What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2024-03-18 compared with 2023-03-24 · 23 added, 69 removed, 306 unchanged (23% of the section changed)

39 unchanged sentences

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;

8 unchanged sentences

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.

4 unchanged sentences

Risks Related to Our Business and Industry

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, 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.

Any such volatility and disruptions may have adverse consequences on us or the third parties on whom we rely.

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 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.

5 unchanged sentences

The results of preclinical studies, preliminary study results, and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials or the ultimately completed trials.

For instance, while we have early clinical trial results for our clinical studies of DKN-01 in esophagogastric cancer and gynecologic cancer, additional clinical trials are still ongoing and will be needed for the registration of DKN-01.

Moreover, these results may not be representative of the ultimate study population.

For instance, while we have early clinical trial results for our clinical studies of DKN-01, additional clinical trials are still ongoing and will be needed for the registration of DKN-01.

Moreover, these results may not be representative of the ultimate global study population.

The ultimate study results of our ongoing or future trials may be different than the ones we have seen to date.

45 unchanged sentences

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.

38 unchanged sentences

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

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

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

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.

1 unchanged sentence

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 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.

22 unchanged sentences

Risks Related to Our Dependence on Third Parties

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

We rely on NovaRock to perform its obligations under the NovaRock Agreement

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 expect to rely on NovaRock to manage the manufacturing of FL-301 and FL-302 at their CMO and to participate in joint research and development activities for FL-301 and FL-302.

We will have limited influence over their performance.

28 unchanged sentences

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

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.

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.

24 unchanged sentences

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

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.

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.

3 unchanged sentences

Any performance failure on the part of our distributors could delay clinical development of our product candidates, which could produce additional losses.

We depend on information technology and a failure of, or significant disruption to, those systems could have a material adverse effect on our business and operations.

We are increasingly dependent on our information technology systems and infrastructure for our business, which are inherently vulnerable to malicious intrusion, random attack, loss of data privacy, disruption, degradation or breakdown.

Data privacy or security breaches of our internal systems or those of our information technology vendors may in the future result in the failure of critical business operations.

Such breaches may cause sensitive data to be exposed to unauthorized persons or to the public.

To date, neither our business nor our operations have been materially impacted by such incidents.

Cybersecurity attacks and incidents are increasing in their frequency, sophistication and intensity and, due to the nature of some of these attacks, there is a risk that they may remain undetected for a period of time.

Our investments in the protection of our data and information technology and our efforts to monitor our systems on an ongoing basis may be insufficient to prevent compromises in our information technology systems that could have a material adverse effect on our business.

Such adverse consequences could include the loss of critical or sensitive information from us or our third - party providers’ databases or information technology systems and could also result in legal, financial, reputational or business harm to us and potentially substantial remediation costs.

In addition, our cyber insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems or those of our third - party vendors.

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.

10 unchanged sentences

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.

38 unchanged sentences

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.

As of January 1, 2023, we were 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.

6 unchanged sentences

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.

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

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.

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.

We are unable to predict the effect that sales may have on the prevailing market 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.

Substantial sales of common stock by our stockholders 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.

3 unchanged sentences

There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which you purchased them.

Unresolved Staff Comments.

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