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Item 1A. Risk Factors

2025-03-05 compared with 2024-02-28 · 312 added, 229 removed, 1138 unchanged (32% of the section changed)

Our business is subject to numerous risks.

The following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in this Annual Report on Form 10-K and other filings with the Securities and Exchange Commission (the “SEC”), press releases, communications with investors, and oral statements.

Securities and Exchange Commission (the “SEC”), press releases, communications with investors, and oral statements.

Actual future results may differ materially from those anticipated in our forward-looking statements.

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As of December 31, 2024, we had an accumulated deficit of $1.47 billion.

We have financed our operations primarily through public offerings of our common stock, our collaboration with Bristol Myers Squibb Company (“BMS”) through its wholly owned subsidiary, Juno Therapeutics, Inc.

(“Juno Therapeutics”) , and payments under our former strategic alliance with Allergan Pharmaceuticals International Limited (together with its affiliates, “Allergan”).

We have financed our operations primarily through public offerings of our common stock, our research collaboration with Bristol Myers Squibb Company (“BMS”) through its wholly owned subsidiary, Juno Therapeutics, Inc.

(“Juno Therapeutics”) , payments under our former strategic alliance with Allergan Pharmaceuticals International Limited (together with its affiliates, “Allergan”), payments received under our purchase and sale agreement with DRI Healthcare Acquisitions LP, and payments under our license agreement with Vertex Pharmaceuticals, Inc.

We have devoted substantially all of our efforts to research and development.

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

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

The net losses we incur may fluctuate significantly from quarter to quarter.

We anticipate that our expenses will increase substantially if and as we:

• progress the clinical development of reni-cel to treat severe sickle cell disease (“SCD”) and transfusion-dependent beta-thalassemia (“TDT”);

• advance our in vivo programs as we progress towards preclinical proof-of-concept for an undisclosed in vivo indication in 2024;

• progress the preclinical development of our in vivo programs and seek to achieve our stated strategic priorities through 2027;

• continue our current research programs and our preclinical and clinical development of product candidates from our current research programs;

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• establish, expand or contract for commercial-scale current Good Manufacturing Practices (“cGMP”) manufacturing capabilities.

We continue to progress the clinical development of reni-cel, but it may be years, if ever, before we have a product candidate ready for commercialization.

In December 2024, we announced the discontinuation of the clinical development of our ex vivo renizgamglogene autogedtemcel (“reni-cel”) program to treat sickle cell disease (“SCD”) and transfusion-dependent beta thalassemia (“TDT”) and a related employee workforce reduction.

We expect to incur substantial costs as we complete the wind-down of various activities related to clinical development of reni-cel, including contract termination costs, impairment charges and non-cash charges, and may also incur additional costs not currently contemplated due to events that may occur as a result of or that are associated with the discontinuation.

We additionally expect to incur substantial costs related to the employee workforce reduction, primarily consisting of severance payments and employee benefit costs.

The charges related to these activities are expected to be substantially incurred through the end of June 2025.

The amounts and timing of these charges may be impacted by events that may occur as a result of, or that are associated with, these activities, which impacts could be material.

We may not experience the expected benefits of the employee workforce reduction or the decision to discontinue clinical development of reni-cel.

We expect that it will be many years, if ever, before we have a product candidate ready for commercialization.

To become and remain profitable, we must develop and eventually commercialize a medicine or medicines with significant market potential.

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We may never succeed in these activities and, even if we do, may never generate revenues that are significant or large enough to achieve profitability.

Other than reni-cel, we are currently only in the preclinical testing stages for our most advanced research programs.

We are currently only in the preclinical testing stages for our most advanced research programs.

If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

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In addition, if we obtain marketing approval for any product candidates we develop, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution to the extent that such sales, marketing, manufacturing, and distribution are not the responsibility of a collaborator.

We may also need to raise additional funds sooner if we choose to pursue additional indications or geographies for our product candidates or

otherwise expand more rapidly than we presently anticipate.

We may also need to raise additional funds sooner if we choose to pursue additional indications or geographies for our product candidates or otherwise expand more rapidly than we presently anticipate.

Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.

If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our research and product development programs or future commercialization efforts.

We expect that our existing cash, cash equivalents and marketable securities on December 31, 2023, together with the near-term annual license fees and the contingent upfront payment payable under our license agreement with Vertex Pharmaceuticals, Incorporated (“Vertex”), will fund our operating expenses and capital expenditure requirements into 2026.

As of December 31, 2023 , our right to contingent payments under our collaboration agreements with BMS and Vor Bio, as well as our contingent upfront payment and annual license fees with Vertex, are our only significant committed potential external source of funds.

If we are unable to raise capital when needed or on attractive terms,

we would be forced to delay, reduce, or eliminate our research and product development programs or future commercialization efforts.

We expect that our existing cash, cash equivalents and marketable securities on December 31, 2024, together with the retained portions of the payments payable under our license agreement with Vertex, will fund our operating expenses and capital expenditure requirements into the second quarter of 2027.

As of December 31, 2024 , our right to contingent payments under our collaboration agreements with BMS and our license agreement with Vor Bio, as well as the retained portions of the contingent upfront payment and other amounts under our license agreement with Vertex, are our only significant committed potential external source of funds.

Our future capital requirements will depend on many factors, including:

• the costs of progressing the clinical development of reni-cel to treat SCD and TDT;

• the scope, progress, results, and costs of clinical trials, drug discovery, preclinical development, laboratory testing, and clinical or natural history study trials for other product candidates we develop;

• the restructuring costs associated with the discontinuation of clinical development of reni-cel;

• the scope, progress, results, and costs of drug discovery, preclinical development, laboratory testing, and clinical or natural history study trials for the product candidates we may develop;

• the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights, and defending intellectual property-related claims;

• the costs, timing, and outcome of regulatory review of the product candidates we develop;

• the costs, timing, and outcome of regulatory review of the product candidates we may develop;

• the costs of establishing and maintaining a supply chain for the development and manufacture of our product candidates;

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We have limited significant committed potential external source of funds.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders may be materially diluted, and the terms of these securities may include liquidation or other preferences that adversely

affect the rights of our stockholders.

Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

Debt financing, if available, would result in increased fixed payment obligations and

may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

If we raise funds through additional collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates, or we may have to grant licenses on terms that may not be favorable to us.

Our limited operating history may make it difficult for our stockholders to evaluate the success of our business to date and to assess our future viability.

We have never successfully completed a clinical trial.

Following our discontinuation of the clinical development of reni-cel, we have become an early-stage company.

We were founded and commenced operations in the second half of 2013.

Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, acquiring and developing our technology, identifying potential product candidates, undertaking preclinical studies and initiating and conducting clinical trials.

Except for reni-cel, all of our research programs are still in the preclinical or research stage of development, and the risk of failure of all of our research programs is high.

All of our ongoing research programs are in the preclinical or research stage of development, and the risk of failure of all of our research programs is high.

We have not yet demonstrated an ability to successfully complete any clinical trials, including large-scale, pivotal clinical trials, obtain marketing approvals, manufacture a commercial-scale medicine, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful commercialization.

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Our relatively short history as an operating company makes any assessment of our future success or viability subject to significant uncertainty.

We will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving fields.

We will encounter risks and difficulties frequently experienced by other early-stage companies in rapidly evolving fields.

If we do not address these risks successfully, our business will suffer.

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Risks Related to Discovery, Development, and Commercialization

We are dependent on the success of our lead product candidate, reni-cel, which is in clinical development.

Clinical trials of product candidates may not be successful.

If we are unable to complete the clinical development of, obtain marketing approval for, or successfully commercialize this product candidate, either alone or with a collaborator, or if we experience significant delays in doing so, our business would be substantially harmed.

We have one ongoing clinical-stage program, reni-cel.

We currently have no products approved for sale and are investing a significant portion of our efforts and financial resources in the development of reni-cel for the treatment of SCD and TDT.

Our prospects are substantially dependent on our ability, or that of any future collaborator, to develop, obtain marketing approval for and successfully commercialize reni-cel.

Because our business is significantly dependent upon this one product candidate, any setback in the clinical development or the obtaining of regulatory approval for reni-cel would have a material adverse effect on our business and prospects.

The success of our reni-cel program will depend on several factors, including the following:

• successful enrollment and completion of our RUBY Phase 1/2/3 clinical trial of reni-cel for the treatment of SCD and our EdiTHAL Phase 1/2 clinical trial of reni-cel for the treatment of TDT, as well as any additional clinical trials of reni-cel that we undertake;

• safety, tolerability and efficacy profiles that are satisfactory to the FDA, or any comparable foreign regulatory authority for marketing approval;

• timely receipt of marketing approvals from applicable regulatory authorities;

• the performance of our future collaborators, if any;

• the extent of any required post-marketing approval commitments to applicable regulatory authorities;

• establishment and maintenance of supply arrangements with third-party raw materials suppliers and manufacturers for clinical development and, if approved, commercialization of our product candidates;

• establishment and maintenance of arrangements with third-party manufacturers to obtain finished drug products that are appropriately packaged for sale;

• successful development of our internal manufacturing processes and transfer to larger-scale facilities operated by either a contract manufacturing organization or by us;

• obtaining and maintaining patent, trade secret protection and regulatory exclusivity, both in the United States and internationally;

• protection of our rights in our intellectual property portfolio;

• successful launch of commercial sales following any marketing approval;

• a continued acceptable safety profile following any marketing approval;

• commercial acceptance by patients, the medical community and third-party payors following any marketing approval;

• our ability to compete with other therapies.

Many of these factors are beyond our control, including the outcome of clinical development, the regulatory submission process, potential threats to our intellectual property rights and the manufacturing, marketing and sales efforts of any future collaborator.

If we are unable to develop, receive marketing approval for and successfully commercialize reni-cel, on our own or with any future collaborator, or experience delays as a result of any of these or other factors, our business would be substantially harmed.

We intend to identify and develop product candidates based on a relatively novel genome editing technology, which makes it difficult to predict the time and cost of product candidate development.

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Our future success depends on the successful development of this relatively novel genome editing therapeutic approach.

In 2023, the first and, to date, only, approved therapeutic product that utilizes genome editing, including CRISPR technology, was approved in the United States and Europe.

It is difficult for us to predict the time and cost of product candidate development, and we cannot predict whether the application of our genome editing platform, or any similar or

competitive genome editing platforms, will result in the identification, development, and regulatory approval of any medicines.

In 2023, the first and, to date, only, approved therapeutic product that utilizes ex vivo CRISPR-based genome editing was approved in the United States and Europe.

To date, in the United States, the FDA has not approved any in vivo CRISPR-based genome editing therapeutic.

It is difficult for us to predict the time and cost of product candidate development, and we cannot predict whether the application of our genome editing platform, or any similar or competitive

genome editing platforms, will result in the identification, development, and regulatory approval of any medicines.

There can be no assurance that any development problems we experience in the future related to our genome editing platform or any of our research programs will not cause significant delays or unanticipated costs, or that such development problems can be solved.

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It has also established the Cellular, Tissue and Gene Therapies Advisory Committee to advise the Center for Biologics Evaluation and Research on its review of gene therapy products.

The FDA has also issued guidance documents, including a March 2022 draft guidance entitled “Human Gene Therapy Products Incorporating Human Genome Editing” outlining the agency’s current recommendations regarding information that should be provided in an Investigational New Drug application (“IND”) in order to assess the safety and quality of the investigational product.

Nonetheless, the FDA’s regulatory requirements governing genetic and cellular medicines continue to evolve and we will need to monitor and adapt to these requirements as they develop.

The same is true for activities in the European Union.

The FDA has also issued guidance documents, including a January 2024 final guidance entitled “Human Gene Therapy Products Incorporating Human Genome Editing” outlining the agency’s current recommendations regarding information that should be provided in an Investigational New Drug application (“IND”) in order to assess the safety and quality of the investigational product.

The FDA’s regulatory requirements governing genetic and cellular medicines continue to evolve and we will need to monitor and adapt to these requirements as they develop.

The same is true for activities in the European Union (the “EU”).

The EMA’s Committee for Advanced Therapies (“CAT”) is responsible for assessing the quality, safety and efficacy of advanced-therapy medicinal products.

The role of the CAT is to prepare a draft opinion on an application for marketing authorization for a genetic medicinal candidate that is submitted to the Committee for Human Medicinal Products (“CHMP”) before it adopts its final opinion.

In the European Union, the development and evaluation of a genetic medicinal product must be considered in the context of the relevant European Union guidelines.

In the EU, the development and evaluation of a genetic medicinal product must be considered in the context of the relevant European Union guidelines.

The EMA may issue new guidelines concerning the development and marketing authorization for genetic medicinal products and require that we comply with these new guidelines.

As a result, the procedures and standards applied to genetic medicines and cell therapy products may be applied to any product candidates we may develop, but that remains uncertain at this point.

These regulatory review committees and advisory groups and the new guidances they promulgate may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of any product candidates we may develop or lead to significant post-approval limitations or restrictions.

These regulatory review committees and advisory groups and the new guidance they promulgate may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of any product candidates we may develop or lead to significant post-approval limitations or restrictions.

As we advance any product candidates we may develop, we will be required to consult with these regulatory and advisory groups and comply with applicable guidelines.

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Conversely, the FDA can put an IND on a clinical hold even if the RAC has provided a favorable review or an exemption from in-depth, public review.

If we were to engage an NIH-funded institution to conduct a clinical trial, that institution’s institutional biosafety committee as well as its institutional review board (“IRB”) would need to review the proposed clinical trial to assess the safety of the trial.

If we were to engage a U.S.

National Institutes of Health (“NIH”)-funded institution to conduct a clinical trial, that institution’s institutional biosafety committee as well as its institutional review board (“IRB”) would need to review the proposed clinical trial to assess the safety of the trial.

In addition, adverse developments in clinical trials of genetic medicine products conducted by others may cause the FDA or other oversight bodies to change the requirements for approval of any product candidates we may develop.

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The success of our business depends primarily upon our ability to identify, develop, and commercialize products based on our genome editing platform.

Other than reni-cel, all of our ongoing product development programs are still in the preclinical or research stage of development.

All of our ongoing product development programs are in the preclinical or research stage of development.

Our research programs, including those subject to our collaboration with BMS, may fail to identify potential product candidates for clinical development for a number of reasons.

Our research methodology may be unsuccessful in identifying potential product candidates, or our potential product candidates may be shown to have smaller patient populations than initially estimated or may have harmful side effects or may have other characteristics that may make the products impractical to manufacture or commercialize, or unlikely to receive marketing approval.

Our research methodology may be unsuccessful in identifying potential product candidates, or our potential product candidates may be shown to have smaller patient populations than initially estimated or may have harmful side effects or may have other characteristics or unforeseeable consequences that may make the products impractical to manufacture or commercialize, or unlikely to receive marketing approval.

The occurrence of these events may force us to abandon our development efforts for a program or programs, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

For example, we recently decided to discontinue clinical development of reni-cel to focus on our in vivo preclinical programs.

Research programs to identify new product candidates require substantial technical, financial, and human resources.

We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful, as was the case with our Phase 1/2 BRILLIANCE trial of EDIT-101 to treat Leber congenital amaurosis, for which the identified responder patient population was determined to be too small to progress the program independently.

We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.

For example, in December 2024, we announced the discontinuation of our Phase 1/2/3 RUBY trial of reni-cel for SCD and our Phase 1/2 EdiTHAL trial of reni-cel for TDT, following an extensive search to identify a commercial partner.

Though reni-cel had demonstrated a favorable safety profile and promising preliminary efficacy, we determined not to pursue commercialization for reni-cel in order to optimize our cost structure and accelerate our in vivo pipeline development.

The genome editing field is relatively new and is evolving rapidly.

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Any of these factors could reduce or eliminate our commercial opportunity, and could have a material adverse effect on our business, financial condition, results of operations, and prospects.

Except for reni-cel, all of our product development programs are at the preclinical or research stage.

All of our ongoing product development programs are at the preclinical or research stage.

Preclinical testing and clinical trials of product candidates may not be successful.

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Our ability to generate product revenues, which we do not expect will occur for many years, if ever, will depend heavily on our successful development and eventual commercialization of product candidates that we have identified or may identify in the future.

Our research programs, including any with collaborators, may fail to identify potential product candidates for clinical development for a number of reasons, or our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the product candidates impractical to manufacture, unmarketable, or unlikely to receive marketing approval.

Any potential product candidates we identify will require preclinical and clinical activities and studies, regulatory review and approval in each jurisdiction in which we intend to market the products, substantial investment, establishing manufacturing capabilities, access to sufficient commercial manufacturing capacity and significant marketing efforts before we can generate any revenue from product sales.

The success of product candidates we may identify and develop will depend on many factors, including the following:

• sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials;

• successful completion of preclinical studies and IND‑enabling studies;

• successful enrollment in, and completion of, clinical trials;

• timely receipt of marketing approvals from applicable regulatory authorities;

• the performance of our future collaborators, if any;

• the extent of any required post-marketing approval commitments to applicable regulatory authorities;

• establishment and maintenance of arrangements with third-party manufacturers to obtain finished drug products that are appropriately packaged for sale;

• successful development of our internal manufacturing processes and transfer to larger-scale facilities operated by either a contract manufacturing organization (“CMO”) or by us;

• obtaining and maintaining patent, trade secret protection and regulatory exclusivity, both in the United States and internationally;

• protection of our rights in our intellectual property portfolio;

• successful launch of commercial sales following any marketing approval;

• a continued acceptable safety profile following any marketing approval;

• commercial acceptance by patients, the medical community and third-party payors following any marketing approval;

• our ability to compete with other therapies.

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize any product candidates we may develop, which would materially harm our business.

We currently generate no revenue from sales of any product and we may never be able to develop or commercialize a marketable product.

In addition, if any product candidates encounter safety or efficacy problems, development delays, regulatory issues or other problems, our development plans and business could be significantly harmed.

For the reasons described above, among others, regulatory authorities, particularly the FDA, have requested, and may request in the future, additional preclinical studies for genome editing products, such as additional studies related to toxicology, biodistribution or reproductive health, and/or preclinical studies earlier in clinical development compared to other therapeutic modalities.

It is possible that the FDA may impose requirements that result in a delay of any of our programs or their regulatory approval of our product candidates.

If we are unable to complete any required studies satisfactorily, the FDA or other regulatory authorities could require that we exclude certain patient populations from clinical studies, place our clinical studies on hold, or require us to cease further clinical studies or deny approval of such product candidates.

Further, competitors that are developing ex vivo or in vivo products with similar technology may experience problems with their product candidates or programs that could in turn cause us to identify problems with our product candidates and programs, or cause the FDA or other regulatory authorities to impose additional requirements, that could cause us to delay or pause development of our product candidates.

Any of these occurrences may harm our ability to identify and develop product candidates, and may harm our business, financial condition, results of operations and prospects significantly.

We cannot guarantee that the FDA or other regulatory authorities will not change their requirements in the future or agree with our proposed regulatory strategies and filings.

If serious adverse events, undesirable side effects, or unexpected characteristics are identified during the development of any product candidates we develop, we may need to abandon or limit our further clinical development of those product candidates.

We have limited experience in evaluating product candidates in human clinical trials, having dosed our first patient in a clinical trial in 2020, and our proposed delivery modes, combined with CRISPR technology, have a limited history of being tested clinically.

It is impossible to predict when or if any product candidates we develop will ultimately prove safe in humans, including reni-cel.

It is impossible to predict when or if any product candidates we develop will ultimately prove safe in humans.

In the genomic medicine field, there have been several significant adverse events from gene therapy treatments in the past, including reported cases of leukemia and death.

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For example, off-target cuts could lead to disruption of a gene or a genetic regulatory sequence at an unintended site in the DNA.

We cannot be certain that off-target editing will not occur in any of our clinical studies.

We cannot be certain that off-target editing will not occur in any of our future clinical studies.

There is also the potential risk of delayed adverse events following exposure to genome editing therapy due to the potential for persistent biological activity of the genetic material or other components of products used to carry the genetic material.

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If any of the product candidates we develop or the delivery modes we rely on cause undesirable side effects, it could delay or prevent their regulatory approval, limit the commercial potential, or result in significant negative consequences following any potential marketing approval.

Our product candidates that we are testing or may test in clinical trials, including reni-cel, or that are developed may be associated with off-target editing or other serious adverse events, undesirable side effects, or unexpected characteristics.

Product candidates we develop may be associated with off-target editing or other serious adverse events, undesirable side effects, or unexpected characteristics.

In addition to serious adverse events or side effects caused by any product candidate we develop and test, the administration process or related procedures also can cause undesirable side effects.

If any such events occur, our clinical trials could be suspended or terminated.

If we are unable to demonstrate that such adverse events were caused by factors other than our product candidate, the FDA, the EMA or other regulatory authorities could order us to cease further development of, or deny approval of, any product candidates we are able to develop for any or all targeted indications.

develop for any or all targeted indications.

Even if we are able to demonstrate that all future serious adverse events are not product-related, such occurrences could affect patient recruitment or the ability of enrolled patients to complete the trial.

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Any of these events could prevent us from achieving or maintaining market acceptance of any product candidates we may identify and develop and could have a material adverse effect on our business, financial condition, results of operations, and prospects.

We have not extensively tested any of our proposed delivery modes and product candidates in clinical trials.

We have not extensively tested any of our proposed delivery modes in clinical trials and have not begun clinical trials in any of our current development programs.

Our proposed delivery modes, combined with our product candidates, have a limited history of being evaluated in human clinical trials.

Any of our product candidates, including reni-cel, may fail to show the desired safety and efficacy in later stages of clinical development despite having successfully advanced through initial clinical trials.

Any of our product candidates may fail to show the desired safety and efficacy in later stages of clinical development despite having successfully advanced through initial clinical trials.

There is a high failure rate for drugs and biologics proceeding through clinical trials.

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Any such adverse events may cause us to delay, limit, or terminate planned clinical trials, any of which would have a material adverse effect on our business, financial condition, results of operations, and prospects.

Because we are developing product candidates for the treatment of diseases in which there is little clinical experience using new technologies, there is increased risk that the FDA, the EMA, or other regulatory authorities may not consider the endpoints of our clinical trials to provide clinically meaningful results and that these results may be difficult to analyze.

Because we are developing product candidates for the treatment of diseases in which there is little clinical experience using new technologies, there is increased risk that the FDA, the EMA, or other regulatory authorities may not consider the endpoints of our future clinical trials to provide clinically meaningful results and that these results may be difficult to analyze.

During the regulatory review process, we will need to identify success criteria and endpoints such that the FDA, the EMA, or other regulatory authorities will be able to determine the clinical efficacy and safety profile of our product candidates.

As we are seeking to identify and develop product candidates to treat diseases in which there is little clinical experience using new technologies, there is heightened risk that the FDA, the EMA, or other regulatory authorities may not consider the clinical trial endpoints that we propose to provide clinically meaningful results.

Even if the FDA does find our success criteria to be sufficiently validated and clinically meaningful, we may not achieve the pre-specified endpoints to a degree of statistical significance.

Even if the FDA does find our

success criteria to be sufficiently validated and clinically meaningful, we may not achieve the pre-specified endpoints to a degree of statistical significance.

This may be a particularly significant risk for many of the genetically defined diseases for which we plan to develop product candidates because many of these diseases have small patient populations, and designing and executing a rigorous clinical trial with appropriate statistical power is more difficult than with diseases that have larger patient populations.

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• our third-party contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

• regulators, IRBs, or IECs requiring that we or our investigators suspend or terminate clinical research or clinical trials of any product candidates we develop for various reasons, including noncompliance with regulatory requirements, a finding of undesirable side effects or other unexpected characteristics, or that the

participants are being exposed to unacceptable health risks or after an inspection of our clinical trial operations or trial sites;

• the supply or quality of any product candidates we develop or other materials necessary to conduct clinical trials of any product candidates we develop being insufficient or inadequate, including as a result of delays in the testing, validation, manufacturing, and delivery of any product candidates we develop to the clinical sites by us or by third parties with whom we have contracted to perform certain of those functions;

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Moreover, some of our competitors may have approved products or ongoing clinical trials for product candidates that would treat the same indications as any product candidates we develop, and patients who would otherwise be eligible for our clinical trials may instead select the approved product or enroll in clinical trials of our competitors’ product candidates.

Both Vertex and

bluebird bio, Inc.

recently received regulatory approval for medicines for the treatment of sickle cell disease, the same indication as reni-cel.

Eligible patients for our ongoing RUBY trial may select one of these approved medicines rather than enroll in our trial, and any negative publicity resulting from these approved medicines may impact our ability to recruit patients.

Patient enrollment is also affected by other factors, including:

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• proximity and availability of clinical trial sites for prospective patients;

• negative publicity resulting from medicines approved by our competitors.

The eligibility criteria of our clinical trials further limits the pool of available trial participants.

Additionally, the process of finding and diagnosing patients may prove costly.

Future pandemics or other global health crises may impact our ability to timely enroll trial participants and conduct our studies, as the COVID-19 pandemic did.

Future pandemics or other global health crises may impact our ability to timely enroll trial participants and conduct our studies.

Our ability to successfully initiate, enroll, and complete a clinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including:

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Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable medicines.

If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing, or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

retain sole development and commercialization rights to such product candidate.

Any such event could have a material adverse effect on our business, financial condition, results of operations, and prospects.

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Public attitudes may be influenced by claims that genome editing is unsafe, unethical, or immoral, and, consequently, our products may not gain the acceptance of the public or the medical community.

Adverse public attitudes may adversely impact our ability to enroll clinical trials.

Adverse public attitudes may adversely impact our ability to enroll eligible patients in clinical trials.

Moreover, our success will depend upon physicians prescribing, and their patients being willing to receive, treatments that involve the use of product candidates we develop in lieu of, or in addition to, existing treatments with which they are already familiar and for which greater clinical data may be available.

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FDA ban on such activity.

Prohibitions are also in place in the United Kingdom, across most of Europe, in China, and many other countries around the world.

In the United States, the NIH has announced that it would not fund any use of genome editing technologies in human embryos, noting that there are multiple existing legislative and regulatory prohibitions against such work, including the Dickey-Wicker Amendment, which prohibits the use of appropriated funds for the creation of human embryos for research purposes or for research in which human embryos are destroyed.

Laws in the United Kingdom prohibit genetically modified embryos from being implanted into women, but embryos can be altered in research labs under license from the Human Fertilisation and Embryology Authority.

Prohibitions are also in place in the United Kingdom (the “UK”), across most of Europe, in China, and many other countries around the world.

In the United States, the NIH has announced that it would not fund any use of genome editing technologies in human embryos, noting that there are multiple

existing legislative and regulatory prohibitions against such work, including the Dickey-Wicker Amendment, which prohibits the use of appropriated funds for the creation of human embryos for research purposes or for research in which human embryos are destroyed.

Laws in the UK prohibit genetically modified embryos from being implanted into women, but embryos can be altered in research labs under license from the Human Fertilisation and Embryology Authority.

Basic research on embryos is more tightly controlled in many other European countries.

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In addition, we may not be successful in entering into arrangements with third parties to commercialize our product candidates or may be unable to do so on terms that are favorable to us.

We may have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell

and market our medicines effectively.

We may have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our medicines effectively.

If we do not establish commercialization capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates.

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We will face competition with respect to any of our product candidates now and in the future from major pharmaceutical companies, specialty pharmaceutical companies, and biotechnology companies worldwide.

Potential competitors also include academic institutions, government agencies, and other public and private research organizations that conduct research, seek patent protection, and establish collaborative arrangements for research, development, manufacturing, and commercialization.

Potential competitors also include academic institutions, government agencies, and other public and private research organizations

that conduct research, seek patent protection, and establish collaborative arrangements for research, development, manufacturing, and commercialization.

There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we have research programs.

For hemoglobinopathies, these companies include Beam Therapeutics, bluebird bio, CRISPR Therapeutics, Ensoma, Kamau Therapeutics, Orna Therapeutics, Sanofi, Scribe Therapeutics, Tessera Therapeutics, Vertex, and Yoltech Therapeutics.

Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to our approach, and others are based on entirely different approaches.

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The FDA also approved in late 2023 bluebird bio’s LYFGENIA TM (lovotibeglogene autotemcel), a cell-based gene therapy, for the treatment of SCD.

If reni-cel is approved for marketing, these therapies will be directly competitive with reni-cel, our Cas12a genome-edited medicine for the treatment of SCD and TDT.

Our platform and product focus is the development of therapies using CRISPR technology specifically for genome editing.

Other companies developing CRISPR Cas9 or Cas12a technology or therapies using CRISPR Cas9 or Cas12a technology include Artisan Bio, AvenCell Therapeutics, Caribou Biosciences, CRISPR Therapeutics, EdiGene, ERS Genomics, Excision Biotherapeutics, Inscripta, Intellia Therapeutics, Kamau Therapeutics, Sigma-Aldrich, ToolGen, and Vertex Pharmaceuticals.

Other companies developing CRISPR Cas9 or Cas12a technology or therapies using CRISPR Cas9 or Cas12a technology include AvenCell Therapeutics, Caribou Biosciences, Cellestic, CRISPR Therapeutics, EdiGene, eGenesis, ERS Genomics, Excision Biotherapeutics, Inscripta, Intellia Therapeutics, Kamau Therapeutics, Sigma-Aldrich, ToolGen, and Yoltech Therapeutics.

In addition, there have been and may continue to be discoveries of new CRISPR-based gene editing technologies.

There are additional companies developing therapies using related CRISPR genome editing technologies, including other CRISPR nucleases, base editing, prime editing and gene writing.

These companies include Amber Bio, Arbor Biotechnologies, Beam Therapeutics, Chroma Medicine, Emendo Biotherapeutics, Epic Bio, Integra Therapeutics, KSQ Therapeutics, Locus Biosciences, Mammoth Biosciences, Metagenomi, Poseida Therapeutics, Prime Medicine, Scribe Therapeutics, Tessera Therapeutics, Tome Biosciences, Tune Therapeutics, and Verve Therapeutics.

These companies include Amber Bio, Arbor Biotechnologies, Beam Therapeutics, Eligo Biosciences, Emendo Biotherapeutics, Ensoma, Epic Bio, Integra Therapeutics, KSQ Therapeutics, Locus Biosciences, Mammoth Biosciences, Metagenomi, nChroma Bio, Poseida Therapeutics, Prime Medicine, Profluent Bio, Scribe Therapeutics, Tessera Therapeutics, Tune Therapeutics, and Verve Therapeutics.

There are also companies developing therapies using transcription activator-like effector nucleases, meganucleases, Mega-TALs and zinc finger nucleases.

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In addition to competition from other genome editing therapies, gene therapies or cell medicine therapies, any products that we may develop may also face competition from other types of therapies, such as small molecule, antibody, protein, oligonucleotide, or ribonucleic acid therapies.

For hemoglobinopathies, these companies include Acceleron Pharma, Agios Pharmaceuticals, Global Blood Therapeutics, Novartis Pharmaceuticals, and Vertex.

For hemoglobinopathies, these companies include Acceleron Pharma, Agios Pharmaceuticals, Novartis Pharmaceuticals, Pfizer, and Vertex.

Many of our competitors may have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products than we do.

Mergers and acquisitions in the pharmaceutical, biotechnology, and gene therapy industries may result in even more resources being concentrated among a smaller number of our competitors.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

Smaller or other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

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

For example, the Inflation Reduction Act of 2022 (the “IRA”) includes several measures intended to lower the cost of prescription drugs and related healthcare reforms, including limits on price increases and subjecting an escalating number of drugs to annual price negotiations with The Centers for Medicare & Medicaid Services.

We cannot be sure whether additional legislation or rulemaking related to the IRA will be issued or enacted, or what impact, if any, such changes will have on the profitability of any of our drug candidates, if approved for commercial use, in the future.

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If we are unable to obtain adequate levels of reimbursement, our ability to successfully market and sell any such product candidates will be adversely affected.

The manner and level at which

reimbursement is provided for services related to any of our product candidates, e.g., for administration of our product to patients, is also important.

The manner and level at which reimbursement is provided for services related to any of our product candidates, e.g., for administration of our product to patients, is also important.

Inadequate reimbursement for such services may lead to physician resistance and adversely affect our ability to market or sell our products.

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Payors may not be able or willing to adopt such new models, and patients may be unable to afford that portion of the cost that such models may require them to bear.

If we determine such new models are necessary but we are unsuccessful in developing them, or if such models are not adopted by payors, our business, financial condition, results of operations, and prospects could be adversely affected.

If we determine such new models are

necessary but we are unsuccessful in developing them, or if such models are not adopted by payors, our business, financial condition, results of operations, and prospects could be adversely affected.

We expect the cost of a single administration of our genomic medicine products to be substantial, when and if they achieve regulatory approval.

For example, Vertex has announced that the list price for its recently approved Cas9 genome-edited cell medicine for the treatment of SCD and TDT is $2.2 million, while bluebird bio’s recently approved cell-based gene therapy for SCD has a list price of $3.1 million.

For example, the list price for Vertex’s Cas9 genome-edited cell medicine for the treatment of SCD and TDT is $2.2 million, while bluebird bio’s cell-based gene therapy for SCD has a list price of $3.1 million.

We expect that coverage and reimbursement by government and private payors will be essential for most patients to be able to afford these treatments.

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Slight deviations in the manufacturing process, including those affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures or product recalls.

Lot failures or

product recalls could cause us to delay clinical trials, including the ongoing clinical trials for reni-cel, or product launches, which could be costly to us and otherwise harm our business, financial condition, results of operations, and prospects.

Lot failures or product recalls could cause us to delay clinical trials or product launches, which could be costly to us and otherwise harm our business, financial condition, results of operations, and prospects.

We also may encounter problems hiring and retaining the experienced scientific, quality control, and manufacturing personnel needed to manage our manufacturing process, which could result in delays in our production or difficulties in maintaining compliance with applicable regulatory requirements.

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Any problems in our manufacturing process or the facilities with which we contract could make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions, which could limit our access to additional attractive development programs.

Problems in third-party manufacturing process or facilities also could restrict our ability to ensure sufficient clinical material for any clinical trials we may be conducting or are planning to conduct and meet market demand for any products we commercialize.

Problems in third-party manufacturing process or facilities also could restrict our ability to ensure sufficient clinical material for any clinical trials we are planning to conduct and meet market demand for any products we commercialize.

Risks Related to Our Dependence on Third Parties

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We cannot predict the success of any collaboration that we enter into.

Further, despite a favorable safety profile and promising preliminary efficacy data, we may have difficulties identifying a commercial partner, which was the case for our former lead candidate reni-cel.

Collaborations involving our research programs or any of our product candidates and alliance arrangements we may enter into under which our research programs or product candidates may be involved pose the following risks to us:

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We may also be restricted under existing collaboration agreements from entering into future agreements on certain terms with potential collaborators or allies.

For example, under our amended and restated collaboration with BMS, we may not use directly or indirectly, or license others to use, genome editing technology in connection with any research, development, manufacture, commercialization or other exploration of certain T cells, subject to certain exceptions, as more fully described in “Part I—Business—Our Collaborations and Licensing Strategy” of this Annual Report on Form 10-K.

For example, under our amended and restated collaboration with BMS, we may not use directly or indirectly, or license others to use, genome editing technology in connection with any research, development, manufacture, commercialization or other exploration of certain T cells, subject to certain exceptions, as more fully described in Part I, Item 1 “Business—Our Collaborations and Licensing Strategy” of this Annual Report on Form 10-K.

Collaborations are also complex and time-consuming to negotiate and document.

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We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all.

If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense.

If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, reduce or

delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense.

If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all.

If we do not have sufficient funds, we may not be able to further develop product candidates or bring them to market and generate product revenue.

We expect to rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research, or testing.

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

We expect to rely on third parties to conduct our future clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research, or testing.

We currently rely and expect to continue to rely on third parties to conduct some aspects of our research and preclinical testing.

We previously relied and expect to rely in the future on third parties, such as CROs, clinical data management organizations, medical institutions, and clinical investigators, to conduct our future clinical trials.

Any of these third parties may terminate their engagements with us at any time.

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Any performance failure on the part of our distributors could delay clinical development or marketing approval of any product candidates we develop or commercialization of our medicines, producing additional losses and depriving us of potential product revenue.

We contract with third parties for the manufacture of materials for our research programs, preclinical studies and clinical trials and expect to continue to do so and for commercialization of any product candidates that we develop.

We contract with third parties for the manufacture of materials for our research programs and preclinical studies and previously did so and expect to do so in the future for clinical trials and for commercialization of any product candidates that we develop.

This reliance on third parties increases the risk that we will not have sufficient quantities of such materials, product candidates, or any medicines that we may develop and commercialize, or that such supply will not be available to us at an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts.

We have a limited ability to manufacture materials for our research programs and preclinical studies and we do not operate any significant manufacturing facilities.

While we currently perform some manufacturing for our internal programs, as well as cell processing for reni-cel, we primarily rely on third-party contract manufacturing organizations (“CMOs”) for the manufacture of our other materials for preclinical studies and clinical trials and expect to continue to do so and for commercial supply of any product candidates that we develop and for which we or our collaborators obtain marketing approval.

While we currently perform some manufacturing for our internal programs, and previously performed cell processing for reni-cel, we primarily rely on third-party CMOs for the manufacture of our other materials for preclinical studies and expect to continue to do so for future clinical trials and for commercial supply of any product candidates that we develop and for which we or our collaborators obtain marketing approval.

If we were to experience an unexpected loss or interruption of supply for any of our product candidates, whether as a result of manufacturing, supply or storage issues or otherwise, we could experience delays, disruptions, suspensions or terminations of, or be required to restart or repeat, any pending or ongoing clinical trials.

Further, our product candidates are composed of multiple components and require specialized formulations for which scale-up and manufacturing could be difficult.

Further, our product candidates may be composed of multiple components and require specialized formulations for which scale-up and manufacturing could be difficult.

We have limited experience in such scale-up and manufacturing requiring us to depend on a limited number of third parties, who may not be able to deliver in a timely manner, or at all.

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Such third party would have full rights to the patent rights that are the subject of such licenses, which could impact our competitive position and enable a third party to commercialize products similar to our future product candidates and technology.

The terms of these license agreements are described more fully under “Part I—Business—Our Collaborations and Licensing Strategy” in this Annual Report.

The terms of these license agreements are described more fully under Part I, Item 1 “Business—Our Collaborations and Licensing Strategy” in this Annual Report on Form 10-K.

In addition, we may not have the right to control the preparation, filing, prosecution, maintenance, enforcement, and defense of patents and patent applications covering the technology that we license from third parties.

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patent application that is co-owned by the University of California, the University of Vienna, and Emmanuelle Charpentier (collectively referred to “CVC”).

An interference is a proceeding in United States Patent and Trademark Office (the “USPTO”) before the Patent Trial and Appeal Board of the USPTO (“PTAB”) to determine priority of invention of the subject matter of patent claims filed by different parties.

An interference is a proceeding in USPTO before the Patent Trial and Appeal Board of the USPTO (“PTAB”) to determine priority of invention of the subject matter of patent claims filed by different parties.

In this first interference, the PTAB made a judgment of no interference-in-fact in favor of the Broad, which was upheld on appeal.

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This decision has been appealed by CVC and the Broad has cross-appealed.

Oral argument in the appeals occurred on May 7, 2024.

It is uncertain when or in what manner the U.S.

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patent that we have in-licensed from Broad, which is involved in certain of the interferences.

The request for ex parte re-examination was granted on May 9, 2016 thereby initiating a re-examination procedure between the USPTO and The Broad Institute, acting on behalf of itself and MIT.

The request for ex parte re-examination was granted on May 9, 2016 thereby initiating a re-examination procedure between the USPTO and Broad, acting on behalf of itself and MIT.

The PTAB has suspended the re-examination noting that it has jurisdiction over any file that involves a patent involved in an interference.

It is uncertain when the PTAB will lift the suspension.

If The Broad Institute is unsuccessful during the re-examination, the patent in question may be revoked or narrowed, which could have a material adverse effect on the scope of our rights under such patent.

If Broad is unsuccessful during the re-examination, the patent in question may be revoked or narrowed, which could have a material adverse effect on the scope of our rights under such patent.

We or our licensors may also be subject to claims that former employees, collaborators, or other third parties have an interest in our owned or in-licensed patents or patent applications, or other intellectual property rights as an inventor or co-inventor.

If we are unable to obtain an exclusive license to any such third-party co-owners’ interest in such patents, patent applications or other intellectual property rights, such co-owners may be able to license their rights to other third

parties, including our competitors.

In addition, we may need the cooperation of any such co-owners to enforce any patents, including any patents that issue from patent applications, against third parties, and such cooperation may not be provided to us.

In addition, we may need the cooperation of any such co-owners to enforce any patents,

including any patents that issue from patent applications, against third parties, and such cooperation may not be provided to us.

Any of the foregoing could have a material adverse effect on the conduct of our business, financial condition, results of operations, and prospects.

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The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents and our intellectual property rights or marketing of competing products in violation of our intellectual property and proprietary rights generally.

Proceedings to

enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing, and could provoke third parties to assert claims against us.

Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert

our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing, and could provoke third parties to assert claims against us.

We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful.

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However, we may be unable to secure such licenses or otherwise acquire or in-license any compositions, methods of use, processes, or other intellectual property rights from third parties that we identify as necessary for our CRISPR technology and product candidates we develop.

For example, certain methods for editing cells, guide RNA modifications and delivery modes, including certain adeno-associated virus vector technologies, that we are evaluating for us for use are covered by patents held by third parties.

For example, certain methods for editing cells, guide RNA modifications and delivery modes that we are evaluating for use are covered by patents held by third parties.

If we are unable to successfully obtain rights to required third party intellectual rights or maintain the existing intellectual property rights we have, we may have to abandon development of the relevant program or product candidate, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

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The intellectual property landscape around genome editing technology, including CRISPR, is highly dynamic, and third parties may initiate legal proceedings alleging that we are infringing, misappropriating, or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

The field of genome editing, especially in the area of CRISPR technology, is still in its infancy, and no such products have reached the market.

The field of genome editing, especially in the area of CRISPR technology, is still in its infancy, and only one CRISPR-based product has reached the market.

Due to the intense research and development that is taking place by several companies, including us and our competitors, in this field, the intellectual property landscape is in flux, and it may remain uncertain for the coming years.

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Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture, market, and sell any product candidates that we develop and use our proprietary technologies without infringing, misappropriating, or otherwise violating the intellectual property and proprietary rights of third parties.

We are subject to and may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our technology and any product candidates we develop, including interference, re-examination, post-grant review, inter partes review, and derivation proceedings before the USPTO and similar proceedings in foreign jurisdictions such as oppositions before the EPO.

Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit.

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If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third party, our competitive position would be materially and adversely harmed.

If we do not obtain patent term extension and data exclusivity for any product candidates we develop, our business may be materially harmed.

Depending upon the timing, duration and specifics of any FDA marketing approval of any product candidates we develop, one or more of our U.S.

patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Action of 1984 (the “Hatch-Waxman Amendments”).

The Hatch-Waxman Amendments permit a patent extension term of up to five years as compensation for patent term lost during the FDA regulatory review process.

A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended.

However, we may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents, or otherwise failing to satisfy applicable requirements.

Moreover, the applicable time period or the scope of patent protection afforded could be less than we request.

If we are unable to obtain patent term extension or term of any such extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our business, financial condition, results of operations, and prospects could be materially harmed.

Risks Related to Regulatory Approval and Other Legal Compliance Matters

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These plans are meant to encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA regulated products.

Further, on January 31, 2022, the new Clinical Trials Regulation (EU) No 536/2014 became applicable in the European Union (“EU”) and replaced the prior Clinical Trials Directive 2001/20/EC.

The new regulation aims at simplifying and streamlining the authorization, conduct and transparency of clinical trials in the European Union.

Under the new coordinated procedure for the approval of clinical trials, the sponsor of a clinical trial to be conducted in more than one Member State of the EU (“EU Member State”) will only be required to submit a single application for approval.

In June 2024, as mandated by FDORA, the FDA issued draft guidance outlining the general requirements for diversity action plans (“DAPs”).

Unlike most guidance documents issued by the FDA, the DAP guidance when finalized will have the force of law because FDORA specifically dictates that the form and manner for submission of DAPs are specified in FDA guidance.

On January 27, 2025, in response to an Executive Order issued by President Trump on January 21, 2025, on Diversity, Equity and Inclusion programs, the FDA removed this draft guidance from its website.

This action raises questions about the applicability of statutory obligations to submit DAPs and the agency’s current thinking on best practices for clinical development.

Further, on January 31, 2022, the new Clinical Trials Regulation (EU) No 536/2014 became applicable in the EU and replaced the prior Clinical Trials Directive 2001/20/EC.

The new regulation aims at simplifying and streamlining the authorization, conduct and transparency of clinical trials in the EU.

Under the new coordinated procedure for the approval of clinical trials, the sponsor of a clinical trial to be conducted in more than one Member State of the EU (“EU Member

State”) will only be required to submit a single application for approval.

The submission will be made through the Clinical Trials Information System, a new clinical trials portal overseen by the EMA and available to clinical trial sponsors, competent authorities of the EU Member States and the public.

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We may also seek a priority review designation for one or more of our product candidates.

If the FDA determines that a product candidate offers major advances in treatment or provides a treatment where no adequate therapy exists, the FDA may designate the product candidate for priority review.

If the FDA determines that a product candidate is intended to treat a serious disease or condition and if approved, would provide a significant improvement in the safety or effectiveness of the treatment, prevention or diagnosis of such disease or condition, the FDA may designate the product candidate for priority review.

A priority review designation means that the goal for the FDA to review an application is six months, rather than the standard review period of ten months.

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PRIME is a voluntary program aimed at enhancing the EMA’s role to reinforce scientific and regulatory support in order to optimize development and enable accelerated assessment of new medicines that are of major public health interest with the potential to address unmet medical needs.

The program focuses on medicines that target conditions for which there exists no satisfactory method of treatment in the EU or even if such a method exists, it may offer a major therapeutic advantage over

existing treatments.

PRIME is limited to medicines under development and not authorized in the EU and the applicant intends to apply for an initial marketing authorization application through the centralized procedure.

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PRIME enables an applicant to request parallel EMA scientific advice and health technology assessment advice to facilitate timely market access.

Even if we receive PRIME designation for any of our product candidates, the designation may not result in a materially faster development process, review or approval compared to conventional EMA procedures.

Even if we receive PRIME designation for any of our product

candidates, the designation may not result in a materially faster development process, review or approval compared to conventional EMA procedures.

Further, obtaining PRIME designation does not assure or increase the likelihood of EMA’s grant of a marketing authorization.

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As a result, its ultimate impact, implementation, and meaning are subject to uncertainty, and any new policies or processes adopted by the FDA could have a material adverse effect on the future commercial prospects for our biological products.

In December 2022, Congress clarified through FDORA that the FDA may approve multiple first interchangeable biosimilar biological products so long as the products are all approved on the first day on which such a product is approved as interchangeable with the reference product and the exclusivity period may be shared amongst multiple first interchangeable products.

There have been recent government proposals to reduce the 12-year reference product exclusivity period, but none has been enacted to date.

At the same time, since passage of the BPCIA, many states have passed laws or amendments to laws, which address pharmacy practices involving biosimilar products.

We believe that any of the product candidates we develop as a biological product under a BLA should qualify for the 12-year period of exclusivity.

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Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug or biologic intended to treat a rare disease or condition.

A similar regulatory scheme governs approval of orphan products by the EMA in the European Union.

A similar regulatory scheme governs approval of orphan products by the EMA in the EU.

Generally, if a product candidate with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or the EMA from approving another marketing application for the same product for the same therapeutic indication for that time period.

The applicable period is seven years in the United States and ten years in the European Union.

The exclusivity period in the European Union can be reduced to six years if a product no longer meets the criteria for orphan drug designation, in particular if the product is sufficiently profitable so that market exclusivity is no longer justified.

The applicable period is seven years in the United States and ten years in the EU.

The exclusivity period in the EU can be reduced to six years if a product no longer meets the criteria for orphan drug designation, in particular if the product is sufficiently profitable so that market exclusivity is no longer justified.

In order for the FDA to grant orphan drug exclusivity to one of our products, the agency must find that the product is indicated for the treatment of a condition or disease with a patient population of fewer than 200,000 individuals annually in the United States.

The FDA may conclude that the condition or disease for which we seek orphan drug exclusivity does not meet this standard.

Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect

the product from competition because different products can be approved for the same condition.

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

In particular, the concept of what constitutes the "same drug" for purposes of orphan drug exclusivity remains in flux in the context of gene therapies.

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This may be particularly true in light of a decision from the Court of Appeals for the 11th Circuit in September 2021 finding that, for the purpose of determining the scope of exclusivity, the term “same disease or condition” means the designated “rare disease or condition” and could not be interpreted by the FDA to mean the “indication or use.” Thus, the court concluded, orphan drug exclusivity applies to the entire designated disease or condition rather than the “indication or use.” Although there have been legislative proposals to overrule this decision, they have not been enacted into law.

On January 23, 2023, FDA announced that, in matters beyond the scope of that court order, FDA will continue to apply its existing regulations tying orphan-drug exclusivity to the uses or indications for which the orphan drug was approved.

On January 23, 2023, the FDA announced that, in matters beyond the scope of that court order, the FDA will continue to apply its existing regulations tying orphan-drug exclusivity to the uses or indications for which the orphan drug was approved.

We do not know if, when, or how the FDA may change the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect our business.

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Failure to obtain marketing approval in foreign jurisdictions would prevent any of our product candidates from being marketed in such jurisdictions, which, in turn, would materially impair our ability to generate revenue.

In order to market and sell any of our product candidates in the European Union and many other foreign jurisdictions, we or our collaborators must obtain separate marketing approvals and comply with numerous and varying regulatory requirements.

In order to market and sell any of our product candidates in the EU and many other foreign jurisdictions, we or our collaborators must obtain separate marketing approvals and comply with numerous and varying regulatory requirements.

The approval procedure varies among countries and can involve additional testing.

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We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our medicines in any jurisdiction, which would materially impair our ability to generate revenue.

Further, we could face heightened risks with respect to obtaining marketing authorization in the UK as a result of the withdrawal of the UK from the EU, commonly referred to as Brexit.

Additionally, we could face heightened risks with respect to obtaining marketing authorization in the UK as a result of the withdrawal of the UK from the EU, commonly referred to as Brexit.

The UK is no longer part of the European Single Market and EU Customs Union.

As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency (“MHRA”) became responsible for supervising medicines and medical devices in Great Britain ("GB"), comprising England, Scotland and Wales under domestic law, whereas under the terms of the Northern Ireland Protocol, Northern

Ireland is currently subject to EU rules.

The UK and EU have however agreed to the Windsor Framework which fundamentally changes the existing system under the Northern Ireland Protocol, including with respect to the regulation of medicinal products in the UK Once implemented, the changes introduced by the Windsor Framework will see the MHRA be responsible for approving all medicinal products destined for the UK market (i.e., GB and Northern Ireland), and the EMA will no longer have any role in approving medicinal products destined for Northern Ireland.

As of January 1, 2025, the Medicines and Healthcare Products Regulatory Agency (“MHRA”), is responsible for approving all medicinal products destined for the UK market (i.e., Great Britain and Northern Ireland).

At the same time, a new international recognition procedure (“IRP”) will apply, which intends to facilitate approval of pharmaceutical products in the UK.

The IRP is open to applicants that have already received an authorization for the same product from one of the MHRA’s specified Reference Regulators (“RRs”).

The RRs notably include EMA and regulators in the EU/European Economic Area (“EEA”) member states for approvals in the EU centralized procedure and mutual recognition procedure as well as the FDA (for product approvals granted in the U.S.).

However, the concrete functioning of the IRP is currently unclear.

Any delay in obtaining, or an inability to obtain, any marketing approvals may force us or our collaborators to restrict or delay efforts to seek regulatory approval in the UK for our product candidates, which could significantly and materially harm our business.

In addition, foreign regulatory authorities may change their approval policies and new regulations may be enacted.

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Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the medicine may be marketed or to the conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the medicine.

Further, our ability to develop and market new drug products may be impacted by ongoing litigation challenging the FDA’s approval of mifepristone.

Specifically, on April 7, 2023, the U.S.

District Court for the Northern District of Texas stayed the approval by the FDA of mifepristone, a drug product which was originally approved in 2000 and whose distribution is governed by various conditions adopted under a REMS.

In reaching that decision, the district court made a number of findings that may negatively impact the development, approval and distribution of drug products in the U.S.

Among other determinations, the district court held that plaintiffs were likely to prevail in their claim that FDA had acted arbitrarily and capriciously in approving mifepristone without sufficiently considering evidence bearing on whether the drug was safe to use under the conditions identified in its labeling.

Further, the district court read the standing requirements governing litigation in federal court as permitting a plaintiff to bring a lawsuit against the FDA in connection with its decision to approve an NDA or establish requirements under a REMS based on a showing that the plaintiff or its members would be harmed to the extent that FDA’s drug approval decision effectively compelled the plaintiffs to provide care for patients suffering adverse events caused by a given drug.

On April 12, 2023, the district court decision was stayed, in part, by the U.S.

Court of Appeals for the Fifth Circuit.

Thereafter, on April 21, 2023, the U.S.

Supreme Court entered a stay of the district court’s decision, in its entirety, pending disposition of the appeal of the district court decision in the Court of Appeals for the Fifth Circuit and the disposition of any petition for a writ of certiorari to or the Supreme Court.

The Court of Appeals for the Fifth Circuit held oral argument in the case on May 17, 2023 and, on August 16, 2023, issued its decision.

The court declined to order the removal of mifepristone from the market, finding that a challenge to the FDA’s initial approval in 2000 is barred by the statute of limitations.

But the court did hold that plaintiffs were likely to prevail in their claim that changes allowing for

expanded access of mifepristone that FDA authorized in 2016 and 2021 were arbitrary and capricious.

On September 8, 2023, the Justice Department and a manufacturer of mifepristone filed petitions for a writ of certiorari, requesting that asked the U.S.

Supreme Court to review the appeals court decision.

On December 13, 2023, the Supreme Court granted these petitions for writ of certiorari for the appeals court decision.

In addition, we could be adversely affected by several significant administrative law cases decided by the U.S.

Supreme Court in 2024.

In Loper Bright Enterprises v.

Raimondo , for example, the court overruled Chevron U.S.A., Inc.

Natural Resources Defense Council, Inc ., which for 40 years required federal courts to defer to permissible agency interpretations of statutes that are silent or ambiguous on a particular topic.

Supreme Court stripped federal agencies of this presumptive deference and held that courts must exercise their independent judgment when deciding whether an agency such as the FDA acted within its statutory authority under the Administrative Procedure Act (“APA”).

Additionally, in Corner Post, Inc.

Board of Governors of the Federal Reserve System , the court held that actions to challenge a federal regulation under the APA can be initiated within six years of the date of injury to the plaintiff, rather than the date the rule is finalized.

The decision appears to give prospective plaintiffs a personal statute of limitations to challenge longstanding agency regulations.

Another decision, Securities and Exchange Commission v.

Jarkesy , overturned regulatory agencies’ ability to impose civil penalties in administrative proceedings.

These decisions could introduce additional uncertainty into the regulatory process and may result in additional legal challenges to actions taken by federal regulatory agencies, including the FDA and the CMS, that we rely on.

In addition to potential changes to regulations as a result of legal challenges, these decisions may result in increased regulatory uncertainty and delays and other impacts, any of which could adversely impact our business and operations.

Further, our ability to develop and market new drug products may be impacted by litigation challenging the FDA’s approval of another company’s drug product.

In April 2023, the U.S.

District Court for the Northern District of Texas invalidated the approval by the FDA of mifepristone, a drug product which was originally approved in 2000 and whose distribution is governed by various measures adopted under a REMS.

The Court of Appeals for the Fifth Circuit declined to order the removal of mifepristone from the market but did hold that plaintiffs were likely to prevail in their claim that changes allowing for expanded access of mifepristone, which the FDA authorized in 2016 and 2021, were

arbitrary and capricious.

In June 2024, the Supreme Court reversed that decision after unanimously finding that the plaintiffs (anti-abortion doctors and organizations) did not have standing to bring this legal action against the FDA.

On October 11, 2024, the Attorneys General of three states (Missouri, Idaho and Kansas) filed an amended complaint in the district court in Texas challenging the FDA’s actions.

On January 16, 2025, the district court agreed to allow these states to file an amended complaint and continue to pursue this challenge.

Depending on the outcome of this litigation, our ability to develop new drug product candidates and to maintain approval of existing drug products could be delayed, undermined or subject to protracted litigation.

Finally, with the change in presidential administrations in 2025, there is substantial uncertainty as to how, if at all, the new administration will seek to modify or revise the requirements and policies of the FDA and other regulatory agencies with jurisdiction over our product candidates.

The impending uncertainty could present new challenges or potential opportunities as we navigate the clinical development and approval process for our product candidates.

Accordingly, assuming we, or any collaborators we may have, receive marketing approval for one or more of our product candidates, we, and such collaborators, and our and their contract manufacturers will continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance, and quality control.

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Even if our product candidates receive regulatory approval, they will be subject to significant post-marketing regulatory requirements and oversight.

Any regulatory approvals that we may receive for our product candidates will require the submission of reports to regulatory authorities and ongoing surveillance to monitor the safety and efficacy of the product candidate, may contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, and may include burdensome post-approval study or risk management requirements and regulatory inspection.

significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, and may include burdensome post-approval study or risk management requirements and regulatory inspection.

For example, the FDA may require a REMS in order to approve our product candidates, which could entail requirements for a medication guide, physician training and communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

In addition, if the FDA, EMA or foreign regulatory authorities approve our product candidates, the manufacturing processes, labelling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for our product candidates will be subject to extensive and ongoing regulatory requirements.

These requirements include submissions of safety and other

post-marketing information and reports, registration, as well as ongoing compliance with cGMPs and good clinical practices (GCP) for any clinical trials that we conduct post-approval.

These requirements include submissions of safety and other post-marketing information and reports, registration, as well as ongoing compliance with cGMPs and good clinical practices (GCP) for any clinical trials that we conduct post-approval.

In addition, manufacturers of drug products and their facilities are subject to continual review and periodic, unannounced inspections by the FDA, EMA and other regulatory authorities for compliance with cGMP regulations and standards.

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The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

In September 2021, the FDA published final regulations which describe the types of evidence that the agency will consider in determining the intended use of a

drug product.

Physicians may nevertheless prescribe our products off-label to their patients in a manner that is inconsistent with the approved label.

We intend to implement compliance and training programs designed to ensure that any of our sales and marketing practices comply with applicable regulations.

Notwithstanding these programs, the FDA or other government agencies may allege or find that our practices constitute prohibited promotion of our products for unapproved uses.

We also cannot be sure that our employees will comply with Company policies and applicable regulations regarding the promotion of products for unapproved uses.

Notwithstanding the regulatory restrictions on off-label promotion, the FDA and other regulatory authorities allow companies to engage in truthful, non-misleading, and non-promotional scientific communications concerning their products in certain circumstances.

For example, January 2025, the FDA published final guidance outlining the agency’s non-binding policies governing the distribution of scientific information on unapproved uses to healthcare providers.

This final guidance calls for such communications to be truthful, non-misleading, factual, and unbiased and include all information necessary for healthcare providers to interpret the strengths and weaknesses and validity and utility of the information about the unapproved use.

In addition, under some relatively recent guidance from the FDA and the Pre-Approval Information Exchange Act (“PIE Act”), signed into law as part of the Consolidated Appropriations Act of 2023, companies may also promote information that is consistent with the prescribing information and proactively speak to formulary committee members of payors regarding data for an unapproved drug or unapproved uses of an approved drug.

We may engage in these discussions and communicate with healthcare providers, payors and other constituencies in compliance with all applicable laws, regulatory guidance and industry best practices.

We will need to carefully navigate the FDA’s various regulations, guidance and policies, along with recently enacted legislation, to ensure compliance with restrictions governing promotion of our products.

In recent years, a significant number of pharmaceutical and biotechnology companies have been the target of inquiries and investigations by various federal and state regulatory, investigative, prosecutorial and administrative entities in connection with the promotion of products for unapproved uses and other sales practices, including the Department of Justice and various U.S.

Attorneys’ Offices, the Office of Inspector General of the Department of Health and Human Services (the “HHS”), the FDA, the Federal Trade Commission (“FTC”), and various state Attorneys General offices.

These investigations have alleged violations of various federal and state laws and regulations, including claims asserting antitrust violations, violations of the Federal Food, Drug and Cosmetic Act, the False Claims Act, the Prescription Drug Marketing Act and anti-kickback laws and other alleged violations in connection with the promotion of products for unapproved uses, pricing and Medicare and/or Medicaid reimbursement.

Many of these investigations originate as “ qui tam ” actions under the False Claims Act.

Under the False Claims Act, any individual can bring a claim on behalf of the government alleging that a person or entity has presented a false claim or caused a false claim to be submitted to the government for payment.

The person bringing a qui tam suit is entitled to a share of any recovery or settlement.

Qui tam suits, also commonly referred to as “whistleblower suits,” are often brought by current or former employees.

In a qui tam suit, the government must decide whether to intervene and prosecute the case.

If it declines, the individual may pursue the case alone.

Similar restrictions apply to the approval of our products in the EU.

The holder of a marketing authorization is required to comply with a range of requirements applicable to the manufacturing, marketing, promotion and sale of medicinal products.

These include:

compliance with the EU’s stringent pharmacovigilance or safety reporting rules, which can impose post-authorization studies and additional monitoring obligations;

the manufacturing of authorized medicinal products, for which a separate manufacturer’s license is mandatory;

and the marketing and promotion of authorized drugs, which are strictly regulated in the EU.

and are also subject to EU.

Member State laws.

The failure to comply with these and other EU requirements can also lead to significant penalties and sanctions.

The FDA, EMA and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates.

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• the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items, or services;

• the federal transparency requirements under the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics, and medical supplies to report to the Department of Health and Human Services information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members and applicable group purchasing organizations;

• the federal transparency requirements under the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics, and medical supplies to report to the HHS information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members and applicable group purchasing organizations;

• analogous state laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and certain state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures.

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If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment, and the curtailment or restructuring of our operations, any of which could adversely affect our business, financial condition, results of operations, and prospects.

The provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, or use of medicinal products is prohibited in the European Union.

The provision of

benefits or advantages to physicians is also governed by the national anti-bribery laws of European Union Member States, such as the UK Bribery Act 2010.

The provision of benefits or

advantages to physicians is also governed by the national anti-bribery laws of EU Member States, such as the UK Bribery Act 2010.

Infringement of these laws could result in substantial fines and imprisonment.

Payments made to physicians in certain European Union Member States must be publicly disclosed.

Moreover, agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his or her competent professional organization, and/or the regulatory authorities of the individual European Union Member States.

These requirements are provided in the national laws, industry codes, or professional codes of conduct applicable in the European Union Member States.

Payments made to physicians in certain EU Member States must be publicly disclosed.

These requirements are provided in the national laws, industry codes, or professional codes of conduct applicable in the EU Member States.

Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines, or imprisonment.

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

These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2031 under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

Under current legislation, the actual reductions in Medicare payments may vary up to 4%.

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Litigation and legislation over the ACA are likely to continue, with unpredictable and uncertain results.

The Trump Administration also took executive actions to undermine or delay implementation of the ACA, including directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices.

On January 28, 2021, however, President Biden issued a new Executive Order which directs federal agencies to reconsider rules and other policies that limit Americans’ access to health care, and consider actions that will protect and strengthen that access.

Under this Order, federal agencies are directed to re-examine:

policies that undermine protections for people with pre-existing conditions;

demonstrations and waivers under Medicaid and the ACA that may reduce coverage or undermine the programs, including work requirements;

policies that undermine the Health Insurance Marketplace or other markets for health insurance;

policies that make it more difficult to enroll in Medicaid and the ACA;

and policies that reduce affordability of coverage or financial assistance, including for dependents.

The prices of prescription pharmaceuticals in the United States and foreign jurisdictions is subject to considerable legislative and executive actions and could impact the prices we obtain for our products, if and when licensed.

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congressional inquiries, as well as proposed and enacted state and federal legislation designed to, among other things, bring more transparency to pharmaceutical pricing, review the relationship between pricing and manufacturer patient programs, and reduce the costs of pharmaceuticals under Medicare and Medicaid.

In 2020, President Trump issued several executive orders intended to lower the costs of prescription products and certain provisions in these orders have been incorporated into regulations.

These regulations include an interim final rule implementing a most favored nation model for prices that would tie Medicare Part B payments for certain physician-administered pharmaceuticals to the lowest price paid in other economically advanced countries, effective January 1, 2021.

That rule, however, has been subject to a nationwide preliminary injunction and, on December 29, 2021, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule to rescind it.

With issuance of this rule, CMS stated that it will explore all options to incorporate value into payments for Medicare Part B pharmaceuticals and improve beneficiaries' access to evidence-based care.

In addition, in October 2020, Department of Health and Human Services (“HHS”) and the FDA published a final rule allowing states and other entities to develop a Section 804 Importation Program (“SIP”) to import certain prescription drugs from Canada into the United States.

That regulation was challenged in a lawsuit by the Pharmaceutical Research and Manufacturers of America (“PhRMA”) but the case was dismissed by a federal district court in February 2023 after the court found that PhRMA did not have standing to sue HHS.

Nine states (Colorado, Florida, Maine, New Hampshire, New Mexico, North Dakota, Texas, Vermont and Wisconsin) have passed laws allowing for the importation of drugs from Canada.

Certain of these states have submitted Section 804 Importation Program proposals and are awaiting FDA approval.

In addition, in October 2020, the HHS and the FDA published a final rule allowing states and other entities to develop a Section 804 Importation Program (“SIP”) to import certain prescription drugs from Canada into the United States.

Seven states (Colorado, Florida, Maine, New Hampshire, New Mexico, Texas and Vermont) have passed laws allowing for the importation of drugs from Canada.

North Dakota and Virginia have passed legislation establishing workgroups to examine the impact of a state importation program.

As of October 2024, five states (Colorado, Florida, Maine, New Hampshire and New Mexico) had submitted Section 804 Importation Program proposals to the FDA.

Vermont has submitted a concept letter to the HHS.

On January 5, 2024, the FDA approved Florida’s plan for Canadian drug importation.

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

That state now has authority to import certain drugs from Canada for a period of two years once certain conditions are met.

Florida will first need to submit a pre-import request for each drug selected for importation, which must be approved by the FDA.

The state will also need to relabel the drugs and perform quality testing of the products to meet FDA standards.

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

The final rule would also eliminate the current safe harbor for Medicare drug rebates and create new safe harbors for beneficiary point-of-sale discounts and pharmacy benefit manager service fees.

It originally was set to go into effect on January 1, 2022, but has been delayed by Congress to January 1, 2032.

On July 9, 2021, President Biden signed Executive Order 14063, which focuses on, among other things, the price of pharmaceuticals.

The Order directs HHS to create a plan within 45 days to combat “excessive pricing of prescription pharmaceuticals and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the federal government for such pharmaceuticals, and to address the recurrent problem of price gouging.” On September 9, 2021, HHS released its plan to reduce pharmaceutical prices.

The key features of that plan are to:

(a) make pharmaceutical prices more affordable and equitable for all consumers and throughout the health care system by supporting pharmaceutical price negotiations with manufacturers;

(b) improve and promote competition throughout the prescription pharmaceutical industry by supporting market changes that strengthen supply chains, promote biosimilars and generic drugs, and increase transparency;

and (c) foster scientific innovation to promote better healthcare and improve health by supporting public and private research and making sure that market incentives promote discovery of valuable and accessible new treatments.

On August 16, 2022, the IRA was signed into law by President Biden.

The new legislation has implications for Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in Medicare Part B to give them the option of paying a monthly premium for outpatient prescription drug coverage.

Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026),

with prices that can be negotiated subject to a cap;

Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap;

imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2025);

and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).

The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

The IRA permits the Secretary of the HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for certain costly single-source drug and biologic products that do not have competing generics or biosimilars and are reimbursed under Medicare Part B and Part D.

CMS may negotiate prices for ten high-cost drugs paid for by Medicare Part D starting in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond.

The CMS may negotiate prices for ten high-cost drugs paid for by Medicare Part D starting in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond.

This provision applies to drug products that have been approved for at least 9 years and biologics that have been licensed for 13 years, but it does not apply to drugs and biologics that have been approved for a single rare disease or condition.

Nonetheless, since CMS may establish a maximum price for these products in price negotiations, we would be fully at risk of government action if our products are the subject of Medicare price negotiations.

Nonetheless, since the CMS may establish a maximum price for these products in price negotiations, we would be fully at risk of government action if our products are the subject of Medicare price negotiations.

Moreover, given the risk that could be the case, these provisions of the IRA may also further heighten the risk that we would not be able to achieve the expected return on our drug products or full value of our patents protecting our products if prices are set after such products have been on the market for nine years.

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The new law also caps Medicare out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at $2,000 a year.

The first cycle of negotiations for the Medicare Drug Price Negotiation Program commenced in the summer of 2023.

On August 15, 2024, the HHS published the results of the first Medicare drug price negotiations for ten selected drugs that treat a range of conditions, including diabetes, chronic kidney disease, and rheumatoid arthritis.

The prices of these ten drugs will become effective January 1, 2026.

On January 17, 2025, the CMS announced its selection of 15 additional drugs covered by Part D for the second cycle of negotiations by February 1, 2025.

While there had been some questions about the Trump Administration’s position on this program, the CMS issued a public statement on January 29, 2025, declaring that lowering the cost of prescription drugs is a top priority of the new administration and the CMS is committed to considering opportunities to bring greater transparency in the negotiation program.

The second cycle of negotiations with participating drug companies will occur during 2025, and any negotiated prices for this second set of drugs will be effective starting January 1, 2027.

On June 6, 2023, Merck & Co.

filed a lawsuit against the HHS and CMS asserting that, among other things, the IRA’s Drug Price Negotiation Program for Medicare constitutes an uncompensated taking in violation of the Fifth Amendment of the Constitution.

filed a lawsuit against the HHS and the CMS asserting that, among other things, the IRA’s Drug Price Negotiation Program for Medicare constitutes an uncompensated taking in violation of the Fifth Amendment of the Constitution.

Subsequently, a number of other parties, including the U.S.

Chamber of Commerce (the “Chamber”), Bristol Myers Squibb Company, the PhRMA, Astellas, Novo Nordisk, Janssen Pharmaceuticals, Novartis, AstraZeneca and Boehringer Ingelheim, also filed lawsuits in various courts with similar constitutional claims against the HHS and CMS.

There have been various decisions by the courts considering these cases since they were filed.

The HHS has generally won the substantive disputes in these cases, and various federal district court judges have expressed skepticism regarding the merits of the legal arguments being pursued by the pharmaceutical industry.

Certain of these cases are now on appeal and, on October 30, 2024, the Court of Appeals for the Third Circuit heard oral argument in three of these cases.

We expect that litigation involving these and other provisions of the IRA will continue, with unpredictable and uncertain results.

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

This is increasingly true with respect to products approved pursuant to the accelerated approval pathway.

State Medicaid programs and other payers are developing strategies and implementing significant coverage barriers, or refusing to cover these products outright, arguing that accelerated approval drugs have insufficient or limited evidence despite meeting the FDA’s standards for accelerated approval.

In addition, regional health care organizations and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs.

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We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

In addition, in some countries, including member states of the EU, the pricing of prescription pharmaceuticals is subject to governmental control.

In addition, in some countries, including EU Member States, the pricing of prescription pharmaceuticals is subject to governmental control.

In these countries, pricing negotiations with governmental authorities can take a significant amount of time after receipt of marketing approval for a product.

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We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants, and partners.

Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in the European Union and other jurisdictions, provide accurate information to the FDA, the European Commission, and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately, or disclose unauthorized activities to us.

Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in the EU and other jurisdictions, provide accurate information to the FDA, the European Commission, and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately, or disclose unauthorized activities to us.

In particular, sales, marketing, and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.

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These obligations may be applicable to some or all of our business activities now or in the future.

If we are unable to properly protect the privacy and security of protected health information, we could be found to have breached our contracts.

Further, if we fail to comply with applicable privacy laws, including applicable HIPAA privacy and security standards, we could face civil and criminal penalties.

If we fail to comply with applicable privacy laws, including applicable HIPAA privacy and security standards, we could face civil and criminal penalties.

HHS enforcement activity can result in financial liability and reputational harm, and responses to such enforcement activity can consume significant internal resources.

In recent months, the Officer of Civil Rights (“OCR”) has been especially active in enforcing the HIPAA rules.

In addition, state attorneys general are authorized to bring civil actions seeking either injunctions or damages in response to violations that threaten the privacy of state residents.

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In addition to the risks associated with enforcement activities and potential contractual liabilities, our ongoing efforts to comply with evolving laws and regulations at the federal and state level may be costly and require ongoing modifications to our policies, procedures and systems.

Additionally, the OCR is looking to amend the HIPAA Security Rule, which (if and when finalized) could create additional compliance obligations and risk for our business.

In addition to potential enforcement by the HHS, we could also be potentially subject to privacy enforcement from the FTC.

The FTC has been particularly focused on the unpermitted processing of health and genetic data through its recent enforcement actions and is expanding the types of privacy violations that it interprets to be “unfair” under Section 5 of the FTC Act, as well as the types of activities it views to trigger the Health Breach Notification Rule (which the FTC also has the authority to enforce).

The agency is also in the process of developing rules related to commercial surveillance and data security.

We will need to account for the FTC’s evolving rules and guidance for proper privacy and data security practices in order to mitigate risk for a potential enforcement action, which may be costly.

Finally, both the FTC and HHS’s enforcement priorities (as well as those of other federal regulators) may be impacted by the change in administration and new leadership.

These shifts in enforcement priorities may also impact our business.

There are also increased restrictions at the federal level relating to transferring sensitive data outside of the U.S.

to certain foreign countries.

For example, in 2024, Congress passed H.B.

815, which included the Protecting Americans’ Data from Foreign Adversaries Act of 2024.

This law creates certain restrictions for entities that disclose sensitive data (including potential health data) to countries such as China.

Failure to comply with these rules can lead to a potential FTC enforcement action.

Additionally, the Department of Justice recently finalized a rule implementing Executive Order 14117, which creates similar restrictions related to the transfer of sensitive US data to countries such as China.

These data transfer restrictions (and others that may pass in the future) may create operational challenges and legal risks for our business.

In 2018, California passed into law the California Consumer Privacy Act (the “CCPA”), which took effect on January 1, 2020 and imposed many requirements on businesses that process the personal information of California residents.

Many of the CCPA’s requirements are similar to those found in the General Data Protection Regulation (the “GDPR”), including requiring businesses to provide notice to data subjects regarding the information collected about them and how such information is used and shared, and providing data subjects the right to request access to such personal information and, in certain cases, request the erasure of such personal information.

information is used and shared, and providing data subjects the right to request access to such personal information and, in certain cases, request the erasure of such personal information.

The CCPA also affords California residents the right to opt-out of “sales” of their personal information.

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The provisions in the CPRA may apply to some of our business activities.

In addition to California, at least eleven other states have passed comprehensive privacy laws similar to the CCPA and CPRA.

In addition to California, at least eighteen other states have passed comprehensive privacy laws similar to the CCPA and CPRA.

These laws are either in effect or will go into effect sometime before the end of 2026.

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Some of the provisions of these laws may apply to our business activities.

There are also states that are strongly considering or have already passed comprehensive privacy laws during the 2023 legislative sessions that will go into effect in 2024 and beyond, including New Hampshire and New

Other states will be considering these laws in the future, and Congress has also been debating passing a federal privacy law.

There are also states that are strongly considering or have already passed comprehensive privacy laws during the 2024 legislative sessions that will go into effect in 2025 and beyond.

Other states will be considering similar laws in the future, and Congress has also been debating passing a federal privacy law.

There are also states that are specifically regulating health information that may affect our business.

For example, Washington state passed a health privacy law in 2023 that will regulate the collection and sharing of health information, and the law also has a private right of action, which further increases the relevant compliance risk.

Connecticut and Nevada have also passed similar laws regulating consumer health data and additional states (including Vermont) are considering such legislation for 2024.

For example, the state of Washington passed the My Health My Data Act in 2023 which specifically regulated health information that is not otherwise regulated by the HIPAA rules, and the law also has a private right of action, which further increases the relevant compliance risk.

Connecticut and Nevada have also passed similar laws regulating consumer health data, and more states are considering such legislation in 2024.

These laws may impact our business activities, including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our products.

Plaintiffs’ lawyers are also increasingly using privacy-related statutes at both the state and federal level to bring lawsuits against companies for their data-related practices.

In particular, there have been a significant number of cases filed against companies for their use of pixels and other web trackers.

These cases often allege violations of the California Invasion of Privacy Act and other state laws regulating wiretapping, as well as the federal Video Privacy Protection Act.

The rise in these types of lawsuits creates potential risk for our business.

Similar to the laws in the U.S., there are significant privacy and data security laws that apply in Europe and other countries.

The collection, use, disclosure, transfer, or other processing of personal data, including personal health data, regarding individuals who are located in the European Economic Area (“EEA”), and the processing of personal data that takes place in the EEA, is regulated by the GDPR, which went into effect in May 2018 and which imposes obligations on companies that operate in our industry with respect to the processing of personal data and the cross-border transfer of such data.

The collection, use, disclosure, transfer, or other processing of personal data, including personal health data, regarding individuals who are located in the EEA, and the processing of personal data that takes place in the EEA, is regulated by the GDPR, which went into effect in May 2018 and which imposes obligations on companies that operate in our industry with respect to the processing of personal data and the cross-border transfer of such data.

The GDPR imposes onerous accountability obligations requiring data controllers and processors to maintain a record of their data processing and policies.

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generally and increase our costs of compliance with data privacy legislation as well as our costs of negotiating appropriate privacy and security agreements with our vendors and business partners.

Following the CJEU decision, in October 2022, President Biden signed an executive order to implement the EU-U.S.

Data Privacy Framework, which would serve as a replacement to the EU-US Privacy Shield.

The EC initiated the process to adopt an adequacy decision for the EU-US Data Privacy Framework in December 2022, and has now adopted an adequacy decision to permit data transfers from the EU to the US going forward.

This development permits data transfers at this point under this Framework and more broadly has made international data transfers more straightforward, but these provisions are being challenged in court.

In October 2022, President Biden signed an executive order to implement the EU-U.S.

Data Privacy Framework, which serves as a replacement to the EU-U.S.

Privacy Shield.

The EC adopted the adequacy decision on July 10, 2023.

The adequacy decision permits U.S.

companies who self-certify to the EU-U.S.

Data Privacy Framework to rely on it as a valid data transfer mechanism for data transfers from the EU to the U.S.

However, some privacy advocacy groups have already

suggested that they will be challenging the EU-U.S.

Data Privacy Framework.

If these challenges are successful, they may not only impact the EU-U.S.

Data Privacy Framework, but also further limit the viability of the standard contractual clauses and other data transfer mechanisms.

The uncertainty around this issue has the potential to impact our business.

Following the withdrawal of the UK from the EU, the UK Data Protection Act 2018 applies to the processing of personal data that takes place in the UK and includes parallel obligations to those set forth by GDPR.

In relation to data transfers, both the UK and the EU have determined, through separate “adequacy” decisions, that data transfers between the two jurisdictions are in compliance with the UK Data Protection Act and the GDPR, respectively.

The UK and the U.S.

have also agreed to a U.S.-UK “Data Bridge”, which functions similarly to the EU-U.S.

Data Privacy Framework and provides an additional legal mechanism for companies to transfer data from the UK to the U.S.

Following Brexit, there are open questions about how personal data will be protected in the U.K.

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We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions.

In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy.

In addition, we

rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy.

Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.

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• business disruptions caused by potential workplace, laboratory and office closures and an increased reliance on employees working from home, disruptions to or delays in ongoing laboratory experiments and operations, staffing shortages, travel limitations, cyber security and data accessibility, or communication or mass transit disruptions, any of which could adversely impact our business operations or delay necessary interactions with local regulators, ethics committees, manufacturing sites, research or clinical trial sites and other important agencies and contractors.

Our clinical trials for reni-cel, as well as timely completion of preclinical activities and initiation of planned clinical trials for other product candidates, is dependent upon the availability of, for example, preclinical and clinical trial sites, researchers and investigators, regulatory agency personnel, and materials, which may be adversely affected by a public health crisis and related government responses .

Timely completion of preclinical activities and initiation of planned clinical trials for product candidates is dependent upon the availability of, for example, preclinical and clinical trial sites, researchers and investigators, regulatory agency personnel, and materials, which may be adversely affected by a public health crisis and related government responses .

We cannot presently predict the scope and severity of any potential business shutdowns or disruptions.

If we or any of the third parties with whom we engage, however, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively affected, which could have a material adverse impact on our business and our results of operation and financial condition.

We expect to expand our manufacturing, clinical, development, and regulatory capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

We expect growth in the number of our employees and the scope of our operations, particularly in the areas of manufacturing, clinical development, drug development, and regulatory affairs, and, if any product candidates receive marketing approval, sales and marketing.

To manage our anticipated future growth, we must continue to implement and improve our managerial, operational, and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel.

Due to our limited financial resources, we may not be able to effectively manage the expected expansion of our operations or recruit and train additional qualified personnel.

Moreover, the expected physical expansion of our operations may lead to significant costs and may divert our management and business development resources.

Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

Security breaches and other disruptions to our information technology structure could compromise our information, disrupt our business and expose us to liability, which would cause our business and reputation to suffer.

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We also rely to a large extent on information technology systems to operate our business, including our financial systems.

We have outsourced elements of our confidential information processing and information technology structure, and as a result, we are managing independent vendor relationships with third parties who may or could have access to our confidential information.

We have outsourced elements of our confidential information processing and information technology structure, and as a result, we

are managing independent vendor relationships with third parties who may or could have access to our confidential information.

Similarly, our business partners and other third-party providers possess certain elements of our sensitive data.

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While we believe we have not experienced any such material system failure, accident or security breach to date, any such event may substantially impair our ability to operate our business and would compromise our, and their, networks and the information stored could be accessed, publicly disclosed, lost, or stolen.

In addition, if a

ransomware attack or other cybersecurity incident occurs, either internally or at our vendors or third-party technology service providers, we could be prevented from accessing our data or systems, which may cause interruptions or delays in our business operations, cause us to incur remediation costs, subject us to demands to pay a ransom, or damage our reputation, regardless of whether we pay the ransom amount.

In addition, if a ransomware attack or other cybersecurity incident occurs, either internally or at our vendors or third-party technology service providers, we could be prevented from accessing our data or systems, which may cause interruptions or delays in our business operations, cause us to incur remediation costs, subject us to demands to pay a ransom, or damage our reputation, regardless of whether we pay the ransom amount.

Any such event, or other loss of information, could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, any of which could adversely affect our business.

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Risks Related to Our Common Stock

The market price of our common stock may be volatile, which could result in substantial losses for our stockholders.

The market price of our common stock has been, and is likely to remain, volatile.

Our stock price has been, and is likely to remain, volatile.

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• the success of existing or new competitive products or technologies;

• the timing and results of our RUBY and EdiTHAL clinical trials for reni-cel and any preclinical studies and clinical trials of any other product candidates that we develop;

• the timing and results of our preclinical studies for any product candidates that we develop;

• commencement or termination of collaborations for our product development and research programs;

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• the ability of our board of directors to make, alter, or repeal our amended and restated bylaws;

the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors.

• the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used to institute a rights plan, or a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors.

In addition, Section 203 of the General Corporation Law of the State of Delaware prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.

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provided, that with respect to claims under the Securities Act, our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

We are a “smaller reporting company” within the meaning of the Securities Exchange Act of 1934, and if we decide to take advantage of certain exemptions from various reporting requirements applicable to smaller reporting companies, our common stock could be less attractive to investors.

For so long as we qualify as a “smaller reporting company,” we will have the option to take advantage of certain exemptions from various reporting and other requirements that are applicable to other public companies that are not “smaller reporting companies,” including but not limited to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and later effective dates for compliance with certain new disclosure obligations.

In addition, for as long as we are deemed neither a large accelerated filer nor an accelerated filer, we will continue to use the exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act.

We will remain a smaller reporting company if we have either (i) a public float of less than $250 million held by non-affiliates as of the last business day of the second quarter of our then-current fiscal year or (ii) annual revenues of less than $100 million during such recently completed fiscal year with less than $700 million in public float as of the last business day of the second quarter of such fiscal year.

In the event we are eligible to and do rely on the exemptions available to smaller reporting companies, we cannot predict if investors will find our common stock less attractive because we may or do rely on these exemptions.

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 price may be more volatile.

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