What changed in this filing

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Item 1A. Risk Factors

2020-08-12 compared with 2020-05-13 · 247 added, 179 removed, 1106 unchanged (28% of the section changed)

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You should consider all of the factors described as well as the other information in our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” when evaluating our business.

The risk factors set forth below that are marked with an asterisk (*) contain changes to the similarly titled risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2019.

The risk factors set forth below that are marked with an asterisk (*) either are new risks to, or contain changes to the similarly titled risk factors included in, our Annual Report on Form 10-K for the year ended December 31, 2019.

If any of the following risks actually occurs, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected.

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T he President of the United States declared the coronavirus pandemic a national emergency and many states and municipalities in the United States, including California, have announced aggressive actions to reduce the spread of the disease, including limiting non-essential gatherings of people, ceasing all non-essential travel, ordering certain businesses and government agencies to cease non-essential operations at physical locations and issuing “shelter-in-place” orders which direct individuals to shelter at their places of residence (subject to limited exceptions).

As a result , we have implemented work-from-home p olicies for employees and have moved to a “virtual” model with respect to our partner support activities.

As a result , we have implemented work-from-home policies for employees and have moved to a “virtual” model with respect to our partner support activiti es.

The effects of government actions and our policies and those of third parties to reduce the spread of the coronavirus may negatively impact productivity, cause disruptions to our supply chain and ongoing and future clinical trials and impair our ability to execute our business development strategy.

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This decision was not based on any observed safety issues associated with itolizumab (EQ001) but rather out of an abundance of caution related to the current global pandemic and our concern for the well-being of patients and their caregivers.

We are continuing to enroll patients in the Phase 1b/2 clinical trial of itolizumab (EQ001) for the treatment of aGVHD given the acute life-threatening severity of the disease as we believe itolizumab (EQ001) represents a potentially life-saving treatment for these severely ill patients.

In July 2020, we announced that patient enrollment in both of those trials had resumed.

We are continuing efforts to enroll patients in the Phase 1b/2 clinical trial of itolizumab (EQ001) for the treatment of aGVHD given the acute life-threatening severity of the disease as we believe itolizumab (EQ001) represents a potentially life-saving treatment for these severely ill patients.

However, there remains a risk that enrollment of that trial as well as enrollment in our Phase 1b trials in uncontrolled asthma and lupus nephritis, and the timing of topline data, may also be adversely impacted by the COVID-19 pandemic.

Clinical site initiation and patient enrollment for our ongoing aGVHD trial may be delayed due to prioritization of hospital resources toward the coronavirus.

Current or potential patients in our ongoing or planned clinical trials may also choose to not enroll, not participate in follow-up clinical visits or drop out of the trial as a precaution against contracting the coronavirus.

Current or future patients in our ongoing or planned clinical trials may also choose to not enroll, not participate in follow-up clinical visits or drop out of the trial as a precaution against contracting the coronavirus.

Further, some patients may not be able or willing to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services.

Similarly, our ability to recruit and retain principal investigators and site staff who, as healthcare providers, may have heightened exposure to the coronavirus, may be adversely impacted.

Similarly, our ability to recruit and retain principal investigators and site staff who, as healthcare providers, may have heightened exposure to the

coronavirus, may be a dversely impacted.

These events could delay our clinical trials, increase the cost of completing our clinical trials and negatively impact the integrity, reliability or robustness of the data from our clinical trials.

The spread of the coronavirus and actions taken to reduce its spread may also materially affect us economically.

While the potential economic impact brought by, and the duration of, the coronavirus may be difficult to assess or predict, there could be a significant d isruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity and financial position.

While the potential economic impact brought by, and the duration of, the coronavirus may be difficult to assess or predict, there could be a significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity and financial position.

The coronavirus continues to rapidly evolve.

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Consequently, we have no meaningful operations upon which to evaluate our business, and predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing biopharmaceutical products.

We expect to incur significant losses for the foreseeable future and may never achieve or maintain profitab ility.*

We expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability.*

Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that a product candidate will fail to gain regulatory approval or become commercially viable.

We have never generated any revenues, and we cannot estimate with precision the extent of our future losses.

For the three months ended March 31, 2020 and the year ended December 31, 2019, our net losses were $7.8 million and $25.6 million, respectively.

As of March 31, 2020, we had an accumulated deficit of $48.9 million.

We expect to incur increasing levels of operating losses for the foreseeable future as we execute our plan to continue our research and development activities, including the ongoing and future clinical development of itolizumab (EQ001), potentially acquire new products and/or product candidates, seek regulatory approvals of and potentially commercialize any approved product candidates, hire additional personnel and protect our intellectual property.

For the six months ended June 30, 2020 and the year ended December 31, 2019, our net losses were $14.3 million and $25.6 million, respectively.

As of June 30, 2020, we had an accumulated deficit of $55.4 million.

We expect to incur increasing levels of operating losses for the foreseeable future as we execute our plan to continue our research and development activities, including the ongoing and future clinical development of itolizumab (EQ001), potentially expand the indications for which we conduct clinical development of itolizumab (EQ001), potentially acquire new products and/or product candidates, seek regulatory approvals of and potentially commercialize any approved product candidates, hire additional personnel and protect our intellectual property.

In addition, if we obtain regulatory approval for itolizumab (EQ001), we expect to incur increased sales and marketing expenses.

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A decline in the value of our company could also cause you to lose all or part of your investment.

We are highly dependent on the success of our product candidate, itolizumab (EQ001), which is in early stage clinical development, and we may not be able to successfully obtain regulatory or mark eting approval for, or successfully commercialize, this product candidate in any of the indications for which we plan to develop it.

Our future success will depend almost entirely on our ability to successfully develop, obtain regulatory approval for and then successfully commercialize itolizumab (EQ001), in any of the indications for which we initially plan to develop it, including uncontrolled asthma, aGVHD and lupus nephritis, which may never occur.

We are highly dependent on the success of our product candidate, itolizumab (EQ001), which is in early stage clinical development, and we may not be able to successfully obtain regulatory or marketing approval for, or successfully commercialize, this product candidate in any of the indications for which we plan to develop it.*

Our future success will depend almost entirely on our ability to successfully develop, obtain regulatory approval for and then successfully commercialize itolizumab (EQ001), in any of the indications for which we initially plan to develop it, including treatment of COVID-19 patients, as well as treatment of uncontrolled asthma, aGVHD and lupus nephritis, which may never occur.

We have no product candidates in our pipeline other than itolizumab (EQ001).

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If itolizumab (EQ001) is approved and we fail to successfully commercialize it, we may be unable to generate sufficient revenues to sustain and grow our business, and our business, prospects, financial condition and results of operations will be adversely affected.

The positive preliminary data as reported by Biocon from its clinical trial of itolizumab in COVID-19 patients may be incomplete or inappropriately analyzed, and results of earlier studies may not be predictive of future clinical trial results.*

Our partner Biocon recently announced positive preliminary data from a clinical trial of itolizumab in patients hospitalized with COVID-19 in India.

We own the rights to develop and commercialize itolizumab (EQ001) in the United States, Canada, Australia and New Zealand through an exclusive collaboration and license agreement with Biocon.

We are still in the process of obtaining and reviewing data from the clinical trial conducted by Biocon.

Data reported by Biocon may not be complete.

Further, we do not control and are unable to validate study results reported by Biocon or third parties.

Any errors or omissions in the data and public disclosures reported by Biocon or third parties could have a material adverse effect on our stock price and business plans.

While we are currently planning to conduct a global randomized, controlled clinical trial of itolizumab (EQ001) in COVID-19 patients under a U.S.

IND we plan to file, we may decide against initiating clinical development of itolizumab (EQ001) in COVID-19 patients in the United States or internationally after we complete our review and analysis of the Biocon data.

The results of Biocon’s COVID-19 clinical trial may not be predictive of the results of subsequent clinical trials that we may undertake of itolizumab (EQ001) in patients with COVID-19.

The design of any future clinical trials will be based on many assumptions, including, but not limited to, the expected effects of itolizumab (EQ001), and if those assumptions are incorrect, the trials may not produce results to support regulatory approval.

Clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in early-stage clinical trials have nonetheless failed to replicate results in later-stage clinical trials and subsequently failed to obtain regulatory approval.

Additionally, product candidates in later stages of clinical trials may fail to show the desired safety and efficacy despite having progressed through nonclinical studies and earlier clinical trials.

It is also possible that patients enrolled in clinical trials will experience adverse events or unpleasant side effects that are not currently part of the product candidate’s profile.

We have not yet commenced development of itolizumab (EQ001) for COVID-19 patients.

We may be unable to successfully develop and obtain regulatory approval of itolizumab (EQ001) for COVID-19 patients in a timely manner, if at all.*

Based on the initial topline data from the Biocon study and the subsequent restricted emergency use approval of itolizumab granted by the Drugs Controller General of India for the treatment of CRS in COVID-19 patients with moderate to severe ARDS in India, we are planning to conduct our own clinical trial of itolizumab (EQ001) in COVID-19 patients.

Because we have not yet commenced development of itolizumab (EQ001) as a potential treatment for COVID-19 patients, such development will likely require extensive pre-clinical and clinical testing.

In addition, we will need to submit an IND for acceptance by the FDA prior to initiating any clinical trials in the United States for COVID-19 patients.

The FDA may require us to conduct additional preclinical studies for itolizumab (EQ001) before it allows us to initiate clinical trials, which would be costly and time consuming, and could delay, or even prevent, our development plans.

We may be unable to successfully develop and obtain regulatory approval of itolizumab (EQ001) for COVID-19 patients and establish a competitive market share for our treatment before a competitor or before the COVID-19 outbreak is effectively contained, a vaccine or other effective competitive therapies are successfully developed, or the risk of coronavirus infection is significantly diminished, any of which could materially and adversely impact the commercial potential of itolizumab (EQ001) as a treatment for COVID-19 patients.

A large number of companies, academic institutions and other org anizations currently have programs to develop COVID-19 vaccines and therapeutic candidates.

Many of our competitors pursuing vaccines and treatments for COVID-19 have significantly greater financial, product development, manufacturing and marketing resourc es than we have.

Larger pharmaceutical and biotechnology companies have extensive experience in clinical testing and obtaining regulatory approval for their products, and may have the resources to heavily invest to accelerate discovery and development of t heir products.

Our business could be materially and adversely affected if competitors develop and commercialize one or more COVID-19 vaccines or treatments before we can complete development and obtain approval of itolizumab (EQ001) for COVID-19 patients, or if they develop and commercialize one or more COVID-19 vaccines or treatments that are safer, more effective, have fewer or less severe side effects, have broader market acceptance, are more convenient or are less expensive than itolizumab (EQ001) .

We will need significant funding to support the development and commercialization of itolizumab (EQ001) for COVID-19 patients.

Various government entities and private foundations are offering incentives, grants and contracts to encourage additional investment by commercial organizations into preventative and therapeutic agents against COVID-19, but such grants may have the effect of increasing the number of competitors and/or providing advantages to competitors working on COVID-19 vaccines and treatments.

Accordingly, there can be no assurance that we will be able to successfully obtain the necessary funding to support our development and potential commercialization efforts.

Biocon’s grant of restricted emergency use approval of itolizumab in India by the Drugs Controller General of India does not mean that we will be successful in obtaining regulatory approval of itolizumab (EQ001) from other regulatory authorities, including the FDA.*

Although Biocon was granted restricted emergency use approval of itolizumab by the Drugs Controller General of India for the treatment of CRS in COVID-19 patients with moderate to severe ARDS in India, that does not guarantee that we will be able to obtain regulatory approval for itolizumab (EQ001) for COVID-19 patients in any other jurisdiction, including in the United States from the FDA.

Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from those in other jurisdictions, including additional preclinical studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions.

The FDA and comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the product candidate in those countries.

In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction.

We may not be able to submit for marketing approvals and may not receive necessary approvals to commercialize itolizumab (EQ001) for COVID-19 in any market.

If we fail to comply with U.S.

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Thus, no further authorization is required from OFAC at this time for our ongoing and future clinical trials of itolizumab (EQ001).

Even though OFAC has concluded that the general license for Cuban-origin pharmaceuticals applies to itolizumab (EQ001), there can be no assurance that the general license will not be revoked or modified by OFAC in the future, or that we w ill remain in compliance with the general license or other export laws and regulations.

If OFAC revokes or modifies the general license, or otherwise determines that the general license does not apply to itolizumab (EQ001), and OFAC then denies our request for a specific license or delays issuance of a specific license, we will be unable to deal in, or otherwise commercialize, itolizumab (EQ001).

Even though OFAC has concluded that the general l icense for Cuban-origin pharmaceuticals applies to itolizumab (EQ001), there can be no assurance that the general license will not be revoked or modified by OFAC in the future, or that we will remain in compliance with the general license or other export l aws and regulations.

If OFAC revokes or modifies the general license, or otherwise determines that the general license does not apply to itolizumab (EQ001), and OFAC then denies our request for a specific license or delays issuance of a specific license, w e will be unable to deal in, or otherwise commercialize, itolizumab (EQ001).

In that case, we would be required to cease operations related to itolizumab (EQ001), which would materially and adversely affect our financial condition and business prospects.

In addition, in the absence of the general or specific license, the transfer, sale and/or purchase of our securities could be prohibited, and the ownership or possession of our securities co uld be subject to an affirmative OFAC reporting requirement relating to blocked property.

I n addition, in the absence of the general or specific license, the transfer, sale and/or purchase of our securities could be prohibited, and the ownership or possession of our securities could be subject to an affirmative OFAC reporting requirement relatin g to blocked property.

Any violations of the CACR or other applicable export control and sanctions laws could subject us and certain of our employees to substantial civil or criminal penalties.

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This makes it difficult to predict the timing and costs of clinical development for itolizumab (EQ001).

We do not know w hether our approach in targeting CD6 will allow us to develop any products of commercial value.

We do not know whether our approach in targeting CD6 will allow us to develop any products of commercial value.

We have concentrated our research and development approach on targeting CD6, and our future success depends on the successful development of this therapeutic approach to the diseases we are targeting for treatment.

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Our inability to collaborate with a companion diagnostics developer could have a material and adverse effect on our business, financial condition, results of operations and prospects.

We will require substantial additional funding to complete the development and any commercialization of itolizumab (EQ001).

If we are unable to raise this capital when needed, we may be forced to delay, reduce or eliminate our research and development programs or other operation s.*

We will require substantial additional funding to complete the development and any commerc ialization of itolizumab (EQ001).

If we are unable to raise this capital when needed, we may be forced to delay, reduce or eliminate our research and development programs or other operations.*

We expect our expenses to increase substantially during the next few years.

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In addition, if we obtain marketing approval for itolizumab (EQ001), we expect to incur significant commercialization expenses for marketing, sales, manufacturing and distribution.

As of March 31, 2020, we had $47.7 million in cash, cash equivalents and short-term investments.

Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments as of March 31, 2020 will enable us to fund our operations for at least the next 12 months.

As of June 30, 2020, we had $42.6 million in cash, cash equivalents and short-term investments.

Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments as of June 30, 2020, together with capital raised subsequent to June 30, 2020, will enable us to fund our operations for at least the next 12 months.

However, changing circumstances or inaccurate estimates by us may cause us to use capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control.

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Missing those milestones either due to unsuccessful trial results and/or delays in our clinical trials, including as a result of the COVID-19 pandemic, would result in us being unable to advance those remaining amounts of the debt facility, which could adversely impact our financial position and business operations.

In November 2019, we entered into the ATM facility with Jefferies, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $8.45 million from time to time through Jefferies acting as our sales agent, or ATM facility.

As of March 31, 2020, we have sold an aggregate of 192,899 shares of our common stock under the ATM facility for gross proceeds of $0.9 million.

In November 2019, we entered into an ATM facility with Jefferies, or the 2019 ATM Facility, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $8.45 million from time to time through Jefferies acting as our sales agent.

As of June 30, 2020, we sold an aggregate of 192,899 shares of our common stock under the 2019 ATM Facility for gross proceeds of $0.9 million.

In July 2020, we entered into a new ATM facility with Jefferies, or the 2020 ATM Facility, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $150 million from time to time through Jefferies acting as our sales agent.

Subsequent to June 30, 2020 and through the date of the filing of this Quarterly Report on Form 10-Q, we sold an aggregate of 1,539,525 shares of our common stock, which includes shares sold pursuant to the 2020 ATM Facility, but not yet delivered to Jefferies, for total gross proceeds of approximately $17.9 million under those ATM offerings.

In March 2020, we entered into the Purchase Agreement, with Lincoln Park which provides that, upon the terms and subject to the conditions and limitations set forth therein, we may sell to Lincoln Park up to $15.0 million of shares of our common stock from time to time over the 36‑month term of the Purchase Agreement.

Upon execution of the Purchase Agreement, we issued 65,374 shares of our common stock to Lincoln Park as commitment shares in accordance with the closing conditions contained within the Purchase Agreement.

As of March 31, 2020, we have not sold any shares of our common stock to Lincoln Park under the Purchase Agreement.

As of June 30, 2020 and through the date of the filing of this Quarterly Report on Form 10-Q, we have not sold any shares of our common stock to Lincoln Park under the Purchase Agreement.

Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for sale for at least the next several years, if ever.

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In March 2020, as a result of impacts and risks associated with the COVID-19 pandemic, we decided to pause enrollment in our Phase 1b clinical trials of itolizumab (EQ001) in uncontrolled asthma and lupus nephritis.

We have two active INDs with the FDA for the use of itolizumab (EQ001) in the treatment of aGVHD and lupus nephritis and we have not yet filed an IND with the FDA for the use of itolizumab (EQ001) for the treatment of uncontrolled moderate to severe asthma.

In July 2020, we announced that patient enrollment in both of these trials had resumed.

Because of our limited interaction with the FDA, we may not learn of certain information or data that the FDA may request until future interactions.

In part because of our limited infrastructure, experience conducting clinical trials as a company and regulatory interactions, we also cannot be certain that our ongoing and future clinical trials will be completed on time, if at all, that our planned clinical trials will be initiated on time, if at all, or that our planned development programs would be acceptable to the FDA.

planned clinical trials will be initiated on time, if at all, or that our planned development programs would be acceptable to the FDA.

Adverse safety and toxicology findings may emerge as we conduct clinical trials.

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In addition, only a small percentage of biologics under development result in the submission of a BLA to the FDA and even fewer are approved for commercialization.

Our ability to generate product revenues, which we do not expect will occur for at least the next several years, if ever, will depend heav ily on our ability to successfully complete the above activities and any other activities required for the successful development and eventual commercialization of itolizumab (EQ001).

Our ability to generate product revenues, which we do not expect will occur for at least the next several years, if ever, will depend heavily on our ability to successfully complete the above activities and any other activities required for the successful development and eventual commercialization of itolizumab (EQ001).

The success of itolizumab (EQ001) will further depend on factors such as:

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We have licensed itolizumab from Biocon pursuant to an exclusive license agreement, which license is conditioned upon us meeting certain diligence obligations with respect to the development, regulatory approval and commercialization of itolizumab, and making significant milestone payments in connection with regulatory approval and commercial milestones as well as royalty payments.*

We are party to an exclusive license agreement with Biocon, pursuant to which we initially acquired an exclusive license to develop, make, have made, use, sell, have sold, offer for sale, import and otherwise exploit itolizumab and any pharmaceutical composition or preparation containing or comprising itolizumab in the United States and Canada and which was later amended to grant us the same exclusive license in Australia and New Zealand as well.

We are obligated, under this agreement, to achieve certain development milestones within specified timeframes in order to retain all of the licensed rights.

We are obligated, under this agreement, to achieve certain development milestones within specified

timeframes in order to retain all of the licensed rights.

Certain of such milestones are largely outside of our control.

We are also obligated to use commercially reasonable efforts to develop and seek regulatory approval for, and if regulatory approval is obtained, to commercialize, itolizumab in the Equillium Territory and to secure funding for the development of itolizumab in two or more indications.

Further, we are obligated to make certain cash milestone payments to Biocon upon completion of certain regulatory approval and commercial milestones and are required to pay royalties to Biocon on net sales of itolizumab, if approved.

Though we believe that the royalty rates and milestone payments are reasonable in light of our business plan, we will require large amounts of capital to satisfy these obligations.

We may become obligated to make a milestone payment when we do not have the cash on hand to make such payment, which could require us to delay our clinical trials, curtail our operations, scale back our commercialization and marketing efforts or seek funds to meet these obligations on terms unfavorable to us.

In addition, if we are unable to make any payment when due or, if we fail to achieve the development milestones within the timeframes required by the license agreement, or to satisfy our general diligence obligation to use commercially reasonable efforts to develop, register and commercialize itolizumab and to secure funding for the development of itolizumab in two or more indications, Biocon may have the right to limit the scope of our license or terminate the agreement and all of our rights to develop and commercialize itolizumab.

We are also obligated to use commercially reasonable efforts to develop and seek re gulatory approval for, and if regulatory approval is obtained, to commercialize, itolizumab in the Equillium Territory and to secure funding for the development of itolizumab in two or more indications.

Further, we are obligated to make certain cash miles tone payments to Biocon upon completion of certain regulatory approval and commercial milestones and are required to pay royalties to Biocon on net sales of itolizumab, if approved.

Though we believe that the royalty rates and milestone payments are reason able in light of our business plan, we will require large amounts of capital to satisfy these obligations.

We may become obligated to make a milestone payment when we do not have the cash on hand to make such payment, which could require us to delay our cl inical trials, curtail our operations, scale back our commercialization and marketing efforts or seek funds to meet these obligations on terms unfavorable to us.

In addition, if we are unable to make any payment when due or, if we fail to achieve the devel opment milestones within the timeframes required by the license agreement, or to satisfy our general diligence obligation to use commercially reasonable efforts to develop, register and commercialize itolizumab and to secure funding for the development of itolizumab in two or more indications, Biocon may have the right to limit the scope of our license or terminate the agreement and all of our rights to develop and commercialize itolizumab.

We have licensed the rights to itolizumab in the United States, Canada, Australia, and New Zealand.

Any adverse developments that occur during any clinical trials conducted by Biocon or third parties in other juris dictions may affect our ability to obtain regulatory approval or commercialize itolizumab.

Biocon, its Cuban partner, CIMAB, S.A., and their licensees, over which we have no control, have the rights to develop itolizumab worldwide and commercialize itolizumab in geographies outside of the United States, Canada, Australia, and New Zealand.

Any adverse developments that occur during any clinical trials conducted by Biocon or third parties in other jurisdictions may affect our ability to obtain regulatory approval or commercialize itolizumab.*

Itolizumab is approved in India for the treatment of moderate to severe plaque psoriasis, and is marketed by Biocon as ALZUMAb.

In addition, a conditional approval for itolizumab was granted to Centro de Immunologia Molecular, Cuba in May 2014.

This approval is subject to completion of a Phase 3 clinical trial in Cuban patients.

Two clinical trials are currently open in Cuba.

We have recently become aware of ALZUMAb being utilized in India on a compassionate use basis for the treatment of aGVHD, as well as exploratory studies of ALZUMAb that are being conducted in Cuba and planned in India for assessing itolizumab as a potential therapeutic agent for COVID-19.

Biocon was also granted restricted emergency use approval of itolizumab by the Drugs Controller General of India for the treatment of CRS in COVID-19 patients with moderate to severe ARDS in India.

We are also aware of ALZUMAb being utilized in India on a compassionate use basis for the treatment of aGVHD.

In addition, regulatory approval of itolizumab in Cuba was granted to Centro de Immunologia Molecular for itolizumab to be used in patients with rheumatoid arthritis and psoriasis as well as emergency use approval in patients with COVID-19.

We are unaware of any ongoing trials of itolizumab in Cuba.

Although information related to those uses of itolizumab and results observed is currently incomplete and would need to be critically examined before drawing conclusions, results could impact our development plans for itolizumab (EQ001).

Further, if serious adverse events occur with patients using ALZUMAb or during any clinical trials or exploratory studies of itolizumab conducted by Biocon or third parties, regulatory authorities, including the FDA, may delay, limit or deny approval of itolizumab (EQ001) or require us to conduct additional clinical trials as a condition to marketing approval, which would increase our costs.

Further, we do not control and are unable to validate study results reported by Biocon or third parties.

Any errors or omissions in the data and public disclosures reported by Biocon or third parties could have a material adverse effect on our stock price and business plans.

If serious adverse events occur with patients using ALZUMAb or during any clinical trials or exploratory studies of itolizumab conducted by Biocon or third parties, regulatory authorities, including the FDA, may delay, limit or deny approval of itolizumab (EQ001) or require us to conduct additional clinical trials as a condition to marketing approval, which would increase our costs.

If we receive regulatory approval for itolizumab (EQ001) and a new and serious safety issue is identified in connection with use of ALZUMAb or in clinical trials or exploratory studies of itolizumab conducted by Biocon or third parties, regulatory authorities may withdraw their approval of the product or otherwise restrict our ability to market and sell itolizumab.

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The results of preclinical and early clinical trials of itolizumab (EQ001) or any future product candidates may not be predictive of the results of our later-stage clinical trials.

Clinical trial failure may result from a multitude of factors including flaws in trial design, dose selection, placebo effect, patient enrollment criteria and failure to demonstrate favorable safety or efficacy traits, and failure in clinical trials can occur at any stage.

Companies in the biopharmaceutical industry frequently suffer setbacks in the advancement of clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials.

Clinical trial failure may result from a multitude of factors including flaws in trial design, dose selection, placebo effect, patient enrollment criteria and failure to demonstrate favorable safety or efficacy tra its, and failure in clinical trials can occur at any stage.

Based upon negative or inconclusive results, we may decide, or regulators may require us, to conduct additional clinical trials or preclinical studies.

In addition, data obtained from clinical trials are susceptible to varying interpretations, and regulators may not interpret our data as favorably as we do, which may further delay, limit or prevent marketing approval.

In addition, data obtained from clinical trials are susceptible to varying interpretat ions, and regulators may not interpret our data as favorably as we do, which may further delay, limit or prevent marketing approval.

The FDA could delay, limit or deny approval of a product candidate for many reasons, including because they:

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In either case, our development costs would increase.

To date, we have only submitted INDs for clinical trials of itolizumab (EQ001) for the treatment of aGVHD and lupus nephritis, and we will need to submit an IND for acceptance by the FDA prior to initiating any clinical trials in the United States in other indications.

The FDA may require us to conduct additional preclinical studies for itolizumab (EQ001) or any future product candidate before it allows us to initiate clinical trials under any IND, which may lead to additional delays and increase the costs of our preclinical development programs.

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The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to:

impacts and risks associated with global health epidemics such as those related to COVID-19 (for example, in March 2020, as a result of impacts and risks associated with the COVID-19 pandemic, we decided to pause enrollment in our Phase 1b clinical trials of itolizumab (EQ001) in uncontrolled asthma and lupus nephritis);

the FDA disagreeing as to the design or implementation of our clinical studies;

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third-party contractors becoming debarred or suspended or otherwise penalized by the FDA or other government or regulatory authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications.

We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA or by other regulatory agencies or health authorities that have jurisdiction in countries in which the trial is being conducted.

Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory agencies resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a pharmaceutical, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA or by other regulato ry agencies or health authorities that have jurisdiction in countries in which the trial is being conducted.

Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accorda nce with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory agencies resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a pharmaceutical, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes.

Amendments may require us to resubmit our clinical trial protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial.

Certain of our scientifi c advisors or consultants who receive compensation from us are likely to be investigators for our future clinical trials.

Certain of our scientific advisors or consultants who receive compensation from us are likely to be investigators for our future clinical trials.

Under certain circumstances, we may be required to report some of these relationships to the FDA or other regulatory agencies.

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The FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized.

This could result in a delay in approval, or rejection, of our marketing applications by the FDA or other regulatory agencies and may ultimatel y lead to the denial of marketing approval of itolizumab (EQ001) in one or more indications.

If we experience delays in the completion of, or termination of, any clinical trial of itolizumab (EQ001), the commercial prospects of itolizumab (EQ001) will be h armed, and our ability to generate product revenues will be delayed.

Moreover, any delays in completing our clinical trials will increase our costs, slow down our development and approval process and jeopardize our ability to commence product sales and gen erate revenues which may harm our business, financial condition, results of operations and prospects significantly.

This could result in a delay in approval, or rejection, of our marketing applications by the FDA or other regulatory agencies and may ultimately lead to the denial of marketing approval of itolizumab (EQ001) in one or more indications.

If we experience delays in the completion of, or termination of, any clinical trial of itolizumab (EQ001), the commercial prospects of itolizumab (EQ001) will be harmed, and our ability to generate product revenues will be delayed.

Moreover, any delays in completing our clinical trials will increase our costs, slow down our development and approval process and jeopardize our ability to commence product sales and generate revenues which may harm our business, financial condition, results of operations and prospects significantly.

If we experience delays or difficulties in enrolling patients in our ongoing or planned clinical trials, our receipt of necessary regulatory approval could be delayed or prevented.*

We may not be able to continue our ongoing or initiate our future clinical trials for itolizumab (EQ001) if we are unable to identify and enroll a sufficient number of eligible patients to participate in these tri als as required by the FDA.

We may not be able to continue our ongoing or initiate our future clinical trials for itolizumab (EQ001) if we are unable to identify and enroll a sufficient number of eligible patients to p articipate in these trials as required by the FDA.

Multiple factors could contribute to such challenges of enrolling our clinical trials, including impacts related to the COVID-19 pandemic, which have already adversely impacted enrollment across all three of our current clinical trials.

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In addition, some of our competitors may have ongoing clinical trials for product candidates that would treat the same indications as itolizumab (EQ001), and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates.

This is acutely relevant for our development of itolizumab (EQ001) for the treatment of patients with uncontrolled moderate to severe asthma and lupus nephritis, diseases for which there is significant competition for clinical trial subjects.

This is acutely relevant for our development of itolizumab (EQ001) for the treatment of patients with uncontrolled moderate to severe asthma and lupus nephritis, and for our future potential development of itolizumab (EQ001) for the treatment of patients with COVID-19, each diseases for which there is significant competition for clinical trial subjects.

Patient enrollment is also affected by other factors, including:

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proximity and availability of clinical trial sites for prospective patients.

Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether.

Our inability to enroll and retain a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether.

Enrollment delays in our clinical trials may result in increased development costs, which would cause the value of our company to decline and limit our ability to obtain additional financing.

Adverse side effe cts or other safety risks associated with itolizumab could delay or preclude approval, cause us to suspend or discontinue clinical trials, abandon further development, limit the commercial profile of an approved label, or result in significant negative con sequences following marketing approval, if any.

Adverse side effects or other safety risks associated with itolizumab could delay or preclude approval, cause us to suspend or discontinue clinical trials, abandon further development, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.*

As is the case with pharmaceuticals generally, it is likely that there may be side effects and adverse events associated with itolizumab in our ongoing and future clinical trials.

In the Phase 1 clinical trial of itolizumab (EQ001) conducted by Biocon in Australia in healthy subjects, there were no serious adverse events, dose limiting toxicities, or study drug discontinuations reported.

Biocon has completed three clinical studies of ALZUMAb in India in patients with rheumatoid arthritis and chronic plaque psoriasis, with a total of 333 patients exposed to ALZUMAb to date at dose levels ranging from 0.2 mg/kg to 1.6 mg/kg.

An additional 35 patients have received itolizumab in clinical trials conducted in Cuba.

In Biocon’s Phase 3 clinical trial, infusion-related reactions and related events were the main adverse events attributed to itolizumab.

The trial also included a separate stage to compare the pharmacokinetics of the intravenous administration of itolizumab (EQ001) to ALZUMAb and determine the absolute bioavailability of subcutaneous itolizumab (EQ001), but this stage was terminated early due to the occurrence of an initial decrease in lymphocyte counts and the occurrence of transient lymphopenia in the healthy subjects.

No serious adverse events were reported in either stage of the Phase 1 trial.

Biocon has completed four clinical studies of ALZUMAb in India in patients with rheumatoid arthritis, chronic plaque psoriasis, and for the treatment of SARS-COV-2 pneumonia at dose levels ranging from 0.2 mg/kg to 1.6 mg/kg.

Additional patients have received itolizumab in clinical studies in subjects with rheumatoid arthritis, psoriasis, and Type I diabetes conducted in Cuba.

In Biocon’s Phase 3 clinical trials, infusion-related reactions and infusion-related events were the main adverse events attributed to itolizumab.

There were five serious adverse events reported including exfoliative dermatitis (widespread redness and peeling of the skin), erythrodermic (severe) psoriasis, infusion-related reaction, adjustment disorder with anxiety, and bacterial arthritis.

Since the December 27, 2012 date of authorization in India through November 30, 2019, ALZUMAb has accrued approximately 187 patient-years of use.

Post-market safety surveillance has collected a total of 35 adverse events in 24 adverse event reports in that time period, of which four have been noted as serious, including infusion reaction, type 1 hypersensitivity, diarrhea and urticaria (hives).

The majority of reactions have involved the dermatologic system organ class and include rash, acne, urticaria, increased pruritus (itching) and increased psoriasis.

We are aware of clinical studies planned and/or supported by Biocon in India and Cuba related to the testing of ALZUMAb in patients with COVID-19.

The complete results of these studies are currently not known to us but may inform further understanding of the safety and efficacy of ALZUMAb in this additional patient population.

Further, Biocon is supporting compassionate use of ALZUMAb in treatment refractory patients with aGVHD in India.

At this point, we are not aware of any safety findings or adverse events related to the use of ALZUMAb in patients with COVID-19 or in treatment refractory patients with aGVHD.

Post-market safety surveillance of ALZUMAb has collected non- serious reports, primarily involving the dermatologic system organ class that have included rash, acne, urticaria, increased pruritus (itching) and increased psoriasis.

Serious reports have included infusion reaction, type 1 hypersensitivity, diarrhea and urticaria (hives).

Through the date of the filing of this Quarterly Report on Form 10-Q, there has been no change in the benefit risk profile of itolizumab, which remains favorable.

We are aware of clinical studies conducted and/or supported by Biocon in India and Cuba related to the testing of itolizumab in patients with COVID-19.

The preliminary efficacy results from the Biocon trial conducted in India suggest a mortality benefit and improvement in clinical status in patients receiving itolizumab.

Based on this trial, Biocon received approval from the Drugs Controller General of India to market ALZUMAb for emergency use in India for the treatment of CRS in moderate to severe ARDS patients due to COVID-19.

The Cuban COVID-19 study with itolizumab was an uncontrolled study and so interpretation of the efficacy results are limited.

The preliminary safety findings of both studies indicate that there has been no change in the benefit risk profile of itolizumab, which remains favorable.

We are further aware that Biocon is supporting compassionate use of ALZUMAb in treatment refractory patients with aGVHD in India.

At this point, we are not aware of any safety findings or adverse events attributed to the use of ALZUMAb in patients with COVID-19 or in treatment refractory patients with aGVHD.

Biocon may continue to support use of ALZUMAb in aGVHD or other indications over which we have no control.

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Undesirable side effects caused by itolizumab (EQ001) could result in the delay, suspension or termination of clinical trials by us or the FDA for a number of reasons.

Additionally, a material percentage of patients in our aGVHD clinical trial will die from aGVHD, possibly as a result of itolizumab (EQ001), which could impact development of itolizumab (EQ001).

Additionally, a material percentage of patients in our ongoing aGVHD and planned COVID-19 clinical trials may die from those respective diseases, possibly as a result of itolizumab (EQ001), which could impact development of itolizumab (EQ001).

If we elect or are required to delay, suspend or terminate any clinical trial, the commercial prospects of itolizumab (EQ001) will be harmed and our ability to generate product revenues from this product candidate will be delayed or eliminated.

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Any of these occurrences may harm our business, prospects, financial condition and results of operations significantly.

Moreover, if itolizumab (EQ001) is associated with undesirable side effects in clinical trials or has characteristics that are unexpected, we may elect to abandon or limit its development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for itolizumab (EQ001), if approved.

Moreover, if itolizumab (EQ001) is associated with undesirable side effects in clinical trials or has characteristics that are unexpected, we may elect to abandon or limit its development to more narrow uses or subpopulations in which the undesirab le side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for itolizumab (EQ001), if approved.

We may also be required to modify our study plans based on findings in our clinical trials.

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If such side effects become known later in development or upon approval, if any, such findings may harm our business, financial condition, results of operations and prospects significantly.

In addition, if itolizumab (EQ001) receives marketing approval, and we or others later identify undesirable side effects caused by itolizumab (EQ001) or ALZU MA b , a number of potentially significant negative consequences could result, including:

In addition, if itolizumab (EQ001) receives marketing approval, and we or others later identify undesirable side effects caused by itolizumab (EQ001) or ALZUMAb, a number of potentially significant negative consequences could result, including:

regulatory authorities may withdraw approval of itolizumab (EQ001);

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Further, disclosure of interim data by us or by our competitors could result in volatility in the price of our common stock.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses, or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general.

In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular biopharmaceutical product, biopharmaceutical product candidate or our business.

If the topline data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, itolizumab (EQ001) or any future product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

A Phase 1 single ascending dose clinical trial of itolizumab (EQ001) in normally healthy volunteers was conducted by Biocon in Australia, we have initiated a Phase 1b proof-of-concept clinical trial of itolizumab (EQ001) in uncontrolled moderate to severe asthma patients in Australia and New Zealand, and we may conduct add itional clinical trials of itolizumab (EQ001) outside of the United States.

However, the FDA may not accept data from such trials conducted outside the U nited States , in which case our development plans will be delayed, which could materially harm our business.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or a nalyses, or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general.

In addition, th e information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular biopharmaceutical product, biopharmaceutic al product candidate or our business.

If the topline data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, itolizumab (E Q001) or any future product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

A Phase 1 single ascending dose clinical trial of itolizumab (EQ001) in normally healthy volunteers was conducted by Biocon in Australia, we have initiated a Phase 1b proof-of-concept clinical trial of itolizumab (EQ001) in uncontrolled moderate to severe asthma patients in Australia and New Zealand, and we may conduct additional clinical trials of itolizumab (EQ001) outside of the United States.

However, the FDA may not accept data from such trials conducted outside the United States, in which case our development plans will be delayed, which could materially harm our business.*

In the fourth quarter of 2017, Biocon completed a Phase 1 clinical trial of itolizumab (EQ001) in healthy subjects in Australia to assess the safety and tolerability of the subcutaneous version of itolizumab (EQ001).

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We submitted this data to the FDA as part of our IND submissions for the conduct of clinical trials for the treatment of aGVHD and lupus nephritis.

However, it is possible that the FDA will not authorize us to proceed with clinical studies in connection with any future IND submissions in other indications that have different patient populations, and we may be required to conduct additional Phase 1 clinical trials, which would be costly and time consuming, and delay aspects of our development plan, which could harm our business.

However, it is possible that the FDA will not authorize us to proceed with clinical studies in connection with any future IND submissions in other indications that have different patient populations, including for the treatment of COVID-19 patients, and we may be required to conduct additional Phase 1 clinical trials, which would be costly and time consuming, and delay aspects of our development plan, which could harm our business.

In June 2019, we initiated a Phase 1b, multiple ascending dose escalation, proof-of-concept clinical trial of itolizumab (EQ001) in uncontrolled moderate to severe asthma in Australia and have initiated sites in Australia and New Zealand.

In July 2020, we announced that patient enrollment in both of those trials had resumed.

Although the FDA may accept data from clinical trials conducted entirely outside the United States and not under an IND, acceptance of such study data is generally subject to certain conditions.

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We conduct significant operations through our Australian wholly-owned subsidiary.

If we lose our ability to operate in Australia, or if our subsidiary is unable to receive the research and development tax credit allowed by Australian regulations, our business and results of operations will suffer.

If we lose our ability to operate in Australi a, or if our subsidiary is unable to receive the research and development tax credit allowed by Australian regulations, our business and results of operations will suffer.

In January 2019, we formed a wholly-owned Australian subsidiary, Equillium Australia Pty Ltd, to conduct the clinical development of itolizumab (EQ001) for the treatment of uncontrolled asthma in Australia and New Zealand.

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We may not be successful in our efforts to expand our pipeline by identifying additional indications for which to test itolizumab (EQ001) in the future.

We may expend our limited resources to pursue a particular indication for itolizumab (EQ001) and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Our translational biology program may initially show promise in identifying additional indications fo r which itolizumab (EQ001) may have therapeutic benefit, yet this may fail to yield additional clinical development opportunities for itolizumab (EQ001) for a number of reasons, including, itolizumab (EQ001) may, on further study, be shown to have harmful side effects, limited to no efficacy or other characteristics that indicate that it is unlikely to receive marketing approval and achieve market acceptance in such additional indications.

We may expend our limited resources to pursue a particular indication for itolizumab (EQ001), for example in COVID-19 patients, and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.*

Our translational biology program may initially show promise in identifying additional indications for which itolizumab (EQ001) may have therapeutic benefit, yet this may fail to yield additional clinical development opportunities for itolizumab (EQ001) for a number of reasons, including, itolizumab (EQ001) may, on further study, be shown to have harmful side effects, limited to no efficacy or other characteristics that indicate that it is unlikely to receive marketing approval and achieve market acceptance in such additional indications.

Research programs to identify additional indications for itolizumab (EQ001) require substantial technical, financial and human resources.

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withdrawal of the product from the market;

voluntary or mandatory product recalls;

voluntar y or mandatory product recalls;

requirements to change the way the product is administered or for us to conduct additional clinical trials;

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In addition, if we have any product candidate approved, our product labeling, advertising and promotion will be subject to regulatory requirements and continuing regulatory review.

The FDA strictly regulates the promotional claims that may be made about biopharmaceutical pro ducts.

The FDA strictly regulates the promotional claims that may be made about biopharmaceutical products.

In particular, a product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling.

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If we are found to have promoted such off-label uses, we may become subject to significant liability.

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 signifi cant sanctions.

The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion.

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the prevalence and severity of any side effects.

We currently have no marketing and sales organization and have no experience as a company in commercializing products, and we may have to invest significan t resources to develop these capabilities.

We currently have no marketing and sales organization and have no experience as a company in commercializing products, and we may have to invest significant resources to develop these capabilities.

If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell itolizumab (EQ001), we may not be able to generate product revenue.

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We face substantial competition, which may result in others discovering, developing or commercializing products more quickly or marketing them more successfully than us.

If their product candidates are shown to be safer or more effective than ours, the n our commercial opportunity will be reduced or eliminated.

If their product candidates are shown to be safer or more effective than ours, then our commercial opportunity will be reduced or eliminated.

The development and commercialization of new products is highly competitive.

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LLC have received approval for dupilimab, an anti-IL-4 receptor antibody, as an add-on maintenance treatment in patients with moderate to severe asthma aged 12 years and older with an eosinophilic phenotype or with oral corticosteroid dependent asthma.

We are aware of several companies with development programs in moderate to severe asthma, including Amgen Inc., AnaptysBio, Inc., AstraZeneca plc, Boehringer Ingelheim GmbH, GlaxoSmithKline plc, Gossamer Bio, Inc., Regeneron Pharmaceuticals, Inc., Roche Holding AG, Sanofi-Aventis U.S.

We are aware of several companies with

development programs in moderate to severe asthma, including Amgen Inc., AnaptysBio, Inc., AstraZeneca plc, Boehringe r Ingelheim GmbH, GlaxoSmithKline plc, Gossamer Bio, Inc., Regeneron Pharmaceuticals, Inc., Roche Holding AG, Sanofi-Aventis U.S.

and Theravance Biopharma, Inc.

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In addition, these larger companies may be able to use their greater market power to obtain more favorable distribution and sales-related agreements with third parties, which could give them a competitive advantage over us.

Further, as more product candidate s within a particular class of biopharmaceutical products proceed through clinical development to regulatory review and approval, the amount and type of clinical data that may be required by regulatory authorities may increase or change.

Consequently, the results of our clinical trials for product candidates in those classes will likely need to show a risk benefit profile that is competitive with or more favorable than those products and product candidates in order to obtain marketing approval or, if approv ed, a product label that is favorable for commercialization.

Further, as more product candidates within a particular class of biopharmaceutical products proceed through clinical development to regulatory review and approval, the amount and type of clinical data that may be required by regulatory authorities may increase or change.

Consequently, the results of our clinical trials for product candidates in those classes will likely need to show a risk benefit profile that is competitive with or more favorable than those products and product candidates in order to obtain marketing approval or, if approved, a product label that is favorable for commercialization.

If the risk benefit profile is not competitive with those products or product candidates, we may have developed a product that is not commercially viable, that we are not able to sell profitably or that is unable to achieve favorable pricing or reimbursement.

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market opportunities for itolizumab (EQ001) are smaller than we believe they are, our revenue may be adversely affected and our business may suffer.

We only have the rights to itolizumab (EQ001) for the Un ited States, Canada, Australia and New Zealand, and we are focused on the development of itolizumab (EQ001) for immuno-inflammatory diseases, with an initial intention to develop it for the treatment of uncontrolled moderate to severe asthma, aGVHD and lupus nephritis.

Our projections of addressable patient populations in the United States, Canada, Australia and New Zealand that have the potential to benefit from treatment with itolizumab (EQ001) are based on estimates and may prove to be incorrect.

We o nly have the rights to itolizumab (EQ001) for the Equillium Territory, and we are focused on the development of itolizumab (EQ001) for immuno-inflammatory diseases, with an initial intention to develop it for the treatment of patients with uncontrolled moderate to severe asthma, aGVHD, lupus nephritis, and COVID-19.

Our projections of addressable patient populations in the Equillium Territory that have the potential to benefit from treatment with itolizumab (EQ001) are based on estimates and may prove to be incorrect.

If any of our estimates are inaccurate, the market opportunities for itolizumab (EQ001) could be significantly diminished and have an adverse material impact on our business.

We may not ultimately realize the potential benefits of orphan drug designation for itol izumab (EQ001).

We may not ultimately realize the potential benefits of orphan drug designation for itolizumab (EQ001).

We received orphan drug designations for itolizumab (EQ001) for both the prevention and treatment of aGVHD.

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Moreover, if the FDA determines that our manufacturer is not in compliance with FDA laws and regulations, including those governing cGMPs, the FDA may deny BLA approval until the deficiencies are corrected or we replace the manufacturer in our BLA with a manufacturer that is in compliance.

In addition, there are risks associated with large scale manufacturing for clinical trials or commercial scale including, among others, cost overruns, po tential problems with process scale-up, process reproducibility, stability issues, compliance with cGMPs, lot consistency and timely availability and delivery of raw materials.

Even if we obtain regulatory approval for itolizumab (EQ001) or any future prod uct candidates, there is no assurance that Biocon or other potential manufacturers will be able to manufacture the approved product to specifications acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities to meet the requirements for the potential launch of the product or to meet potential future demand.

Further, our third-party manufacturers may experience manufacturing or shipping difficulties due to resource constraints or as a result of natural disasters, labor dis putes, unstable political environments, or public health epidemics such as the recent COVID-19 outbreak.

If our manufacturers are unable to produce sufficient quantities for clinical trials or for commercialization, commercialization efforts would be impaired, which would have an adverse effect on our business, financial condition, results of operations and growth prospects.

In addition, there are risks associated with large scale manufacturing for clinical trials or commercial scale including, among others, cost overruns, potential problems with process scale-up, process reproducibility, stability issues, compliance with cGMPs, lot consistency and timely availability and delivery of raw materials.

Even if we obtain regulatory approval for itolizumab (EQ001) or any future product candidates, there is no assurance that Biocon or other potential manufacturers will be able to manufacture the approved product to specifications acceptable to the FDA or other regulatory authorities, to produce it in sufficie nt quantities to meet the requirements for the potential launch of the product or to meet potential future demand.

Further, our third-party manufacturers may experience manufacturing or shipping difficulties due to resource constraints or as a result of na tural disasters, labor disputes, unstable political environments, or public health epidemics such as the recent COVID-19 outbreak.

If our manufacturers are unable to produce sufficient quantities for clinical trials or for commercialization, commercializat ion efforts would be impaired, which would have an adverse effect on our business, financial condition, results of operations and growth prospects.

Scaling up a biologic manufacturing process is a difficult and uncertain task, and Biocon may not have the necessary capabilities to complete the implementation and development process of further scaling up production, transferring production to other sites, or managing its production capacity to timely deliver our supplies of itolizumab (EQ001) (or other biologics) or meet product demand.

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Our failure to comply with these regulations may require us to stop and/or repeat clinical trials, which would delay the marketing approval process.

There is no guarantee that any such CROs, clinical trial investigators or other third parties on which we rely will devote adequate time and resources to our development activities or perform as contractually require d.

If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, otherwise performs in a substandard manner, or terminates its engagement with us, the timelines for our development programs may be extended or delayed or our development activities may be suspended or terminated.

If our clinical trial site terminates for any reason, we may experience the loss of follow-up information on subjects enrolled in such clinical trial unless we are ab le to transfer those subjects to another qualified clinical trial site, which may be difficult or impossible.

In addition, clinical trial investigators for our clinical trial may serve as scientific advisors or consultants to us from time to time and may r eceive cash or equity compensation in connection with such services.

If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected the interpr etation of the trial, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection of any marketing application we submit by the FDA.

If our clinical trial site terminates for any reason, we may experience the loss of follow-up information on subjects enrolled in such clinical t rial unless we are able to transfer those subjects to another qualified clinical trial site, which may be difficult or impossible.

In addition, clinical trial investigators for our clinical trial may serve as scientific advisors or consultants to us from t ime to time and may receive cash or equity compensation in connection with such services.

If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected the interpretation of the trial, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection of any mark eting application we submit by the FDA.

Any such delay or rejection could prevent us from commercializing itolizumab (EQ001) or any future product candidates.

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Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s independent discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.

In addition, these agreements typically restrict the ability of our advisors, employees, third-party contractors and consultants to publish data potentially relating to our trade sec rets, although our agreements may contain certain limited publication rights.

For example, any academic institution that we may collaborate with will likely expect to be granted rights to publish data arising out of such collaboration and any joint researc h and development programs may require us to share trade secrets under the terms of our research and development or similar agreements.

Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of our agreements with third parties, independent development or publication of information by any of our third-party collaborators.

A competitor’s discovery of our trade secrets would impair our competitive position and have an adverse impact on our busin ess.

In addition, these agreements typically restrict the ability of our advisors, employees, third-party contractors and consultants to publish data potentially relati ng to our trade secrets, although our agreements may contain certain limited publication rights.

For example, any academic institution that we may collaborate with will likely expect to be granted rights to publish data arising out of such collaboration an d any joint research and development programs may require us to share trade secrets under the terms of our research and development or similar agreements.

Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, eit her through breach of our agreements with third parties, independent development or publication of information by any of our third-party collaborators.

A competitor’s discovery of our trade secrets would impair our competitive position and have an adverse impact on our business.

We may wish to acquire rights to future assets through in-licensing or may attempt to form collaborations in the future with respect to future product candidates, but may not be able to do so, which may cause us to alter or delay our development and commercialization plans.

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government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns.

The patent position of biotechnology companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation, resulting in court decisions, including Supreme Court decisions, that have increased uncertainties as to the ability to enforce patent rights in the future.

The patent position of biotechnology companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation, resulting in court decisions, including Supreme Court decisions, which have increased uncertainties as to the ability to enforce patent rights in the future.

In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States, allowing foreign competitors a better opportunity to create, develop and market competing product candidates, or vice versa.

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threshold for initiating such proceedings may be low, so that even proceedings with a low probability of success might be initiated.

In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license , develop or commercialize current or future product candidates.

Our and our licensors’, licensees’ or partners’ patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent i ssues from such applications, and then only to the extent the issued claims cover the technology.

In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collabo rating with us to license, develop or commercialize current or future product candidates.

Our and our licensors’, licensees’ or partners’ patent applications cannot be enforced against third parties practicing the technology claimed in such applications un less and until a patent issues from such applications, and then only to the extent the issued claims cover the technology.

Because patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we or our licensors were the first to file any patent application related to our research programs and product candidates such as itolizumab.

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If we or our licensor fail to adequately protect this intellectual property, our ability to commercialize products could suffer.

Because our programs may require the use of proprietary rights held by third parties, the growth of our business may depend in part on our ability to acquire, in-license or use these proprietary rights.

We may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify as necessary for our product candidates.

The licensing and acquisition of third-party intellec tual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive.

These established companies may have a compe titive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.

The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive.

These established com panies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.

In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us.

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collaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products;

collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property;

a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.

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We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings.

Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and develo ped intellectual property portfolios.

Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

We cannot assure you that our op erations do not, or will not in the future, infringe existing or future patents.

We cannot assu re you that our operations do not, or will not in the future, infringe existing or future patents.

There is a substantial amount of intellectual property litigation in the biotechnology and pharmaceutical industries, and we may become party to, or threatened with, litigation or other adversarial proceedings regarding intellectual property rights with respect to our product candidates.

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An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents against those parties or other competitors and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products.

Interference or derivation proceedings provoked by third parties or brought by us or declared by the USPTO may be necessary to determine the priority of inventions with respect to our patents or paten t applications.

An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party.

For example, an unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party.

Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms or at all, or if a non-exclusive license is offered and our competitors gain access to the same technology.

Our defense of litigation or interference or derivation proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees.

In addition, the uncertainties associated with l itigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development partnerships that would h elp us bring itolizumab or other product candidates that we may identify to market.

In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development partner ships that would help us bring itolizumab or other product candidates that we may identify to market.

Any of these occurrences could adversely affect our competitive business position, results of operations business prospects and financial condition.

Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question.

In this case, we could ultimately be forced to cease use of such trademarks.

Simil arly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question.

In th is case, we could ultimately be forced to cease use of such trademarks.

Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy.

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Moreover, any such litigation or the threat thereof may adversely affect our reputation, our ability to form strategic alliances or sublicense our rights to collaborators, engage with scientific advisors or hire employees or consultants, each of which would have an adverse effect on our business, results of operations and financial condition.

Changes in patent law in the United States and other jurisdictions could diminish the value of patents i n general, thereby impairing our ability to protect our product candidates.

Changes in patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents relating to our research programs and product candidates.

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Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submissions, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submissions, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduc ed or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuities fees and various other governmental fees on patents and/or patent applications are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent and/or patent application.

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Because from time to time we expect to rely on third parties in the development, manufacture, and distribution of our products and provision of our services, we must, at times, share trade secrets with them.

Despite employing the contractual and other security precautions described above, the need to share trade secrets increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of

others, or are disclosed or used in violation of these agreements.

If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us.

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 harmed.

We may become subject to claims challenging the inventorship or ownership of our patents and other intellectual property.

We may become subject to claims chal lenging the inventorship or ownership of our patents and other intellectual property.

We or our licensor may be subject to claims that former employees, consultants, independent contractors, collaborators or other third parties have an interest in our patents or other intellectual property as an owner, co-owner, inventor or co-inventor.

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Although we have entered into agreements with them regarding their employment, they are not for a specific term and each of them may terminate their employment with us at any time, though we are not aware of any present intention of any of these individuals to leave us.

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

As of March 31, 2020, we had 22 full-time employees.

As we advance itolizumab (EQ001) in clinical development, we expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of clinical development, quality, regulatory affairs and, if itolizumab (EQ001) or any future product candidates receives marketing approval, sales, marketing and distribution.

We expect to expand our development, regulatory and operational capabilities and, as a result, we may encounter diffic ulties in managing our growth, which could disrupt our operations.*

As of June 30, 2020, we had 22 full-time employees.

As we advance itolizumab (EQ001) in clinical development, we expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of clinical development, quality, regulatory affairs and, if itolizumab (EQ001) or any future product candidates receive marketing approval, sales, marketing and distribution.

To manage our anticipated future growth, we must:

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improve our operational, financial and management controls, reporting systems and procedures.

Our future financial performance and our ability to develop, manufacture and commercialize itolizumab (EQ001) and any future product candidates will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert financial and other resources, and a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time, to m anaging these growth activities.

We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain third party contract organizations, advisors and consultants to provide certain services, including assuming substantial responsibilities for the conduct of our ongoing and future clinical trials and the manufacture of itolizumab (EQ001) and any future product candidates.

We cannot assure you that the services of such third party contract organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements.

In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by our vendors or consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain marketing approval of our product candidates or otherwise advance our business.

In addition, if we are

unable to effectively manage our outsourced activ ities or if the quality or accuracy of the services provided by our vendors or consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain marketing approval of our product candida tes or otherwise advance our business.

We cannot assure you that we will be able to properly manage our existing vendors or consultants or find other competent outside vendors and consultants on economically reasonable terms, or at all.

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If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from government funded healthcare programs, such as Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, additional integrity reporting and oversight obligations, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Our internal information technology systems, or those of our third-party CROs or other contractors or consultants, may fail or suf fer security breaches, loss or leakage of data and other disruptions, which could result in a material disruption of our development programs, compromise sensitive information related to our business or prevent us from accessing critical information, poten tially exposing us to liability or otherwise adversely affecting our business.

Our internal information technology systems, or those of our third-party CROs or other contractors or consultants, may fail or suffer security breaches, loss or leakage of data and other disruptions, which could result in a material disruption of our development programs, compromise sensitive information related to our business or prevent us from accessing critical information, potentially exposing us to liability or otherwise adversely affecting our business.*

We are increasingly dependent upon information technology systems, infrastructure and data to operate our business.

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We also have outsourced elements of our operations to third parties, and as a result we manage a number of third party contractors who have access to our confidential information.

Despite the implementation of security measures, given their size and complexity and the increasing amounts of confidential information that they maintain, our internal information technology systems and those of our third-party CROs and other contractors and consultants are potentially vulnerable to breakdown or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war and telecommunication and electrical failures, as well as security breaches from inadvertent or intentional actions by our employees, contractors, consultants, business partners, and/or other third parties, or from cyber-attacks by malicious third parties (including the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information), which may compromise our system infrastructure or lead to data leakage.

To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and reputational damage and the further development and commercialization of itolizumab (EQ001) or any future product candidates could be delayed.

Despite the im plementation of security measures, given their size and complexity and the increasing amounts of confidential information that they maintain, our internal information technology systems and those of our third-party CROs and other contractors and consultant s are potentially vulnerable to breakdown or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war and telecommunication and electrical failures, as well as security breaches from inadvertent or inte ntional actions by our employees, contractors, consultants, business partners, and/or other third parties, or from cyber-attacks by malicious third parties (including the deployment of harmful malware, ransomware, denial-of-service attacks, social engineer ing and other means to affect service reliability and threaten the confidentiality, integrity and availability of information), which may compromise our system infrastructure or lead to data leakage.

Changes in how our employees work and access our systems during the COVID-19 pandemic could lead to additional opportunities for bad actors to launch cyber-attacks or for employees to cause inadvertent security risks or incidents.

To the extent that any accidental or intentional disruption or security breach we re to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and reputational damage and the further development and commercialization of itolizumab (EQ0 01) or any future product candidates could be delayed.

The effects of a disruption or security breach could be further amplified during the current COVID-19 pandemic.

While we have not experienced any such system failure, accident or security breach to date, we cannot assure you that our data protection efforts and our investment in information technology will prevent significant breakdowns, data leakages, breaches in our systems or other cyber incidents that could have a material adverse effect upon our reputation, business, operations or financial condition.

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Depending on the facts and circumstances, we could be subject to criminal penalties if we knowingly obtain, use, or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.

As of May 25, 2018, the General Data Protection Regulation, or GDPR, has replaced the Data Protection Directive with respect to the processing of personal data in the European Union.

The GDPR imposes several stringent requirements for controllers and processors of personal data, includin g, for example, higher standards for obtaining consent from individuals to process their personal data, more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention and secondary use of information, increased requirements pertaining to health data and pseudonymised (i.e., key-coded) data and additional obligations when we contract third party processors in connection with the processing of the personal da ta.

The GDPR provides that European Union member states may make their own further laws and regulations limiting the processing of genetic, biometric or health data, which could limit our ability to use and share personal data or could cause our costs coul d increase, and harm our business and financial condition.

Failure to comply with the requirements of GDPR and the applicable national data protection laws of the European Union member states may result in fines of up to €20,000,000 or up to 4% of the tota l worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties.

As of May 25, 2018, the General Data Protection Regulation, or GDPR, has replaced the Data Protection Directiv e with respect to the processing of personal data in the European Union.

The GDPR imposes several stringent requirements for controllers and processors of personal data, including, for example, higher standards for obtaining consent from individuals to pro cess their personal data, more robust disclosures to individuals and a strengthened individual data rights regime, shortened timelines for data breach notifications, limitations on retention and secondary use of information, increased requirements pertaini ng to health data and pseudonymised (i.e., key-coded) data and additional obligations when we contract third party processors in connection with the processing of the personal data.

The GDPR provides that European Union member states may make their own fur ther laws and regulations limiting the processing of genetic, biometric or health data, which could limit our ability to use and share personal data or could cause our costs could increase, and harm our business and financial condition.

Failure to comply w ith the requirements of GDPR and the applicable national data protection laws of the European Union member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is high er, and other administrative penalties.

To comply with the new data protection rules imposed by GDPR we may be required to put in place additional mechanisms ensuring compliance.

This may be onerous and adversely affect our business, financial condition, results of operations and prospects.

This may be onerous and adversely affect our business, financial condition, r esults of operations and prospects.

European data protection law also imposes strict rules on the transfer of personal data out of the European Union, including to the United States.

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Claims that we have violated individuals’ privacy rights, failed to comply with data protection laws, or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.

We or the third parties upon whom we depend may be adversely a ffected by earthquakes, fires, other natural disasters, or other sudden, unforeseen and severe adverse events, including public health events, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

We or the third parties upon whom we depend may be adversely affected by earthquakes, fires, other natural disasters, or other sudden, unfor eseen and severe adverse events, including public health events, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.*

Our headquarters and main research facility are located in the Greater San Diego Area, which in the past has experienced severe earthquakes and fires.

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the inability to commercialize any products that we may develop.

We currently have product liability insura nce.

We currently have product liability insurance.

However, the amount of insurance may not be adequate to cover all liabilities that we may incur.

We anticipate that we will need to increase our insurance coverage as itolizumab (EQ001) and any future product candidates advance through clinical trials and if we successfully commercialize any products.

Insurance coverage is increasingly expensive.

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For example, the Tax Cuts and Jobs Act included a provision that repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” Since the enactment of the Tax Cuts and Jobs Act, there have been additional amendments to certain provisions of the Affordable Care Act, and we expect the current Trump administration and Congress will likely continue to seek to modify, repeal or otherwise invalidate all, or certain provisions of, the Affordable Care Act.

On December 14, 2018, a Texas U.S.

On Dece mber 14, 2018, a Texas U.S.

District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax Cuts and Jobs Act.

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The CARES Act, which was signed into law in March 2020 and is designed to provide financial support and resources to individuals and businesses affected by the COVID-19 pandemic, suspended the 2% Medicare sequester from May 1, 2020 through December 31, 2020, and extended the sequester by one year, through 2030.

In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of

providers, including hospitals, ima ging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

New laws may result in additional reductions in Medicare and other healthcare fundi ng, which may materially adversely affect customer demand and affordability for our products and, accordingly, the results of our financial operations.

Also, there has been heightened governmental scrutiny recently over the manner in which pharmaceutical companies set prices for their marketed products, which have resulted in several Congressional inquiries and proposed and enacted state and federal legislation designed to, among other things, bring more transparency to product pricing, reduce the cost of p rescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

At the federal level, the Trump administration’s budget proposal for f iscal year 2021 includes a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and to increase patient access to lower-cost generic and biosimilar drugs.

In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

New laws may result in additional reductions in Medicare and other healthcare funding, which may materially adversely affect customer demand and affordability for our products and, accordingly, the results of our financial operations.

Also, there has been heightened governmental scrutiny recently over the manner in which pharmaceutical companies set prices for their marketed products, which have resulted in several Congressional inquiries and proposed and enacted state and federal legislation designed to, among other things, bring more transparency to product pricing, reduce the cost of prescription drugs under Medicare, review the relationsh ip between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

At the federal level, the Trump administration’s budget proposal for fiscal year 2021 includes a $135 billion allowance to su pport legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and to increase patient access to lower-cost generic and biosimilar drugs.

On March 10, 2020, the administration sent “principles” for drug pricing to Congress, calling for legislation that would, among other things, cap Medicare Part D beneficiary out-of-pocket pharmacy expenses, provide an option to cap Medicare Part D beneficiary monthly out-of-pocket expenses, and place limits on pharmaceutical price increases.

Further, the Trump administration previously released a “Blueprint,” or plan, to lower drug prices and reduce out of pocket costs of drugs that contained proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers.

The D epartment of Health and Human Services, or HHS, has solicited feedback on some of these measures and has implemented others under its existing authority.

While some of the existing measures and other measures may require additional authorization to become effective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.

At the state level, individual states in the United States have increasingly passed legislation and implemented 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.

Further, the Trump administration previously released a “Blueprint,” or plan, to lower drug prices and reduce out of pocket costs of drugs that contained proposals to increase drug manufacturer competition, increase the neg otiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers.

The Department of Health and Human Services, or HHS, has sol icited feedback on some of these measures and has implemented others under its existing authority.

On July 24, 2020, the Trump administration announced four executive orders related to prescription drug pricing that attempt to implement several of the admi nistration’s proposals, including a policy that would tie Medicare Part B drug prices to international drug prices;

one that directs HHS to finalize the Canadian drug importation proposed rule previously issued by HHS and makes other changes allowing for p ersonal importation of drugs from Canada;

one that directs HHS to finalize the rulemaking process on modifying the anti-kickback law safe harbors for discounts for plans, pharmacies, and pharmaceutical benefit managers;

and one that reduces costs of insuli n and epipens to patients of federally qualified health centers.

While some of the existing measures and other measures may require additional authorization to become effective, Congress and the Trump administration have each indicated that it will continu e to seek new legislative and/or administrative measures to control drug costs.

At the state level, individual states in the United States have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological pr oduct 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 b ulk purchasing.

We expect that these and other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and lower reimbursement, and in additional downward pressure on the price that we receive for any approved product.

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In addition, the Affordable Care Act codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act, or FCA;

federal civil and criminal false claims laws, such as the FCA which can be enforced by private citizens, on behalf of the government, through civil qui tam actions, and civil mone tary penalty laws prohibits individuals or entities from, among other things, knowingly presenting, or causing to be presented, false, fictitious or fraudulent claims for payment or approval by the federal government, including federal health care programs , such as Medicare and Medicaid, and knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim, or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government.

In addition, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA.

As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand” for money or property presented to the U.S.

In addition, manufacturers can be held liable under the FCA even when they do not submit claims directly to govern ment payors if they are deemed to “cause” the submission of false or fraudulent claims.

Criminal prosecution is also possible for making or presenting a false, fictitious or fraudulent claim to the federal government.

Government enforcement agencies and pr ivate whistleblowers have investigated pharmaceutical companies for or asserted liability under the FCA for a variety of alleged promotional and marketing activities, such as providing free product to customers with the expectation that the customers would bill federal programs for the product, providing consulting fees and other benefits to physicians to induce them to prescribe products, engaging in promotion for “off-label” uses, and submitting inflated best price information to the Medicaid Rebate Progr am;

federal civil and criminal false claims laws, such as the FCA which can be enforced by private citizens, on behalf of the government, through civil qui tam actions, and civil monetary penalty laws prohibits individuals or entities from, among other things, knowingly pre senting, or causing to be presented, false, fictitious or fraudulent claims for payment or approval by the federal government, including federal health care programs, such as Medicare and Medicaid, and knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim, or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government.

In addition, a claim including items or services resul ting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA.

As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand” for m oney or property presented to the U.S.

In addition, manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims.

Cri minal prosecution is also possible for making or presenting a false, fictitious or fraudulent claim to the federal government.

Government enforcement agencies and private whistleblowers have investigated pharmaceutical companies for or asserted liability u nder the FCA for a variety of alleged promotional and marketing activities, such as providing free product to customers with the expectation that the customers would bill federal programs for the product, providing consulting fees and other benefits to phy sicians to induce them to prescribe products, engaging in promotion for “off-label” uses, and submitting inflated best price information to the Medicaid Rebate Program;

HIPAA, among other things, imposes criminal and civil liability for executing or attempting to execute a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, in connection with the delivery of or payment for healthcare benefits, items or services.

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federal and state consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;

the federal transparency requirements under the Physician Payments Sunshine Act, created under the Affordable Care Act, which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program to annual ly report to CMS information related to payments and other transfers of value provided to physicians, as defined by such law, and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members;

the federal transparency requirements under the Physician Payments Sunshine Act, created under the Affordable Care Act, which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program to annually report to CMS information related to payments and other transfers of value provided to physi cians, as defined by such law, and teaching hospitals and physician ownership and investment interests, including such ownership and investment interests held by a physician’s immediate family members;

state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by any non-governmental third-party payors, including private insurers;

state and foreign laws that require pharmaceutical companies to implement compliance programs and comply with the pharmaceutical industry’s voluntary compliance guidelines and t he relevant compliance guidance promulgated by the federal government;

state and foreig n laws that require pharmaceutical companies to implement compliance programs and comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government;

track and report gifts, compensation and other remuneration provided to physicians, other health care providers, and certain health care entities;

report information related to drug pri cing;

report information related to drug pricing;

and/or ensure the registration and compliance of sales personnel.

In addition, we may be subject to federal, state and foreign laws that govern the privacy and security of health information or personally identifiable information in certain circumsta nces, including state health information privacy and data breach notification laws which govern the collection, use, disclosure, and protection of health-related and other personal information, many of which differ from each other in significant ways and o ften are not pre-empted by HIPAA, thus complicating compliance efforts.

In addition, we may be subject to federal, state and foreign laws that govern the privacy and security of health information or personally identifiable information in certain circumstances, including state health information privacy and data breach notification laws which govern the collection, use, disclosure, and protection of health-related and other personal information, many of which differ from each other in significant ways and often are not pre-empted by HIPAA, thus complicating compliance efforts.

We have entered into consulting and scientific advisory board arrangements with physicians and other healthcare providers, including some who could influence the use of itolizumab (EQ001) and any future product candidates, if approved.

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Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences.

Requirements associated with being a public company will increase our costs significantly, as well as divert significant company resources and management attention.

Requirements associated with being a public company will increase our costs signifi cantly, as well as divert significant company resources and management attention.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or the other rules and regulations of the SEC, or any securities exchange relating to public companies.

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Tax or other regulatory authorities may challenge our characterization of services providers as independent contractors both under existing laws and regulations and under laws and regulations adopted in the future.

We are aware of a number of judicial decisions and legislative proposals that could bring about major changes in the way workers are classified, including the California legislature’s recent passag e of California Assembly Bill 5, which California Governor Gavin Newsom signed into law in September 2019 , or AB 5.

We are aware of a number of judicial decisions and legislative proposals that could bring about major changes in the way workers are classified, including the California legislature’s recent passage of California Assembly Bill 5, which California Governor Gavin Newsom signed into la w in September 2019 , or AB 5.

AB 5 purports to codify the holding of the California Supreme Court’s unanimous decision in Dynamex Operations West, Inc.

Superior Court of Los Angeles, which introduced a new test for determining worker classification that is widely viewed as expanding the scope of employee relationships and narrowing the scope of independent contractor relationships.

While AB 5 exempts certain licensed health care professionals, including physicians and psychologists, not all of our independent contractors work in exempt occupations.

While AB 5 exempts certain licensed health care professionals, including physicians and psychologists, not all of our indepe ndent contractors work in exempt occupations.

Given AB 5’s recent passage, there is no guidance from the regulatory authorities charged with its enforcement and there is a significant degree of uncertainty regarding its application.

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As a result, any determination that the service providers we characterize as independent contractors should be classified as employees could adversely impact our business, financial condition and results of operations.

If we fail to comply with environmental, health and safety laws and regulations, we coul d become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adver se effect on the success of our business.

We, and the third parties with whom we share our facilities, are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes.

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delays or other adverse impacts to our clinical trials from global health epidemics, such as those related to COVID-19;

our ability to enroll subjects in our ongoing and future clinical trials;

results from our ongoing and future clinical trials and future clinical trials with our current and future product candidates or of our competitors;

our ability to enroll and retain subjects in our ongoing and future clinical trials;

results from our ongoing and future clinical trials and future clinical trials with our current and future product candidates, of our competitors, or of Biocon;

the timing of topline data from ongoing trials, including our ongoing and planned clinical trials of itolizumab;

changes in our projected operating results that we provide to the public, our failure to meet these projections or changes in recommendations by securities analysts that elect to follow our common stock;

regulatory or legal developments in the United States and other countries;

regulatory or legal developments in the United States and other countries of ours, our competitors’, or Biocon’s;

the level of expenses related to future product candidates or clinical development programs;

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our ability to achieve product development goals in the timeframe we announce;

announcements of clinical trial results, regulatory developments, acquisitions, strategic alliances or significant agreements by us or by our competitors;

announcements of clinical trial results, regulatory developments, acquisitions, strategic alliances or significant agreements by us, by our competitors, or by Biocon;

the success or failure of our efforts to acquire, license or develop additional product candidates;

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In November 2019, we entered into the 2019 ATM Facility with Jefferies under which we may offer and sell shares of our common stock having an aggregate offering price of up to $8.45 million from time to time through Jefferies acting as our sales agent.

As of March 31, 2020, we have sold an aggregate of 192,899 shares of our common stock under the ATM facility for gross proceeds of $0.9 million.

As of June 30, 2020, we have sold an aggregate of 192,899 shares of our common stock under the 2019 ATM facility for gross proceeds of $0.9 million.

On July 14, 2020, we entered into the 2020 ATM Facility with Jefferies, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $150 million from time to time through Jefferies acting as our sales agent.

Subsequent to June 30, 2020 and through the date of our filing, we sold an aggregate of 1,539,525 shares of our common stock under both of our ATM facilities, which includes shares sold pursuant to the 2020 ATM Facility, but not yet delivered to Jefferies, for gross proceeds of $17.9 million.

In March 2020, we entered into the Purchase Agreement with Lincoln Park which provides that, upon the terms and subject to the conditions and limitations set forth therein, we may sell to Lincoln Park up to $15.0 million of shares of our common stock, from time to time over the 36-month term of the Purchase Agreement, and we issued an additional 65,374 shares of our common stock to Lincoln Park as commitment shares under the Purchase Agreement.

As of March 31, 2020, we have not sold any shares of our common stock to Lincoln Park under the Purchase Agreement.

As of the date of the filing of this Quarterly Report on Form 10-Q, we have not sold any shares of our common stock to Lincoln Park under the Purchase Agreement.

Debt financing, if available, 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.

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

If there are substantial sales of shares of our common stock, the price of our common stock could dec line.*

If there are substantial sales of shares of our common stock, the price of our common stock could decline.*

The price of our common stock could decline if there are substantial sales of our common stock, particularly sales by our directors, executive officers and significant stockholders, or if there is a large number of shares of our common stock available for sale and the market perceives that sales will occur.

As of May 8, 2020, we had 17,683,965 shares of our common stock outstanding.

As of August 11, 2020, we had 19,263,375 shares of our common stock outstanding.

Shares held by directors, executive officers and other affiliates will be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements.

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The market price of the shares of our common stock could decline as a result of the sale of a substantial number of our shares of common stock in the public market or the perception in the market that the holders of a large number of shares intend to sell their shares.

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

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

We will have broad discretion in the use of working capital and may not use it effectively or in ways that increase the value of our share price.

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reduced disclosure obligations regarding executive compensation;

not being required to hold a non-binding advisory vote on executive compensation or obtain stockholder approval of any golden parachute payments not previously approved.

not being required to hold a non-binding advisory vote on executive compensation or obtain stockhold er approval of any golden parachute payments not previously approved.

In addition, as an “emerging growth company” the JOBS Act allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies.

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provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner and also specify requirements as to the form and content of a stockholder’s notice;

do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in a ny election of directors to elect all of the directors standing for election, if they should so choose);

do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose);

provide that special meetings of our stockholders may be called only by the chairman of the board, our Chief Executive Officer or by the board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors;

provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or bylaws, or (iv) any action asserting a claim against us governed by the internal affairs doctrine (these choice of forum provisions do not apply to suits brought to enforce a duty or liability created by the Securities Act, the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction).

provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law;

(i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or bylaws, or (iv) any action asserting a claim against us governed by the internal affairs doctrine.

These provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act.

Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.

Accordingly, both state and federal courts have jurisdiction to entertain such claims.

The amendment of any of these provisions, with the exception of the ability of our board of directors to issue shares of preferred stock and designate any rights, preferences and privileges thereto, would require approval by the holders of at least 66-2/3% of our then-outstanding common stock.

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The existence of these provisions could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or amended and restated bylaws or any action asserting a claim against us that is governed by the internal affairs doctrine;

provided, that, these choice of forum provisions do not apply to suits brought to enforce a duty or liability created by the Securities Act, the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction.

Furthermore, our amended and restated certificate of incorporation also provides that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may discourage these types of lawsuits.

Furthermore, the enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable.

If a court were to find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.*

(i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a breach of fiduciary duty, (iii) any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or amended and restated bylaws or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine.

These provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act.

Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.

Accordingly, both state and federal courts have jurisdiction to entertain such claims.

To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation also provides that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions.

In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation.

This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in these other jurisdictions.

These exclusive forum provision s may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees.

If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in o ther jurisdictions, all of which could seriously harm our business.

We could be subject to securities class action litigation.

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

What changed 10-Q

Item 1A. Risk Factors