and commercialize DKN-01 in the BeiGene Territory.

We expect to rely on BeiGene with respect to DKN-01 in the BeiGene Territory, and will have limited influence over their performance.

The failure of BeiGene to exercise the option or to successfully carry out its contractual development and commercialization responsibilities could substantially harm our business, because we have no development or commercialization experience or personnel in the BeiGene Territory.

We cannot assure you that BeiGene will execute its option or successfully develop or commercialize DKN-01.

If BeiGene were to terminate the BeiGene Agreement, then that could delay our DKN-01 development activities and adversely affect our business.

We rely on NovaRock to perform its obligations under the NovaRock Agreement and to complete the clinical trial for FL-301 in China

Pursuant to the terms of the NovaRock Agreement, NovaRock retained the right to develop, manufacture and commercialize FL-301 and FL-302 in the People’s Republic of China, Hong Kong, Macau, and Taiwan.

We expect to rely on NovaRock to manage the manufacturing of FL-301 and FL-302 at their CMO, to execute the ongoing clinical trial of FL-301 in cancer patients in China, and to participate in joint research and development activities for FL-301 and FL-302.

We will have limited influence over their performance.

The failure of NovaRock to successfully carry out its contractual development responsibilities could substantially harm our development of FL-301 and FL-302 and adversely affect our business.

We rely on BeiGene to supply tislelizumab for the DisTinGuish trial

As part of our collaboration with BeiGene, we rely on BeiGene to supply tislelizumab for the DisTinGuish trial and will have limited influence over their performance.

The failure of BeiGene to supply tislelizumab for the DisTinGuish trial could substantially harm our ability to complete the DisTinGuish trial which could delay our DKN-01 development activities and adversely affect our business.

We rely, and expect to continue to rely, on third parties to conduct, supervise, and monitor our preclinical studies and clinical trials.

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We rely on CROs to conduct, supervise, and monitor our preclinical and clinical trials for our product candidates.

We expect to continue to rely on third parties, such as CROs, clinical data management organizations, medical institutions, and clinical

investigators, to conduct our preclinical studies and clinical trials.

We expect to continue to rely on third parties, such as CROs, clinical data management organizations, medical institutions, and clinical investigators, to conduct our preclinical studies and clinical trials.

While we have agreements governing their activities, we have limited influence over their actual performance and control only certain aspects of their activities.

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Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with applicable protocols, legal, regulatory, and scientific standards, and our reliance on CROs does not relieve us of our regulatory responsibilities.

For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and applicable protocols for that trial and for ensuring that our preclinical trials are conducted in accordance with Good Laboratory Practice Standards, or GLPs, as appropriate.

Moreover, the FDA and comparable foreign regulatory authorities require us to comply with Good Clinical Practices, commonly referred to as GCPs, for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity, and confidentiality of trial participants are protected.

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As a result, delays could occur, which could compromise our ability to meet our desired development timelines.

Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects, and results of operations.

Although we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects, and results of operations.

If the contract manufacturers upon whom we rely fail to produce our product candidates or components in the volumes that we require on a timely basis, or to comply with stringent regulations applicable to biopharmaceutical manufacturers, we may face delays in the development and commercialization of, or be unable to meet demand for, our product candidates and may lose potential revenues.

We do not manufacture any of our product candidates, and we do not currently plan to develop any capacity to do so.

We utilize third-party contract manufacturing organizations, or CMOs, to manufacture the clinical trial material of DKN-01 and expect to do so for commercial products, if approved.

We utilize third-party contract manufacturing organizations (“CMOs”), to manufacture the clinical trial material of DKN-01 and expect to do so for commercial products, if approved.

We do not have any long-term commitments from our CMOs for clinical trial material or guaranteed prices for our product candidates.

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

There are a limited number of CMOs that operate under cGMP regulations and that are both capable of manufacturing for us and willing to do so.

There are a limited number of CMOs that operate under cGMP regulations and that are both capable of manufacturing for us and willing to

If our existing CMOs, or any new third party CMOs that we engage in the future to manufacture our product candidates for our clinical trials, should cease to continue to do so for any reason, we likely would experience delays in obtaining sufficient quantities of our product candidates for us to advance our clinical trials while we identify and qualify replacement suppliers.

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● disruptions to the operations of our third-party CMOs caused by conditions unrelated to our business or operations, which could result in disruptions in the development or commercialization of our product candidates.

In addition, all CMOs of our product candidates and therapeutic substances must comply with cGMP requirements enforced by the FDA that are applicable to both finished product and their active components used both for clinical and commercial supply, through its facilities inspection program.

In addition, all CMOs of our product candidates and therapeutic substances must comply with cGMP requirements enforced by the FDA that are applicable to both finished products and their active components used both for clinical and commercial supply, through its facilities inspection program.

Our CMOs must be approved by the FDA pursuant to inspections that will be conducted after we submit our marketing applications to the agency.

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If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which could significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.

A failure to comply with these requirements may also result in regulatory enforcement actions against our CMOs or us, including fines and civil and criminal penalties.

A failure to comply with these requirements may also result in regulatory enforcement actions against our CMOs or us, including fines and civil and criminal

If the safety of any quantities supplied is compromised due to our CMOs’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.

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Risks Related to Legal and Compliance Matters

We are not in compliance with the Nasdaq continued listing requirements.

If we are unable to comply with the continued listing requirements of the Nasdaq Global Market, our common stock could be delisted, which could affect our common stock's market price and liquidity and reduce our ability to raise capital.

On November 2, 2022, we received a letter (the “Notice”) from the Nasdaq Stock Market, or Nasdaq, notifying us that, because the closing bid price for our common stock, par value $0.001 per share (the “Common Stock”), has been below $1.00 per share for the past 30 consecutive business days, it no longer complies with the minimum bid price requirement for continued listing on the Nasdaq Global Market.

The Notice provides us with a compliance period of 180 calendar days, or until May 1, 2023, to regain compliance.

If at any time during this 180-day compliance period the closing bid price of the Common Stock is at least $1.00 per share for a minimum of 10 consecutive business days, then Nasdaq will provide us with written confirmation of compliance and the matter will be closed.

We intend to monitor the closing bid price of the Common Stock and may, if appropriate, evaluate various courses of action to regain compliance.

There can be no assurance that we will regain compliance or otherwise maintain compliance with the other listing requirements.

If we fail to comply with federal and state healthcare laws, including fraud and abuse and health and other information privacy and security laws, we could face substantial penalties and our business, financial condition, results of operations, and prospects could be adversely affected.

As a biopharmaceutical company, we are subject to many federal and state healthcare laws.

If we or our operations are found to be in violation of any federal or state healthcare law, or any other governmental regulations that apply to us, we may be subject to penalties, including civil, criminal, or administrative penalties, damages, fines, disgorgement, debarment from government contracts and/or refusal of orders under existing contracts, exclusion from participation in U.S.

As a biopharmaceutical company, we are subject to many federal and state healthcare laws in the United States and healthcare and data protection laws around the world.

If we or our operations are found to be in violation of any federal or state healthcare law, global general data protection laws, or any other governmental regulations that apply to us, we may be subject to penalties, including civil, criminal, or administrative penalties, damages, fines, disgorgement, debarment from government contracts and/or refusal of orders under existing contracts, exclusion from participation in U.S.

federal or state health care programs, corporate integrity agreements, or the curtailment or restructuring of our operations, any of which could materially adversely affect our ability to operate our business and our financial results.

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Although an effective compliance program can mitigate the risks of investigation and prosecution for violations of these laws, these risks cannot be entirely eliminated.

Moreover, achieving and sustaining compliance with applicable federal and state privacy, security, and fraud laws may prove to be costly.

Moreover, achieving and sustaining compliance with applicable privacy, security, and fraud laws may prove to be costly.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

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and other countries with respect to our proprietary technology and products.

We rely on patent, trade secret, copyright and trademark laws, and confidentiality, licensing and other agreements with employees and third parties, all of which offer only limited protection.

We rely on patent, trade secret,

copyright and trademark laws, and confidentiality, licensing and other agreements with employees and third parties, all of which offer only limited protection.

We have sought and continue to seek to protect our proprietary position by filing and prosecuting patent applications in the U.S.

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Patents in the field of therapeutic monoclonal antibodies are frequently limited in scope based on the sequence of amino acids that form particular parts of the antibody.

A portion of our intellectual property

portfolio is limited by amino acid sequences found in our product candidates.

A portion of our intellectual property portfolio is limited by amino acid sequences found in our product candidates.

Other competing companies may have therapeutic antibodies to the same target as our product candidates, but have a different amino acid sequence and, as a result, may not be determined to infringe our patents which are limited by amino acid sequence(s).

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Risks Related to our Common Stock

Our share price may be volatile, which could subject us to securities class action litigation and our stockholders could incur substantial losses.

Our share price has been low and volatile.

If our share price continues to be low and volatile, we could be subject to securities class action litigation and our stockholders could incur substantial losses.

The market price of shares of our common stock could be subject to wide fluctuations in response to many risk factors listed in this section, and others beyond our control, including:

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These and other market and industry factors may cause the market price and demand for our common stock to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock.

In addition, the stock market in general, and Nasdaq and emerging growth companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

In addition, the stock market in general, and Nasdaq in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

In the past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock.

If in the future any of our stockholders brought a lawsuit against us, we could incur significant legal expenses, settlement costs or damage awards that

are not covered by, or exceed the limits of, our available directors’ and officers’ liability insurance, which could adversely impact our financial condition, results of operations or cash flows.

If in the future any of our stockholders brought a lawsuit against us, we could incur significant legal expenses, settlement costs or damage awards that are not covered by, or exceed the limits of, our available directors’ and officers’ liability insurance, which could adversely impact our financial condition, results of operations or cash flows.

Such a lawsuit could also divert the time and attention of our management.

We are an “emerging growth company” and a “smaller reporting company” and we intend to take advantage of reduced disclosure and governance requirements applicable to emerging growth companies and smaller reporting companies, which could result in our common stock being less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We were previously an “emerging growth company” and are still a “smaller reporting company,” and we take advantage of reduced disclosure and governance requirements applicable to smaller reporting companies, which could result in our common stock being less attractive to investors.

Prior to January 1, 2023, we were an “emerging growth company,” as defined in the JOBS Act, and we took advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

As of January 1, 2023, we are no longer an emerging growth company, however, we still continue to qualify as a “smaller reporting company” which will allow us to take advantage of scaled disclosure requirements.

We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions.

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If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

We may take advantage of these reporting exemptions until we are no longer an emerging growth company, which in certain circumstances could be for up to five years.

We will remain an “emerging growth company” until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, (c) the date on which we have issued more than $1.0 billion in nonconvertible debt during the preceding three-year period and (d) the last day of our 2022 fiscal year containing the fifth anniversary of the date on which shares of our common stock became publicly traded in the U.S.

Even after we no longer qualify as an emerging growth company, we may still continue to qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from the disclosure requirements described above, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, and being subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statement.

We will also be exempt from providing selected and supplemental financial information.

Our business is subject to changing regulations for corporate governance and public disclosure that has increased both our costs and the risk of noncompliance.

Each year we are required to evaluate our internal controls systems in order to allow management to report on our internal controls as required by Section 404 of the Sarbanes-Oxley Act.

As a result, we continue to incur additional expenses and divert our management’s time to comply with these regulations.

As a result, we continue to incur additional expenses and expend our management’s time to comply with these regulations.

We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.

If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our common stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities, which would require additional financial and management resources.

Sales of a substantial number of shares of our common stock in the public market by our stockholders could cause our stock price to fall.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.

Our management is authorized to grant stock options and other equity-based awards to our employees, directors and consultants under our equity incentive plans.

Grants under our equity incentive plans may also cause our stockholders to experience additional dilution, which could cause our stock price to fall.

If we are not able to comply with the requirements of Section 404, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our common stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities, which would require additional financial and management resources.

Sales of a substantial number of shares of our common stock in the public market by our stockholders, particularly the former Flame shareholders, could cause our stock price to fall.

In the merger with Flame, we issued approximately 19,794,373 shares of our common stock and 136,833 shares of Series X Non-Voting Convertible Preferred Stock, which are convertible into approximately 136,833,000 shares of common stock upon approval by our shareholders, to the former shareholders of Flame.

These were issued as unregistered securities, and we have committed to file a resale registration statement on Form S-3 to permit the resale of these shares.

We are unable to predict the effect that sales may have on the prevailing market price of our common stock.

Most of our outstanding shares of common stock, as well as a substantial number of our shares of

common stock underlying outstanding warrants, are eligible for sale in the public market, subject in some cases to the volume limitations and manner of sale requirements of Rule 144 under the Securities Act.

Sales of common stock by our stockholders could have a material adverse effect on the trading price of our common stock.

Substantial sales of common stock by our stockholders, particularly those who acquired their shares through the merger with Flame, could have a material adverse effect on the trading price of our common stock.

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.

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Not applicable.

We have leased our principal offices in Cambridge, Massachusetts covering approximately 7,667 square feet of space.

In November 2018, we entered into a lease through April 30, 2022.

On May 16, 2022, we entered into a Third Amendment to Lease and extended the lease through July 31, 2024.

Legal Proceedings .

From time to time we may become involved in legal proceedings or be subject to claims that arise in the ordinary course of business.

As of the date of this report, we are not currently a party to any material legal proceedings.

Mine Safety Disclosures.

Not applicable.

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

What changed 10-K

Item 1A. Risk Factors