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Item 1A. Risk Factors

2023-03-29 compared with 2022-03-29 · 182 added, 187 removed, 351 unchanged (51% of the section changed)

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You should carefully consider the following material risks, together with the other matters described in this Annual Report and in our financial statements and the related notes thereto in evaluating our current business and future performance.

We cannot assure you that any of the events discussed in the risk factors below will not occur.

If we are not able to successfully address any of the following risks or difficulties, we could experience significant changes in our business, operations and financial performance.

We cannot assure you that any of the events discussed in the risk factors below will or will not occur.

If we are not able to successfully address any of the following risks, we could experience significant changes in our business, operations and financial performance.

In such circumstances, the trading price of our common stock could decline, and in some cases, such declines could be significant, and you could lose part or all of your investment.

In addition to the risks described below, other unforeseeable risks and uncertainties or factors that we currently believe are immaterial may also adversely affect our operating results, and there may be other risks that may arise in the future.

In addition to the risks described below, other unforeseeable risks that we currently believe are immaterial may arise that adversely affect our operating results.

Certain statements contained in this Annual Report (including certain statements used in the discussion of our risk factors) constitute forward-looking statements.

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Cautionary Note Regarding Forward-Looking Statements ”

appearing on page 4  of this Annual Report for important limitations and guidelines regarding reliance on forward-looking statements.

appearing on page 4  of this Annual Report for important information regarding reliance on forward-looking statements.

Risk Factor Summary

The following is a summary description of the material risks and uncertainties to which we may be exposed.

Each of these risks could adversely affect our business, financial condition and results of operations, and any such effects may be material.

These and other risks are more fully described after this summary description.

The following is a summary of the material risks to which we may be exposed.

These risks are more fully described after this summary.

Risks Related to Our Business and Financial Condition

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We have a history of net losses, and we may not achieve or maintain profitability.

We could fail to manage our growth, which would impair our business.

Our revenue growth depends in part on market and regulatory acceptance of the C1-cell protein production platform and our other technologies to develop and manufacture animal and/or human biopharmaceutical products and 

non-pharmaceutical products.

We must continually offer new products and technologies.

We may fail to commercialize the C1-cell protein production platform or our other technologies for the expression of therapeutic proteins, antibodies, vaccines, and metabolites or other non-pharmaceutical biologic products.

We could fail to manage our growth.

Our revenue growth depends in part on market and regulatory acceptance of the C1-cell protein production platform and our other technologies to develop and manufacture animal and/or human biopharmaceutical products and non-pharmaceutical products.

If our competitors develop technologies and products more quickly and market more effectively than our product candidates, our commercial opportunity will be reduced or eliminated.

Alternative technologies may not require microbial or other cell produced proteins, such as our proprietary C1 cells.

Our SARS-CoV-2 vaccine product candidates are at the preclinical stage and have not been approved for sale.

We have not conducted substantial research and development , or cGMP manufacturing of drug substance and drug product, for a vaccine product candidate in the past, and we may be unable to produce a vaccine that can be used to successfully prevent the SARS-CoV-2 virus or its variants of concern, in a timely and economical manner, if at all.

Our SARS-CoV-2 vaccine candidates are at the Phase 1 clinical stage and have not been approved for sale.

We have not developed, manufactured or commercialized any vaccine product in the past, and we may be unable to produce a vaccine that can be used to successfully prevent the SARS-CoV-2 virus or its variants of concern, in a timely and economical manner, if at all.

The results of nonclinical studies and early-stage clinical trials may not be predictive of future results.

We may need substantial additional capital in the future to fund our business.

Changes in global economic and financial markets may have a negative effect on our business.

We face risks related to health epidemics, pandemics and other widespread outbreaks of contagious disease or other biological threats, as well as armed conflict escalated between Russia and Ukraine, any of which could significantly disrupt our operations and have a material adverse effect on our business, employees, directors, consultants, collaborators and other third parties, including business development activities and research and development projects conducted by third party contract research organizations parties.

Our sales and operations are subject to the risks of doing business internationally.

If we lose key personnel, including key management or board members, or are unable to attract and retain additional personnel, it could delay our technology and product development programs and harm our R&D efforts, and we may be unable to pursue research funding, licenses and other forms of collaborations or develop our own products.

We may be sued for product liability.

Foreign currency fluctuations could adversely affect our results.

Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.

We may make acquisitions, investments and strategic alliances that may use significant resources, result in disruptions to our business or distractions of our management, may not proceed as planned, and could expose us to unforeseen liabilities.

We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business effectively.

Risks Related to Dependence on Third Parties

We are dependent on collaborations with third parties, and if we fail to maintain or successfully manage existing, or enter into new, strategic collaborations, we may not be able to develop and commercialize many of our technologies and products and achieve profitability.

We have a small number of research collaborations, and the nonperformance or loss of any collaboration could have a material adverse effect on our business.

We have limited or no control over the resources that any collaborator or licensee may devote to our programs, and reductions in collaborators’ R&D budgets may affect our businesses.

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We have no experience submitting applications to the FDA or similar regulatory authorities in the past and could be subject to lengthy and/or unfavorable regulatory proceedings.

Risks Relating to Intellectual Prop erty

Inability to protect our intellectual property could harm our ability to compete.

Risks Relating to Intellectual Property

Failure to protect our intellectual property and the intellectual property of certain third parties could harm our competitive position.

Litigation or other proceedings or third-party claims of intellectual property infringement could require us to spend significant time and resources and could prevent us and our collaborators from commercializing our or their technologies and products or negatively impact our stock price.

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We are a smaller reporting company, and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.

General Risk Factors

We may need substantial additional capital in the future to fund our business.

Changes in global economic and financial markets may have a negative effect on our business.

We face risks related to health epidemics, pandemics and other widespread outbreaks of contagious disease, pandemics, epidemics or other biological threats, such as the ongoing COVID-19 pandemic, that could significantly disrupt our operations and have a material adverse effect on our business, employees, directors, consultants, collaborators and other third parties, including business development activities and research and development projects conducted by third party contract research organizations parties.

Our sales and operations are subject to the risks of doing business internationally.

We may be sued for product liability.

Foreign currency fluctuations could adversely affect our results.

Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.

Risks Related to Our Business and Financial Condition

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Consequently, our business has changed dramatically as compared to the past, as we no longer have any product revenue related to our enzyme business.

We have begun to apply the C1- cell protein production platform  in the biopharmaceutical market, which has higher risks and a higher barrier to entry.

We also now apply the C1-cell protein production platform in the biopharmaceutical market, which has higher risks and a higher barrier to entry.

As we attempt to adapt the C1-cell protein production platform and our other technologies for use in the biopharmaceutical and other markets, our business is subject to the execution, integration, and research and development risks that early-stage companies customarily face with new technologies, products and markets.

These risks relate to, among other things, our ability to successfully further develop the C1- cell protein production platform and our other technologies, 

products and processes, assemble and maintain adequate production and research and development (“R&D”) capabilities, comply with regulatory requirements, construct effective channels of distribution and manage growth.

These risks relate to, among other things, our ability to successfully further develop the C1-cell protein production platform and our other technologies, products and processes, assemble and maintain adequate production and research and development (“R&D”) capabilities, comply with regulatory requirements, construct effective channels of distribution and manage growth.

We have encountered and will continue to encounter risks and difficulties frequently experienced by early-stage companies in expanding and upgrading our intellectual property, regulatory, marketing, sales and R&D capabilities, improving our accounting and financial reporting and internal controls infrastructure, and adapting to the rapidly evolving industries in which we operate.

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Food and Drug Administration (the “FDA”) and other governmental bodies, and there is a risk that such technologies will not be adopted by the pharmaceutical industry or governmental agencies and therefore not succeed and/or not grow at the rates projected or at all.

We have not yet commercialized any products for the biopharmaceutical market, and we may never be able to do so.

We have also developed the Dapibus™

filamentous fungal based microbial protein production platform use in non-pharmaceutical applications, such as food, nutrition, and wellness. 

We have not yet commercialized any products based on our platforms and technologies, and we may never be able to do so.

We do not know when or if we and/or our current and/or future collaborators and licensees will complete any of our or their product development efforts, obtain regulatory approval for any product candidates incorporating our technologies or successfully commercialize any approved products.

Even if we and/or our licensees and collaborators are successful in developing products that are approved for marketing, we and they will still require that these products gain regulatory approval and market acceptance.

The biopharmaceutical industry is a high-risk industry in that even if we are successful at expressing certain proteins, these proteins may fail to be advanced or approved for use or sale for many reasons including their characteristics, biological activity, bio comparability, bio similarity, stability, glycosylation structures, containments, purity, performance, safety and regulatory reasons.

The biopharmaceutical industry is a high-risk industry in that even if we are successful at expressing certain proteins, these proteins may fail to be advanced or approved for use or sale for many reasons including their characteristics, biological activity, biological comparability, biological similarity, stability, glycosylation structures, containments, purity, performance, safety and regulatory reasons.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to predict the timing or amount of increased expenses or when, or if, we will be able to achieve certain technology, product and/or commercial milestones, access fees and royalties, launch products and/or processes, or achieve profitability.

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As of December 31, 2022 , we have an accumulated deficit of approximately $ 73.5 million . Our profitability has strongly relied on, and will be even more reliant going forward on, third party industry and government research funding, licensing partnerships and other forms of collaborations.

We believe that it is likely that if we do not sign license agreements or other forms of collaborations, we will incur losses because of our planned levels of R&D and additional general and administrative expenditures that we believe is necessary to operate our business and further develop the C1- cell protein production platform and our other technologies 

for use in the pharmaceutical and non-pharmaceutical industries.

We believe that it is likely that if we do not sign license agreements or other forms of collaborations, we will incur losses because of our planned levels of R&D and additional general and administrative expenditures that we believe are necessary to operate our business and further develop the C1-cell protein production platform and our other technologies for use in the pharmaceutical and non-pharmaceutical industries.

The amount of our future net losses will depend, in part, on the rate of increase in our expenses along with other potential cost of unforeseen circumstances, our ability to generate research funding, government grants, receipt of access fees, milestones, royalty and other payments, and whether we are able to generate revenues by entering into license agreements or other forms of collaborations, launch new products and/or processes from future licensees or collaborators, and our ability to raise additional capital.

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equity and working capital.

The R&D efforts needed to enhance and leverage the C1- cell protein production platform and our other technologies  for use in developing and manufacturing human and animal biopharmaceuticals and other non-pharmaceutical products will require significant funding and increased staffing;

The R&D efforts needed to enhance and leverage the C1-cell protein production platform and our other technologies, such as 

Dapibus™

, for use in developing and manufacturing human and animal biopharmaceuticals and other non-pharmaceutical products will require significant funding and increased staffing.

Therefore, we expect near-term operating and research expenses to continue, and maybe even accelerate, as we further develop our research and business plans, and our goals and objectives.

Consequently, we will require significant additional revenue to achieve profitability.

We cannot provide assurance that we will be able to generate any revenues from our focus and efforts as we intend to apply the C1- cell protein production platform and our other technologies i nto the biopharmaceutical and non-pharmaceutical industries.

We cannot provide assurance that we will be able to generate any revenues from our focus and efforts as we intend to apply the C1-cell protein production platform and our other technologies into the biopharmaceutical and non-pharmaceutical industries.

If we fail to enter into new license agreements or other forms of collaborations or generate revenues and profit from additional research projects and government grants, the market price of our common stock will likely decrease.

Further regulatory complications, competition from other technologies, or delays in our research programs and the adoption and use of the C1-cell protein production platform and our other technologies by the biopharmaceutical and non-pharmaceutical industries may force us to reduce our staffing and research and development efforts, which may further affect our ability to generate cash flow.

We could fail to manage our growth, which would impair our business.

We could fail to manage our growth.

We will need to take the following steps, among others, to manage our growth.

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Balance our cash burn with technology and product development;

Maintain and add additional CROs, other third-party service providers or other technology collaborators;

Maintain and add additional CROs (Contract Research Organizations), other third-party service providers or other technology collaborators;

Maintain and add additional collaborators, strategic partners technology licensees or other forms of structures;

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The dynamic and conservative nature of the biopharmaceutical industry, the unpredictable nature of the product development process and the time and cost of new technology adoption in the biopharmaceutical industry may affect our ability to meet the requirements of the marketplace or achieve market and/or regulatory acceptance. 

The expenses or losses associated with unsuccessful technology and product development activities or lack of market acceptance of our new technologies and products could seriously harm our business, financial condition and results of operations.

We must continually offer new products and technologies.

The biopharmaceutical industry is characterized by rapid technological change, and the area of gene and protein research and platform development is a rapidly evolving field.

Our future success will depend on our ability to maintain a competitive position with respect to technological advances in terms of product and process quality, stability, safety, productivity and cost. Rapid technological development by others could cause our products and technologies to become obsolete and could have a material adverse effect on our business, financial condition and results of operations.

The expenses or losses associated with unsuccessful technology and product development activities or lack of market acceptance of our new technologies and products could harm our business, financial condition and results of operations.

We have not yet developed any C1-based biopharmaceutical products, conducted the necessary safety, efficacy, cost and regulatory studies, or completed the commercialization of any therapeutic proteins, antibodies and vaccines.

We have not yet completed the necessary safety, efficacy, cost and regulatory studies, or the commercialization of any therapeutic proteins, antibodies and vaccines, and metabolites or other non-pharmaceutical biologic products based on C1 or our other technologies, such as Dapibus™

To date, drug companies have developed and commercialized only a small number of gene-based products in comparison to the total number of drug molecules available in the marketplace.

Our biopharmaceutical business should be evaluated as having the same risks as those inherent to early-stage biotechnology companies because the application of the C1-cell protein production platform for the expression of pre-clinical and clinical quantities of therapeutic proteins, antibodies and vaccines is still in early development.

Successful development of the C1-cell protein production platform for biopharmaceutical and non-pharmaceutical purposes will require significant research, development and capital investment, including testing, to prove its safety, efficacy and cost-effectiveness.

Successful development of the C1-cell protein production platform and our other technologies, such as Dapibus™

, for biopharmaceutical and non-pharmaceutical purposes will require significant research, development and capital investment, including testing, to prove its safety, efficacy and cost-effectiveness.

In general, our experience has been that each step in the process has been longer and costlier than originally projected, and we anticipate that this is likely to remain the case with respect to the continuing development efforts of our biopharmaceutical and non-pharmaceutical business.

If our competitors develop technologies and products more quickly and market more effectively than our product candidates, our commercial opportunity will be reduced or eliminated.

Any biopharmaceutical products we or our current or collaborators or licensees develop through the C1-cell protein production platform, or through our other technologies, will com pete in highly competitive and regulated markets.

The biopharmaceutical industry is characterized by rapid technological change, and the area of gene and protein research and platform development is a rapidly evolving field.

Many of the organizations competing with us in the market for such products have more capital resources, larger R&D and marketing staff, facilities and capabilities, and greater experience in research and development, regulatory approval, manufacturing and commercialization of technology and products.

Accordingly, our competitors may be able to develop technologies and products more rapidly.

If a competitor develops superior technology or products, or more cost-effective alternatives to our and our collaborators’

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vaccine  

product candidates are at the preclinical stage and have not been approved for sale.

We have not conducted substantial research and development 

or cGMP manufacturing of drug substance and drug product, 

candidates are at the Phase 1 clinical stage and have not been approved for sale.

We have not developed, m anufactured or commercialized any  

vaccine  

product candidate in the past, and we may be unable to produce a  

product in the past, and we may be unable to produce a  

vaccine  

that can be used to successfully prevent the SARS-CoV-2 virus or its variants of concern, in a timely and economical manner, if at all.

Our SARS-CoV-2 vaccine development program is in the early stages of research and development. 

Limited data exist regarding the safety and efficacy of our vaccine product candidates, and we must conduct a substantial amount of additional research, development and clinical testing before any regulatory authority will approve our vaccine product candidates.

The success of our efforts to develop and commercialize our product candidates could fail for a number of reasons.

For example, regulations have and continue to change in South Africa and other countries which may affect the design of our COVID-19 vaccine candidate, and our ability to carry out our anticipated Phase 1 clinical trial. 

In addition, we may not receive the necessary documentation, data, or other required information, materials, and support from BTG Israel or other third parties we are working with that is needed to submit and ultimately receive regulatory approval to conduct the anticipated Phase 1 clinical trial in South Africa or in an alternative country. 

As a result, we could experience delays in product development and clinical trials or unsatisfactory clinical trial results. 

Moreover, adverse events, or the perception of adverse events, relating to vaccine product candidates and delivery technologies may negatively impact our ability to develop commercially successful products and also may lead to greater government regulation, which could have a material effect on our ability to develop and market our SARS-CoV-2 vaccine product candidates .

Our DYAI-100, SARS-CoV-2 vaccine candidate has received regulatory approval for Phase 1 clinical trial in South Africa, and we have completed dosing of all patients by the end of February 2023. However, we could experience delays in clinical trials or unsatisfactory clinical trial results. Moreover, adverse events, or the perception of adverse events, relating to vaccine product candidates and delivery technologies may negatively impact our ability to develop commercially successful products and also may lead to greater government regulation, which could have a material effect on our ability to develop and market our SARS-CoV-2 vaccine product candidates.

Uncertainties exist surrounding the longevity and severity of COVID-19 as a global health concern.

The success of our efforts to develop and commercialize our product candidates could fail for a number of reasons.

The success of our efforts to develop and commercialize our vaccine product candidates could fail for a number of reasons.

Accordingly, we may be unable to produce a vaccine that successfully targets SARS-CoV-2 in a timely and economical manner, if at all.

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Additionally, our ability to develop an effective vaccine will depend on our ability to work on an accelerated timeline, with limited access to financial resources beyond those that we currently possess, and in competition with a significant number of better-funded and more experienced vaccine-development companies.

Moreover, if the COVID-19 pandemic is effectively contained or the risk of further spread is diminished or eliminated before we can successfully develop, manufacture and commercialize SARS-CoV-2 vaccine products, we may be unable to identify strategic partners willing to work with and support us in our development efforts and, even if we obtain regulatory approval, the market that we anticipate for this product candidate may not exist or may be much smaller than we previously anticipated.

Moreover, given the COVID-19 pandemic is now relatively contained and the risk of further spread is diminished, we may be unable to identify strategic partners willing to work with and support us in our development efforts and/or the market that we anticipate for this product candidate may not exist or may be much smaller than we previously anticipated.

Alternatively, even if a market exists, our vaccine product candidates could be found to be ineffective or unsafe, or otherwise fail to receive necessary regulatory clearances.

Our vaccine product candidates, even if safe and effective, could be difficult to manufacture on a large scale or uneconomical to market, or our competitors could develop superior products more quickly and efficiently or more effectively market their competing products.

Accordingly, our inability to develop a commercially-successful vaccine product will materially harm our business.

Accordingly, our inability to develop a commercially-successful vaccine product could materially harm our business.

The results of nonclinical studies and early-stage clinical trials may not be predictive of future results.

The results of nonclinical studies may not be predictive of the results of clinical trials, and the results of any early-stage clinical trials we commence may not be predictive of the results of the later-stage clinical trials.

Vaccine and drug candidates in later stages of clinical trials may fail to show the desired sa fety and efficacy despite having progressed through nonclinical studies and initial clinical trials.

Vaccine and drug candidates in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through nonclinical studies and initial clinical trials.

There is a high failure rate for drugs proceeding through clinical trials, and a number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies.

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Any such setbacks in our clinical development could have a material adverse effect on our business and operating results.

We may need substantial additional capital in the future to fund our business.

Our future capital requirements may be substantial, particularly as we continue to further develop, engineer and optimize the C1-cell protein production platform and our other proprietary technologies, products and processes for licensing for research and development, and commercialization of potential animal and human pharmaceutical products.

We currently have very little leverage, and if our capital resources are insufficient to meet our capital requirements, we will have to raise additional funds to continue the development of our technologies and complete the development and commercialization of products, if any, resulting from our technologies.

If the acquisition of additional funds is not possible or if we engage in future equity financings, dilution to our existing stockholders may result.

If we raise capital through debt financing, we may be subject to restrictive covenants that limit our ability to conduct our business.

We may not be able to raise funds on terms that are favorable to us, if at all.

If we fail to raise sufficient funds and incur losses, our ability to fund our operations, take advantage of strategic opportunities, develop products or technologies, or otherwise respond to competitive pressures could be significantly limited.

If this happens, we may be forced to delay or terminate research or development programs or the commercialization of products resulting from our technologies, curtail or cease operations or obtain funds through collaborative and licensing arrangements that may require us to relinquish commercial rights, sell certain assets of the company which will limit future opportunities, or grant licenses on terms that are not favorable to us.

Without sufficient funding or revenue, we may have to curtail, cease, or dispose of one or more of our operations, which would have a material adverse effect on our business, financial condition, and future prospects.

Changes in global economic and financial markets may have a negative effect on our business.

Our business is subject to a variety of market forces including, but not limited to, domestic and international economic, political and social conditions.

Many of these forces are beyond our control.

Any change in market conditions that negatively impacts our operations or the demand of our current or prospective customers could adversely affect our business operations.

Changes in the global financial, pharmaceutical and biotech markets may make it difficult to accurately forecast operating results.

These changes have had, and may continue to have, a negative effect on our business, results of operations, financial condition and liquidity.

In the event of a downturn in global economic activity, current or potential business partners may go out of business, may be unable to fund purchases or determine to reduce purchases, all of which could lead to reduced demand for our products and increased payment delays or defaults.

We are also limited in our ability to reduce costs to offset the results of a prolonged or severe economic downturn given certain fixed costs associated with our operations and difficulties if we over strained our resources.

The timing and nature of a sustained recovery in the credit and financial markets remains uncertain, and there can be no assurance that market conditions will significantly improve in the near future or that our results will not continue to be materially and adversely affected.

Significant outbreaks of contagious diseases, and other adverse public health developments, could have a material impact on our business operations, financial condition, and operating results.

The COVID-19 pandemic has significantly impacted the operation of business in the United States and Europe, where several of our key executive management members and our third-party contract research organizations are located.

The COVID-19 pandemic and various governmental responses in the United States and Europe has adversely affected our ability to carry on certain business development activities in the past, including restrictions in business-related travel, delays or disruptions in our on-going research projects, and unavailability of the employees of the Company or third-party contract research organizations with whom we conduct business, due to illness or quarantines, among others, and it may adversely affect our business operations if any health epidemics and pandemics and other widespread outbreaks of contagious disease or other biological threats in the future.

In addition, we rely on third parties in the United States and Europe to conduct our research and development projects and to provide other services, and COVID-19 has affected and may continue to affect service providers of such third-party contract research organizations and therefore negatively affect the operations of our on-going research projects, which could materially and negatively affect our business, financial condition, and results of operations.

The COVID-19 pandemic has adversely affected and may continue to adversely affect the economies and financial markets worldwide, resulting in an economic downturn that could impact our business, financial condition and results of operations.

As a result, our ability to fund through public or private equity offerings, debt financings, and through other means at acceptable terms, if at all, may be disrupted, in the event our financing needs for the foreseeable future are not able to be met by our existing balances of cash, cash equivalents and investments. In addition, the COVID-19 pandemic has posed and may continue to pose significant challenges for our supply chains, particularly as a result of mandatory shutdowns in locations where our products are manufactured or held for distribution. The extent to which COVID-19 could impact our business and research and development activities will depend on future developments, which are uncertain and cannot be predicted with confidence, and will depend on many factors.

As such, we cannot presently predict the scope and extent of any potential business shutdowns or disruptions.

The Company is currently working on several COVID-19 related vaccine and antibody opportunities.

However, there is no assurance that any of these opportunities will materialize or that the C1-cell protein production platform or any product expressed from C1 or any of the various other steps in a vaccine or drug development process will perform, provide benefits, obtain governmental safety and regulatory approvals, be registered or gain market acceptance.

In addition, our C1-cell protein production platform has yet to be used to produce a vaccine, antibody or other biologic product that has entered the clinical trial phase, and we are competing with more experienced companies for grants or funding of this type.

As a result, there is no assurance that we will receive these grants or funding resulting from these proposals.

In February 2022, armed conflict escalated between Russia and Ukraine.

The sanctions announced by the U.S.

and other countries following Russia’s invasion of Ukraine against Russia to date include restrictions on selling or importing goods, services, or technology in or from affected regions and travel bans and asset freezes impacting connected individuals and political, military, business, and financial organizations in Russia.

and other countries could impose wider sanctions and take other actions should the conflict further escalate.

It is not possible to predict the broader consequences of this conflict, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, currency exchange rates and financial markets, all of which could impact our business, financial condition, and results of operations. Our business is not directly impacted by the war as we do not operate in either Russia or the Ukraine.

However, the war might potentially amplify the disruptive impact of the COVID pandemic.

Our sales and operations are subject to the risks of doing business internationally.

Our sales and operations are subject to the risks of doing business internationally, as we have customers and partners located outside of the United States.

Conducting business internationally exposes us to a variety of risks, including:

changes in or interpretations of foreign regulations that may adversely affect our ability to sell our products, repatriate profits to the United States or operate our foreign-located facilities;

the imposition of tariffs;

the imposition of limitations on, or increase of, withholding and other taxes on remittances and other payments by foreign subsidiaries or joint ventures;

uncertainties relating to foreign laws, regulations and legal proceedings including tax, import/export, anti-corruption and exchange control laws;

the availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us;

increased demands on our limited resources created by our operations may constrain the capabilities of our administrative and operational resources and restrict our ability to attract, train, manage and retain qualified management, technicians, scientists and other personnel;

economic or political instability in foreign countries;

difficulties associated with staffing and managing foreign operations;

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.

Our planned activities will require retention, and ongoing recruiting of additional expertise in specific areas applicable to our industries, technologies and products being developed.

These activities will not only require the development of additional expertise by existing management personnel, but also the addition of new research and scientific, regulatory, licensing, sales, marketing, management, accounting and finance and other personnel.

The inability to acquire or develop this expertise or the loss of principal members of our management, board of directors, consultants, accounting and finance, sales, and scientific staff could impair the growth, if any, of our business.

Competition for experienced personnel from numerous companies, academic institutions and other research facilities may limit our ability to attract and retain qualified management, directors, consultants, and scientific personnel on acceptable terms.

Failure to attract and retain qualified personnel would inhibit our ability to maintain and pursue collaborations and develop our products and core technologies.

Personnel changes may disrupt our operations.

Hiring and training new personnel will entail costs and may divert our resources and attention from revenue-generating efforts.

In addition, we periodically engage consultants to assist us in our business and operations.

These consultants operate as independent contractors, and we therefore do not have as much control over their activities as we do over the activities of our employees.

Our directors and consultants may be affiliated with or employed by other parties, and some may have consulting or other advisory arrangements with other entities that may conflict or compete with their obligations to us.

We may be sued for product liability.

We or our current and future collaborators and licenses may be held liable if any product we or they develop, or any product which is made with the use or incorporation of, any of our technologies, causes injury or is found otherwise unsuitable or unsafe during product testing, manufacturing, marketing or sale.

These claims could be brought by various parties, including other companies who purchase products from our current and future collaborators and licenses or by end users of the products.

While we maintain product liability insurance, it may not fully cover all of our potential liabilities and our liability could in some cases exceed our total assets, which would have a material adverse effect on our business, results of operations, financial condition and cash flows, or cause us to go out of business.

Further, insurance coverage is expensive and may be difficult to obtain and may not be available to us or to our collaborators and licensees in the future on acceptable terms, or at all.

Inability to obtain sufficient insurance coverage at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products developed by us, or our collaborators and licensees.

Foreign currency fluctuations could adversely affect our results.

In the conduct of our business, in certain instances, we are required to receive payments or pay our obligations in currencies other than U.S.

Especially since a large portion of our research and development is done in Europe, our CROs and certain consultants request payments in Euros.

As a result, we are exposed to changes in currency exchange rates with respect to our business transactions denominated in non-US dollars.

Fluctuations in currency exchange rates have in the past and may in the future negatively affect our revenue, expenses and our financial position and results of operations as expressed in U.S.

Our ability to use our net operating loss carryforwards (

) to offset future taxable income may be subject to certain limitations.

In general, under Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change”

is subject to limitations on its ability to utilize its NOLs, to offset future taxable income.

If the Internal Revenue Service challenges our analysis that our existing NOLs are not subject to limitations arising from previous ownership changes, our ability to utilize NOLs could be limited by Section 382 of the Internal Revenue Code.

Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Internal Revenue Code.

Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations.

We may seek to expand our business through the acquisition of, investment in and strategic alliances with companies, technologies, products, and services.

If we are able to identify suitable acquisition, investment or strategic alliance targets, we may be unable to successfully negotiate their acquisition at a price or on terms and conditions acceptable to us.

We cannot assure you that, following an acquisition, investment or strategic alliance, we will achieve expected research and development results, anticipated synergies, revenues, specific net income or loss levels that justify such transaction or that the transaction will result in increased earnings, or reduced losses, for the combined company in any future period.

Moreover, we may need to raise additional funds through public or private debt or equity financing to acquire any businesses or to provide funding for such business, which would result in dilution for stockholders or the incurrence of indebtedness and may not be available on terms which would otherwise be acceptable to us.

We may not be able to oversee such investments nor operate acquired businesses profitably or otherwise implement our growth strategy successfully.

Despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.

System failures, accidents or security breaches could cause interruptions in our operations and could result in a material disruption of our research activities and business operations, in addition to possibly requiring substantial expenditures of resources to remedy.

To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and delays in our research efforts and financial reporting compliance, as well as significant increase in costs to recover or reproduce the data.

Risks Related to Dependence on Third Parties

We have a small number of research collaborations, and the nonperformance or loss of any collaboration could have a material adverse effect on our business.

Our R&D revenue is generated from a small number of research collaborations.

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which may not be available to the Company on commercially reasonable terms or at all.

As a result of the DuPont Transaction, we no longer own a research and development laboratory and we became dependent upon the performance and research capacity of a number of third-party contract research organizations and other service providers to conduct our research an d development projects, pre-clinical, CMC and cGMP manufacturing, fill and finish, and potential clinical trials, which include services and programs in connection with the modification and enhancement of the Company’s C1 - cell protein production platform  and to support our business development efforts for C1’s use in biopharmaceutical applications.

As a result of the DuPont Transaction, we no longer own a research and development laboratory and we became dependent upon the performance and research capacity of a number of third-party contract research organizations and other service providers to conduct our research and development projects, pre-clinical, CMC and cGMP manufacturing, fill and finish, and potential clinical trials, which include services and programs in connection with the modification and enhancement of the Company’s C1-cell protein production platform and to support our business development efforts for C1’s use in biopharmaceutical applications.

The licensing and service arrangements with these third parties are not guaranteed to be obtained, renewed or continued on reasonable terms, if at all.

The Company may be unable to obtain, maintain or expand its access to third party CROs and other service providers to conduct these services.

In addition, from time to time there are disagreements with such third parties that if not resolved can have a material adverse effect on our business, financial condition and operating results.

Failure to obtain, maintain and expand access to certain third party CROs and other service providers could have a material adverse impact on the Company’s research projects, financial condition and operating results. In addition, from time to time there are disagreements with such third parties that if not resolved can have a material adverse effect on our business, financial condition and operating results.

We are heavily dependent upon the availability and performance of third-party research organizations.

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collaborators and/or licensees could harm our business.

An important part of our strategy includes involvement in proprietary r esearch programs.

An important part of our strategy includes involvement in proprietary research programs.

We may pursue opportunities in the pharmaceutical field that could conflict with those of our collaborators and licensees.

Moreover, disagreements with Danisco, our current and/or future CROs, 

other service providers, 

collaborators or licensees could develop over rights to our intellectual property, over further licensing of our technologies to other parties in certain pharmaceutical fields, or for other reasons.

Any conflict with Danisco, our current and/or future CROs, other service providers, 

collaborators or licensees could reduce our ability to obtain future collaboration agreements and negatively impact our relationship with existing collaborators or licensees, which could reduce our revenues and profits.

Some of our current and/or future CROs, 

other service providers, 

collaborators and/or licensees could also become competitors in the future.

Our current and/or future CROs, other service providers, 

collaborators and/or licensees could develop competing technologies or products, preclude us from entering into collaborations or license agreements with their customers, fail to obtain timely regulatory approvals, terminate their agreements with us prematurely or fail to devote sufficient resources to the development and commercialization of their technology and products and processes.

Moreover, disagreements with Danisco, our current and/or future CROs, other service providers, collaborators or licensees could develop over rights to our intellectual property, over further licensing of our technologies to other parties in certain pharmaceutical fields, or for other reasons.

Any conflict with Danisco, our current and/or future CROs, other service providers, collaborators or licensees could reduce our ability to obtain future collaboration agreements and negatively impact our relationship with existing collaborators or licensees, which could reduce our revenues and profits.

Some of our current and/or future CROs, other service providers, collaborators and/or licensees could also become competitors in the future.

Our current and/or future CROs, other service providers, collaborators and/or licensees could develop competing technologies or products, preclude us from entering into collaborations or license agreements with their customers, fail to obtain timely regulatory approvals, terminate their agreements with us prematurely or fail to devote sufficient resources to the development and commercialization of their technology and products and processes.

Any of these developments could harm our technology development and value, product development efforts, revenue, profits and overall business.

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Potential future regulations limiting our ability to sell genetically engineered products could harm our business.

We, our current and future collaborators and licensees expect to develop biologic products using genetically engineered microorganisms (GMOs).

We, our current and future collaborators and licensees expect to develop biologic products using genetically engineered microorganisms (“GMOs”).

Products derived from GMOs may in some instances be subject to bans or additional regulation by federal, state, local and foreign government agencies.

These agencies may not allow us or our collaborators and licensees to produce and market products derived from GMOs in a timely manner or under technically or commercially feasible conditions.

Compliance with FDA, Environmental Protection Agency (EPA) and EU regulations could result in expenses, delays or other impediments to our product development programs or the commercialization of resulting products.

Compliance with FDA, Environmental Protection Agency (“EPA”) and EU regulations could result in expenses, delays or other impediments to our product development programs or the commercialization of resulting products.

The FDA currently applies the same regulatory standards to products made through genetic engineering as those applied to products developed through traditional methodologies.

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Public views on ethical and social issues may limit use of our technologies.

Our success will depend in part upon our ability, our current and future collaborators’ or licensees’ ability, to develop pharmaceutical and non-pharmaceutical products discovered, developed and manufactured through the C1- cell protein production platform, and our other technologies .

Our success will depend in part upon our ability, and our current and future collaborators’ or licensees’ ability, to develop pharmaceutical and non-pharmaceutical products discovered, developed and manufactured through the C1- cell protein production platform, and our other technologies .

Governmental authorities could, for social, ethical or other purposes, limit the use of genetic processes or prohibit the practice of using a modified C1 organism to produce biologic vaccines, drugs and other biologic products.

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Risks Relating to Intellectual Property

Inability to protect our intellectual property could harm our ability to compete.

Failure to protect our intellectual property 

and the intellectual property of certain third parties could harm our competitive position.

Our success will depend in part on our ability to obtain patents and on our and Danisco’s (as part of the DuPont Transaction, patents were assigned to Danisco) and our current and future collaborators’

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However, the patent positions of biotechnology companies, including our patent position, are generally uncertain and involve complex legal and factual questions.

We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our, and in certain instances the C1 patents assigned to Danisco, and our current and future collaborators and licensees proprietary technologies are covered by valid and enforceable patents or are effectively maintained as trade secrets.

proprietary technologies, are covered by valid and enforceable patents or are effectively maintained as trade secrets.

We intend, from time to time, to apply for patents covering both our technologies and our products, while at other times, we only maintain such knowledge as trade secrets without applying for patents, as we deem appropriate.

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patented technologies.

In addition, Danisco, our current and future collaborators, licenses, or other third parties may challenge or invalidate our patents, or our patents may fail to provide us with any competitive advantages.

In addition, Danisco, our current and future collaborators, licensees, or other third parties may challenge or invalidate our patents, or our patents may fail to provide us with any competitive advantages.

If any third party is able to gain intellectual property protections for technology similar to our own, they may be successful in blocking us and our licensees from using the C1-cell protein production platform or our other technologies and/or commercializing products derived from them.

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Our commercial success depends in part on neither infringing patents and proprietary rights of third parties, nor breaching any licenses that we have entered into with regard to our technologies and products.

Others have filed, and in the future are likely to file, patent applications covering genes or gene fragments, genetic elements, screening, gene expression and fermentation processes and other intellectual property that we may wish to utilize with the C1- cell protein production platform or our other technologies or produc ts and systems that are similar to those developed with its use.

Others have filed, and in the future are likely to file, patent applications covering genes or gene fragments, genetic elements, screening, gene expression and fermentation processes and other intellectual property that we may wish to utilize with the C1-cell protein production platform or our other technologies or products and systems that are similar to those developed with its use.

If these patent applications result in issued patents and we wish to use the claimed technology, we may need to obtain a license from the appropriate third party.

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Announcements of new technological innovations, patents or new products or processes by us, Danisco or our current or future collaborators, licensees and competitors;

Announcements by us, Danisco or our collaborators and licensees relating to our relationships or either of our relationships with other third parties;

Announcements by us, Danisco or our collaborators and licensees relating to our relationships with third parties;

Coverage of, or changes in financial estimates by us or securities and industry analysts;

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Developments in domestic and international governmental policy or regulations;

Announcements by us, Danisco, our current and future collaborators and licenses, or our competitors of significant acquisitions, divestures, strategic partnerships, license agreements, joint ventures or capital commitments;

Announcements by us, Danisco, our current and future collaborators and licensees, or our competitors of significant acquisitions, divestures, strategic partnerships, license agreements, joint ventures or capital commitments;

The position of our cash, cash equivalents and marketable securities;

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Expiration of or cancellations of our research contracts with current and future collaborators and/or licensees, which may not be renewed or replaced;

Setbacks or failures in our and our current and future collaborators and licensees research, development and commercialization efforts;

Setbacks or failures in our and our current and future collaborators’

and licensees’

research, development and commercialization efforts;

Setbacks, or delays in our research and development efforts to develop and produce biologics;

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General and industry specific economic conditions, which may affect our current and future collaborators’ and licensees’ R&D expenditures;

The adoption and acceptance of the C1- cell protein production platform and our other technologies by biopha rmaceutical and non-pharmaceutical companies and regulatory agencies;

The adoption and acceptance of the C1-cell protein production platform and our other technologies by biopharmaceutical and non-pharmaceutical companies and regulatory agencies;

The addition or loss of one or more of the collaborative partners, grants, research funding, or licensees we are working with to further develop and commercialize our technologies and products in the pharmaceutical industry;

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Scientific risk associated with emerging technologies such as the C1-cell protein production platform;

Failure to bring on the necessary research, CMO, CDMO and manufacturing capacity if required;

Uncertainty regarding the timing of research funding, grants or upfront license fees for new C1- cell protein production platform, our other technologies, 

collaborations, license agreements or expanded license agreements;

Failure to bring on the necessary research 

and manufacturing capacity, e.g., CRO, CMO (contract manufacturing organization), and CDMO (contract development and manufacturing organization), if required;

Uncertainty regarding the timing of research funding, grants or upfront license fees for new C1-cell protein production platform, our other technologies, collaborations, license agreements or expanded license agreements;

Delays or failure to receive upfront fees, milestones and royalties and other payments.

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We have never paid cash dividends on our stock and do not anticipate paying any dividends for the foreseeable future.

The payment of dividends on our shares, if ever, will depend on our earnings, financial condition and other business and economic factors deemed relevant for consideration by our board of directors.

The payment of dividends on our stock, if ever, will depend on our earnings, financial condition and other business and economic factors deemed relevant for consideration by our board of directors.

If we do not pay dividends, our stock may be less valuable because a return on investment will only occur if and to the extent that our stock price appreciates.

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These provisions may also limit our stockholders’

ability to approve transactions that they may deem to be in their best interests and discourage transactions in which our stockholders might otherwise receive a premium for their shares over the current market price.

Concentration of ownership among our existing officers, directors and principal stockholders may prevent other stockholders from influencing significant corporate decisions and depress our stock price.

Our executive officers, directors and principal stockholders (5% stockholders) together control approximately 30.6% of our 28,229,157 shares of outstanding common stock as of December 31, 2021.

Our executive officers, directors and principal stockholders (5% stockholders) together control approximately 34.5%  of our 28,563,100 shares of outstanding common stock as of 

December 31, 2022 .

Our Founder and Chief Executive Officer Mark Emalfarb, through the Mark A.

Emalfarb Trust U/A/D October 1, 1987, as amended (the “MAE Trust”) of which he is the trustee and beneficiary, owned approximately 15.6% of our outstanding common stock as of December 31, 2021.

Emalfarb Trust U/A/D October 1, 1987, as amended (the “MAE Trust”) of which he is the trustee and beneficiary, owned approximately 15.4%  of our outstanding common stock as of 

December 31, 2022 .

Further, the Francisco Trust U/A/D February 28, 1996 (the “Francisco Trust”), whose beneficiaries are the descendants and spouse of Mr.

Emalfarb, owned approximately 13.6% of our outstanding common stock as of December 31, 2021.

Emalfarb, owned approximately 12.4% of our outstanding common stock as of 

December 31, 2022 .

We have historically been partially controlled, managed and partially funded by Mr.

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Emalfarb and stockholders affiliated with Mr.

Emalfarb controlled approximately 28.2% of our outstanding common stock as of December 31, 2021.

Emalfarb may be able to control or significantly influence all matters requiring approval by our shareholders, including the election of directors and the approval of mergers or other business combination transactions.

Emalfarb controlled approximately 27.8%  of our outstanding common stock as of 

December 31, 2022 .

Emalfarb may be able to control or significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combination transactions.

The interests of Mr.

Emalfarb may not always coincide with the interests of other shareholders, and he may take actions that advance his personal interests and are contrary to the desires of our other shareholders.

Emalfarb may not always coincide with the interests of other stockholders, and he may take actions that advance his personal interests and are contrary to the desires of our other stockholders.

If our existing officers, directors and principal stockholders act together, they will be able to exert a significant degree of influence over our management and affairs and over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.

In addition, this concentration of ownership may delay or prevent a change in control and might affect the market price of our shares, even when a change may be in the best interests of all stockholders.

In addition, this concentration of ownership may delay or prevent a change in control and might affect the market price of our stock, even when a change may be in the best interests of all stockholders.

Certain of our principal stockholders may elect to increase their holdings of our common stock, which may have the impact of delaying or preventing a change of control.

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These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

As of December 31, 2021, there were 28,229,157 shares of our common stock outstanding.

Approximately 30.6% of these outstanding common shares are beneficially owned or controlled by our executive officers, directors and principal stockholders. 

As of December 31, 2022 , there were 28,563,100 shares of our common stock outstanding.

Approximately 

34.5%  of these outstanding common shares are beneficially owned or controlled by our executive officers, directors and principal stockholders. 

Our common stock has a relatively small public float.

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If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock prices may be more volatile.

General Risk Factors

We may need substantial additional capital in the future to fund our business.

Our future capital requirements may be substantial, particularly as we continue to further develop, engineer and optimize the C1- cell protein production platform  and our other proprietary technologies, products and processes for licensing for research and development, and commercialization of potential animal and human pharmaceutical products.

If the acquisition of additional funds is not possible or if we engage in future equity financings, dilution to our existing stockholders may result.

If we raise capital through debt financing, we may be subject to restrictive covenants that limit our ability to conduct our business.

We may not be able to raise funds on terms that are favorable to us, if at all.

Changes in global economic and financial markets may have a negative effect on our business.

Our business is subject to a variety of market forces including, but not limited to, domestic and international economic, political and social conditions.

Many of these forces are beyond our control.

Any change in market conditions that negatively impacts our operations or the demand of our current or prospective customers could adversely affect our business operations.

Changes in the global financial, pharmaceutical and biotech markets may make it difficult to accurately forecast operating results.

These changes have had, and may continue to have, a negative effect on our business, results of operations, financial condition and liquidity.

Significant outbreaks of contagious diseases, and other adverse public health developments, could have a material impact on our business operations, financial condition, and operating results.

The ongoing COVID-19 pandemic has significantly impacted the operation of business in the United States and Europe, where several of our key executive management members and our third-party contract research organizations are located.

The continuation of the COVID-19 pandemic and various governmental responses in the United States and Europe has adversely affected and may continue to adversely affect our business operations, including our ability to carry on business development activities, restrictions in business-related travel, delays or disruptions in our on-going research projects, and unavailability of the employees of the Company or third-party contract research organizations with whom we conduct business, due to illness or quarantines, among others.

As a result, our ability to fund through public or private equity offerings, debt financings, and through other means at acceptable terms, if at all, may be disrupted, in the event our financing needs for the foreseeable future are not able to be met by our existing balances of cash, cash equivalents and investments. In addition, the COVID-19 pandemic has posed and may continue to pose significant challenges for our supply chains, particularly as a result of mandatory shutdowns in locations where our products are manufactured or held for distribution. The extent to which COVID-19 could impact our business and research and development activities will depend on future developments, which are highly uncertain and cannot be predicted with confidence, and will depend on many factors, including the duration of the outbreak, the effect of travel restrictions and social distancing efforts in the United States and other co untries, the scope and length of business closures or business disruptions, and the actions taken by governments to contain and treat the disease.

As such, we cannot presently predict the scope and extent of any potential business shutdowns or disruptions.

The Company is currently working on several COVID-19 related vaccine and antibody opportunities.

However, there is no assurance that any of these opportunities will materialize or that the C1- cell protein production platform or any pr oduct expressed from C1 or any of the various other steps in a vaccine or drug development process will perform, provide benefits, obtain governmental safety and regulatory approvals, be registered or gain market acceptance.

In addition, our C1- cell protein production platform  has yet to be used to produce a vaccine, antibody or other biologic product that has entered the clinical trial phase, and we are competing with more experienced companies for grants or funding of this type.

As a result, there is no assurance that we will receive these grants or funding resulting from these proposals.

Our sales and operations are subject to the risks of doing business internationally.

Our sales and operations are subject to the risks of doing business internationally, as we have customers and partners located outside of the United States.

Conducting business internationally exposes us to a variety of risks, including:

changes in or interpretations of foreign regulations that may adversely affect our ability to sell our products, repatriate profits to the United States or operate our foreign-located facilities;

the imposition of tariffs;

the imposition of limitations on, or increase of, withholding and other taxes on remittances and other payments by foreign subsidiaries or joint ventures;

uncertainties relating to foreign laws, regulations and legal proceedings including tax, import/export, anti-corruption and exchange control laws;

the availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us;

economic or political instability in foreign countries;

difficulties associated with staffing and managing foreign operations;

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.

Our planned activities will require retention, and ongoing recruiting of additional expertise in specific areas applicable to our industries, technologies and products being developed.

Failure to attract and retain qualified personnel would inhibit our ability to maintain and pursue collaborations and develop our products and core technologies.

Personnel changes may disrupt our operations.

Hiring and training new personnel will entail costs and may divert our resources and attention from revenue-generating efforts.

In addition, we periodically engage consultants to assist us in our business and operations.

These consultants operate as independent contractors, and we therefore do not have as much control over their activities as we do over the activities of our employees.

We may be sued for product liability.

These claims could be brought by various parties, including other companies who purchase products from our current and future collaborators and licenses or by end users of the products.

Further, insurance coverage is expensive and may be difficult to obtain and may not be available to us or to our collaborators and licensees in the future on acceptable terms, or at all.

Foreign currency fluctuations could adversely affect our results.

In the conduct of our business, in certain instances, we are required to receive payments or pay our obligations in currencies other than U.S.

Especially since a large portion of our research and development is done in the EU and the CROs and certain consultants request payments in Euros.

As a result, we are exposed to changes in currency exchange rates with respect to our business transactions denominated in non-US dollars.

Fluctuations in currency exchange rates have in the past and may in the future negatively affect our revenue, expenses and our financial position and results of operations as expressed in U.S.

Our ability to use our net operating loss carryforwards ( “

NOLs ”

) to offset future taxable income may be subject to certain limitations.

In general, under Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change”

is subject to limitations on its ability to utilize its NOLs, to offset future taxable income.

Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Internal Revenue Code.

Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations.

We may seek to expand our business through the acquisition of, investment in and strategic alliances with companies, technologies, products, and services.

We may not be able to oversee such investment(s) nor operate acquired businesses profitably or otherwise implement our growth strategy successfully.

Unresolved Staff Comments

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