Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2023, which is the end of the period covered by this Annual Report on Form 10-K. These disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.
Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of December 31, 2023, our disclosure controls and procedures were not effective at the reasonable assurance level.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013 framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2023 due to the material weakness in internal control over financial reporting, described below.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Material Weakness in Internal Controls Over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
We previously identified a material weakness in our internal control over financial reporting that continues to exist as of December 31, 2023 in that we did not design and maintain an effective control environment as we lacked a sufficient complement of professionals commensurate with our financial reporting requirements.
This material weakness did not result in any material misstatements to the consolidated financial statements.
Management’s Plan to Remediate the Remaining Material Weakness
We have taken and will continue to take certain measures to remediate the material weakness that continues to exist as of December 31, 2023 as efficiently and effectively as possible. We have hired additional
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accounting personnel, including but not limited to the hiring of a senior director of SEC reporting and technical accounting, senior director of financial planning and analysis, director of accounting, senior director of internal controls and senior director of accounting and controller. The material weakness will not be considered remediated until management completes the design and implementation of the measures described above and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective.
Remediation of Previously Reported Material Weaknesses
Two material weaknesses reported in the prior year were remediated in 2023. These material weaknesses were as follows:
We did not design and maintain effective controls to ensure adequate segregation of duties within our financial reporting function, including controls related to the procurement and payroll processes, journal entries and account reconciliations. Specifically, certain personnel have incompatible duties including the ability to (i) generate and approve invoices and authorize disbursements; (ii) add employees or modify employee data in the payroll system and authorize payments; (iii) create and post manual journal entries without an independent review; and (iv) prepare and review account reconciliations.
We did not design and maintain effective controls over certain information technology (“IT”) general controls for information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain (i) program change management controls to ensure that program and data changes are identified, tested, authorized and implemented appropriately; (ii) user access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate personnel; and (iii) computer operations controls to ensure that processing of data and data backups and recovery are monitored.
To respond to these material weaknesses, we have hired additional accounting personnel and we have also engaged third-party consultants and advisors to assist us in designing and implementing controls necessary to remediate these material weaknesses, including implementation of key mitigating controls to address key risks. We have properly segregated duties throughout our financial reporting function through hiring additional personnel and also through system changes where applicable. We designed and implemented IT general controls related to change management, user access and computer operations. The new measures have been determined to have operated effectively for a sufficient period of time to conclude that the material weaknesses previously identified have been remediated as of December 31, 2023.
Changes in Internal Controls Over Financial Reporting
Except for the changes in internal control as referenced above for the remediation of previously reported material weaknesses, there were no changes in our internal controls over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(f) or 15d-15(f) of the Exchange Act during our fourth quarter ended December 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Disclosure Controls and Procedures
A system of internal control over financial reporting is intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP and no control system, no matter how well designed and operated, can provide absolute assurance. The design of any control system is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of its inherent limitations, internal control over financial reporting may not prevent or detect financial statement errors and misstatements. Also, projection of any evaluation of effectiveness to
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future periods is subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Item 9B. Other Information.
Trading Arrangements
During the three months ended December 31, 2023, the following officer (as defined in Rule 16a-1(f) under the Exchange Act) adopted a “Rule 10b5-1 trading arrangement” (as such term is defined in Item 408(a) of Regulation S-K).
Type of Trading Arrangement
Name and Position
Action
Date
Rule 10b5-1*
Non-
Rule 10b5-1**
Total ADSs to be Sold
Expiration Date
Xichen Lin , Ph.D., Chief Scientific Officer
Adoption
December 28, 2023
X
106,666
December 15, 2024
* Contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.
** “Non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K under the Exchange Act.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
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PART III
We will file a definitive Proxy Statement for our 2024 Annual General Meeting of shareholders (the “Proxy Statement”) with the SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of the Proxy Statement that specifically address the items set forth herein are incorporated by reference.
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item will be set forth in the Proxy Statement in the section headed “Election of Directors,” “Information Regarding the Board and Corporate Governance,” and “Delinquent Section 16(a) Reports,” if any, and is incorporated herein by reference.
We have adopted a Code of Business Conduct and Ethics that applies to all officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the Code of Business Conduct and Ethics is available on the Corporate Governance section of our website at www.structuretx.com. To the extent required by rules adopted by the SEC, we will promptly disclose future amendments to our Code of Business Conduct and Ethics or waivers of its requirements that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions on our website. The information contained on our website is not considered part of, or incorporated by reference into, this Annual Report on Form 10-K or any other filing that we make with the SEC.
Item 11. Executive Compensation.
The information required by this item will be set forth in the Proxy Statement in the sections headed “Executive Compensation” and “Information Regarding the Board and Corporate Governance,” and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item will be set forth in the Proxy Statement in the section headed “Security Ownership of Certain Beneficial Owners and Management,” and “Securities Authorized for Issuance Under Equity Compensation Plans,” and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information called for by this item will be set forth in the Proxy Statement in the section headed “Transactions with Related Persons,” and “Information Regarding the Board and Corporate Governance,” and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
The information required by this item will be set forth in the Proxy Statement in the section headed “ Principal Accountant Fees and Services” and is incorporated by reference.
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PART IV
Item 15. Exhibits, Financial Statement Schedules.
The following documents are filed as part of this Annual Report on Form 10-K:
(1) FINANCIAL STATEMENTS
Our financial statements are listed in the “Index to the Financial Statements” under Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
(2) FINANCIAL STATEMENT SCHEDULES
All schedules to the financial statements are omitted because they are not applicable, not material or the required information is shown in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
(3) EXHIBITS
The documents listed in the Exhibit Index of this Annual Report on Form 10-K are incorporated by reference or are filed with this Annual Report on Form 10-K, in each case as indicated therein.
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EXHIBIT INDEX
Exhibit Number
Description of Document
Form
File No.
Exhibit
Filing Date
Filed Herewith
3.1
Amended and Restated Memorandum and Articles of Association of the registrant.
8-K
001-41608
3.1
February 7, 2023
4.1
Registrant’s Specimen Certificate for Ordinary Shares.
S-1/A
333-269200
4.1
January 30, 2023
4.2
Form of Deposit Agreement.
S-1/A
333-269200
4.2
January 30, 2023
4.3
Form of American Depositary Receipt evidencing American Depositary Shares (included in Exhibit 4.2).
S-1/A
333-269200
4.3
January 30, 2023
4.4
Amended and Restated Investors’ Rights Agreement, dated July 30, 2021, by and between the registrant and the investors named therein.
S-1
333-269200
4.4
January 12, 2023
4.5
Summary of Rights of Non-Voting Ordinary Shares .
8-K
001-41608
4.1
September 29, 2023
4.6
Description of Securities.
10-K
001-41608
4.5
March 30, 2023
10.1+
Form of Indemnification Agreement between the registrant and each of its executive officers and directors.
S-1
333-269200
10.1
January 12, 2023
10.2+
ShouTi Inc. 2019 Equity Incentive Plan, as amended (including Forms of Option Grant Notice, Option Agreement and Notice of Exercise thereunder).
S-1
333-269200
10.2
January 12, 2023
10.3+
Structure Therapeutics Inc. 2023 Equity Incentive Plan .
10-K
001-41608
10.3
March 30, 2023
10.4+
Form of Share Option Grant Notice, Share Option Agreement and Notice of Exercise (US) under the Structure Therapeutics Inc. 2023 Equity Incentive Plan.
S-1
333-269200
10.4
January 12, 2023
10.5+
Form of Share Option Grant Notice, Share Option Agreement and Notice of Exercise (Non-Employee Director) under the Structure Therapeutics Inc. 2023 Equity Incentive Plan.
S-1
333-269200
10.5
January 12, 2023
10.6+
Form of Share Option Grant Notice, Share Option Agreement and Notice of Exercise (PRC) under the Structure Therapeutics Inc. 2023 Equity Incentive Plan.
S-1
333-269200
10.6
January 12, 2023
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10.7+
Form of Restricted Share Unit Award Grant Notice and Award Agreement (US) under the Structure Therapeutics Inc. 2023 Equity Incentive Plan.
S-1
333-269200
10.7
January 12, 2023
10.8+
Form of Restricted Share Unit Award Grant Notice and Award Agreement (PRC) under the Structure Therapeutics Inc. 2023 Equity Incentive Plan.
S-1
333-269200
10.8
January 12, 2023
10.9+
Structure Therapeutics Inc. 2023 Employee Share Purchase Plan .
10-K
001-41608
10.9
March 30, 2023
10.10+
Executive Employment Agreement, by and between the registrant and Raymond Stevens, dated May 16, 2019.
S-1
333-269200
10.10
January 12, 2023
10.11+
Executive Employment Agreement by and between the registrant and Jun Yoon, dated May 1, 2019.
S-1
333-269200
10.11
January 12, 2023
10.12+
Amendment to the Executive Employment Agreement by and between the registrant and Jun Yoon.
S-1
333-269200
10.12
January 12, 2023
10.13+
Offer Letter, by and between the registrant and Mark Bach, M.D., dated April 19, 2021.
S-1
333-269200
10.13
January 12, 2023
10.14+
Employment Contract, by and between Shanghai ShouTi Biotechnology Co., Ltd. and Xichen Lin, dated July 22, 2019.
S-1
333-269200
10.15
January 12, 2023
10.15+
Employment Contract, by and between Shanghai ShouTi Biotechnology Co., Ltd. and Yingli Ma, dated November 1, 2022.
S-1
333-269200
10.16
January 12, 2023
10.16+
Supplemental Agreement, by and among Shanghai Basecamp Biotechnology Co., Ltd., Shanghai ShouTi Biotechnology Co., Ltd. and Yingli Ma, dated October 31, 2022.
S-1
333-269200
10.17
January 12, 2023
10.17+
Non-Employee Director Compensation Policy.
8-K
001-41608
10.1
August 4, 2023
10.18+
Severance and Change in Control Plan.
S-1
333-269200
10.23
January 12, 2023
10.19*
Collaboration Agreement, by and between Lhotse Bio, Inc. and Schrödinger, LLC, dated October 9, 2020.
S-1
333-269200
10.24
January 12, 2023
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10.20
Shanghai Premises Lease Contract, by and between Shanghai ShouTi Biotechnology Co., Ltd. and Shanghai Changtai Business Management Co., Ltd., dated June 22, 2021.
S-1
333-269200
10.25
January 12, 2023
10.21
Exchange Agreement dated May 10, 2023 between the registrant and the investors named therein.
10-Q
001-41608
10.1
May 11, 2023
10.22
Lease Agreement, dated June 29, 2023, by and between the registrant and Shanghai Changtai Business Management Co., Ltd.
8-K
001-41608
10.1
July 6, 2023
10.23
House Leasing Contract, dated June 29, 2023, by and between the Shanghai ShouTi Biotechnology Co., ltd. and Shanghai Chuangzhi Space Entrepreneurship Incubator Management Co., Ltd.
8-K
001-41608
10.2
July 6, 2023
10.24
Sublease, dated June 29, 2023, by and between Structure Therapeutics USA Inc. and Aligos Therapeutics, Inc.
8-K
001-41608
10.3
July 6, 2023
10.25
Share Purchase Agreement, dated as of September 29, 2023, by and among the registrant and the purchasers named therein.
10-Q
001-41608
10.4
November 17, 2023
10.26*
Collaboration Agreement, dated November 7, 2023, by and between Schrödinger, Inc. and Aconcagua Bio, Inc. Schrödinger, Inc. and Aconcagua Bio, Inc.
8-K
001-41608
10.1
November 14, 2023
16.1
Letter from PricewaterhouseCoopers LLP to the SEC, dated June 5, 2023 .
8-K
001-41608
16.1
June 5, 2023
21.1
Subsidiaries of the registrant.
S-1
333-275651
21.1
November 17, 2023
23.1
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
X
23.2
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.
X
24.1
Powers of Attorney (included on the signature page).
31.1˄
Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
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31.2˄
Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1˄
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2˄
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
97
Incentive Compensation Recoupment Policy.
X
101.INS
Inline XBRL Instance Document
X
101.SCH
Inline XBRL Taxonomy Extension Schema Document
X
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
X
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
X
101.LAB
XBRL Taxonomy Extension Labels Linkbase Document
X
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
X
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
X
+ Indicates management contract or compensatory plan
* Pursuant to Item 601(b)(10)(iv) of Regulation S-K promulgated by the SEC, certain portions of this exhibit have been redacted because they are both not material and is the type that the Registrant treats as private or confidential. The Registrant hereby agrees to furnish supplementally to the SEC, upon its request, an unredacted copy of this exhibit.
˄ The certifications attached as Exhibits 32.1 and 32.2 accompanying this Annual Report on Form 10-K are not deemed filed with the SEC and are not to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
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Item 16. Form 10–K Summary.
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, State of California, on March 8, 2024.
STRUCTURE THERAPEUTICS INC.
By:
/s/ Raymond Stevens, Ph.D.
Raymond Stevens, Ph.D.
Chief Executive Officer
By:
/s/ Jun Yoon
Jun Yoon
Chief Financial Officer
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Raymond Stevens and Jun Yoon, jointly and severally, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
SIGNATURE
TITLE
DATE
/s/ Raymond Stevens, Ph.D.
Chief Executive Officer and Director
March 8, 2024
Raymond Stevens, Ph.D.
(Principal Executive Officer)
/s/ Jun Yoon
Chief Financial Officer and Director
March 8, 2024
Jun Yoon
(Principal Financial and Accounting Officer)
/s/ Daniel Welch
Chairman
March 8, 2024
Daniel Welch
/s/ Eric Dobmeier
Director
March 8, 2024
Eric Dobmeier
/s/ Ramy Farid, Ph.D.
Director
March 8, 2024
Ramy Farid, Ph.D.
/s/ Ted W. Love, M.D.
Director
March 8, 2024
Ted W. Love, M.D.
/s/ Sharon Tetlow
Director
March 8, 2024
Sharon Tetlow
/s/ Joanne Waldstreicher, M.D.
Director
March 8, 2024
Joanne Waldstreicher, M.D.
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