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Item 1A. Risk Factors

2025-03-28 compared with 2024-04-01 · 184 added, 110 removed, 684 unchanged (30% of the section changed)

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It is not possible to predict or identify all such risks; our operations could also be affected by factors, events or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations.

Therefore, while you should carefully consider the following risks, together with all of the other information in this Annual Report, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our financial statements and the related notes thereto.

You should not consider the following risks to be a complete statement of all the potential risks or uncertainties we could face .

Summary of Key Risk Factors

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Raising additional capital may dilute our existing shareholders, restrict our operations or cause us to relinquish valuable rights.

• We and our Chief Executive Officer are currently involved in legal proceedings with Altor BioScience, LLC and NantCell (collectively, “Altor/NantCell”) in which Altor/NantCell have alleged, among other things, a claim of trade secret misappropriation and other related claims against us and breach of contract and fiduciary duty, among other claims, against our chief executive officer in arbitration, and an adverse result could have a negative material impact on our business and operations.

• Our clinical trials may fail to demonstrate substantial evidence of the safety and efficacy of our product candidates or any future product candidates, which would prevent or delay or limit the scope of regulatory approval and commercialization.

• The Company implemented remediation of material weaknesses identified in previous reporting periods.

If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired, which may cause investors to lose confidence in our reported financial information and may lead to a decline in the market price of our common stock.

• We and our Chief Executive Officer were involved in legal proceedings with Altor BioScience, LLC and NantCell (collectively, “Altor/NantCell”).

In July 2024, the parties entered a Settlement Agreement which removed some of the uncertainties as to the outcome and cost of these proceedings.

However, the Company has significant obligations that remain as a result of legal fees incurred but not paid for the defense of the Company as well as our Chief Executive Officer.

If we cannot negotiate acceptable payment plans to satisfy these obligations, an adverse result could have a negative material impact on our business and operations.

• As a result of the Settlement Agreement, the Company is unable to progress into Phase 2 clinical trials for HW9218, our lead product candidate for cancer indications.

The Company is prepared to progress HCW9218 in Phase 2 clinical trials for non-oncology indications, however, we must secure supply of clinical materials to do so.

As a condition of the Settlement Agreement, the Company transferred the master cell line for HCW9218 to ImmunityBio, who in turn agreed to enter a supply agreement with the Company by January 2025.

As of the date of issuance of the Annual Report, there is no supply agreement in place.

As a result the delay in securing supply, there is no assurance that the Company will be able to continue the clinical development of HCW9218 in non-oncology indications.

• The Company has been out of compliance with three applicable rules with respect to its continued listing on The Nasdaq Stock Market, namely, Nasdaq Listing Rule 5450(b)(2)(A) (the “MVLS Rule”), Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”) and Nasdaq Listing Rule 5450(b)(2&3)(C) (the “MVPHS Rule”).

As a result, the Listing Staff of The Nasdaq Stock Market LLC (“Nasdaq”) delivered notices of its determination that the Company’s Common Stock was subject to delisting from the Nasdaq Global Market tier of Nasdaq.

Nasdaq granted the Company a hearing before the Nasdaq Hearings Panel (the “Panel”) to appeal the delisting determination of the Nasdaq Listing Staff, which hearing was held on February 13, 2025, at which we presented our plan to regain compliance with all listing requirements.

On March 3, 2025, the Panel granted our request to continue our listing on Nasdaq, subject to our demonstrating compliance with the Bid Price Rule on or before April 28, 2025 and our demonstrating compliance with all other Nasdaq Listing Rules on or before June 15, 2025.

While the Company is exercising diligent efforts to maintain the listing of our Common Stock on Nasdaq, there can be no assurance that the Company will be able to regain or maintain compliance with the applicable Nasdaq Listing Rules.

If the Company’s Common Stock were to be delisted from Nasdaq, it could have a material adverse effect on us and our stockholders.

• Our clinical trials may fail to demonstrate the safety and efficacy of our product candidates or any future product candidates, which would prevent, delay or limit the scope of regulatory approval and commercialization.

• Preliminary, topline or interim data from our clinical trials that we announce or publish from time to time may change as more patient data becomes available and are subject to audit and verification procedures that could result in material changes in the final data.

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Since our inception, we have devoted most of our financial resources and all of our efforts to research and development, including preclinical studies and our clinical trials, and have incurred significant operating losses.

In addition, the Company and Dr.

Wong, our Founder and Chief Executive Officer, were parties in an extended Arbitration, which was ongoing for over a year, during which time the Company incurred legal fees of nearly $28.4 million for its own defense and the defense of Dr.

For the years ended December 31, 2023 and 2024, we reported a net loss of $25.0 million and $30.3 million, respectively.

As of December 31, 2023, we had $3.6 million in cash and cash equivalents, in the balance sheet included in our audited financial statements included elsewhere in this Annual Report.

These losses are inclusive of reserve for credit losses and other expenses of $5.3 million and $1.3 million for the years ended December 31, 2023 and 2024, respectively.

As of December 31, 2024, we had $4.7 million in cash and cash equivalents, in the balance sheet of our audited financial statements included elsewhere in this Annual Report.

From inception to December 31, 2024, we incurred cumulative net losses of $98.1 million.

To date, we have financed our operations primarily through our initial public offering, or the IPO, the sale of our redeemable preferred stock, and to a lesser extent, payments received under our Wugen License for certain rights to two of our internally-developed molecules and proceeds from a Paycheck Protection Program (“PPP”) loan obtained through the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which was forgiven.

Based on our current operating plans, we believe that our cash and cash equivalents as of December 31, 2023, without considering any mitigating effects of financings that occurred after year end, will not be sufficient for the Company to continue as a going concern for at least one year from the issuance date of the financial statements appearing elsewhere in this Annual Report.

To date, we have financed our operations primarily through the sale of our redeemable preferred stock (all of which converted to common stock upon the effective date of our initial public offering, or IPO);

payments received under our Wugen License for certain rights to two of our internally-developed molecules;

proceeds from our IPO;

a first lien mortgage of $6.5 million;

proceeds from a Paycheck Protection Program (“PPP”) loan obtained through the Coronavirus Aid, Relief and Economic Security Act (which was forgiven);

issuance of senior secured notes;

and sale of common stock and warrants in private placements and direct registered offerings.

Based on our current operating plans, we believe that our cash and cash equivalents as of December 31, 2024 will not be sufficient for the Company to continue as a going concern for at least one year from the issuance date of the financial statements appearing elsewhere in this Annual Report.

Our losses have resulted principally from expenses incurred in the research and development of our product candidates and from management and administrative costs and other expenses that we have incurred while building our business infrastructure, as well as from the significant expenses we have incurred defending ourselves in current disputes with Altor/NantCell and advancing legal expenses of Dr.

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We are at the clinical development stage of our Company with no commercial revenues from the products we are developing, and it is possible we will never generate revenue or profit from product sales.

As of December 31, 2023, we had cash and cash equivalents of $3.6 million.

Our management believes that such cash and cash equivalents will not be sufficient to fund our operating expenses and capital requirements for one year after the date the financial statements included elsewhere in this Annual Report are issued, whether or not we curtail efforts with respect to certain of our current and future product candidates.

As of December 31, 2024, we had cash and cash equivalents of $4.7 million and there was substantial doubt about our ability to continue as a going concern for at least 12 months from the issuance date of the financial statements included elsewhere in this Annual Report, whether or not we curtail efforts with respect to certain of our current and future product candidates.

We will require significant additional funding to advance any of our product candidates beyond the short term and to sustain our operations.

We intend to seek funds through collaborations, strategic alliances, or licensing arrangements with third parties.

Such agreements may adversely impact retained rights to our assets, product candidates, future revenue streams and programs, especially those that require regulatory approval.

We may also seek to raise such capital through public or private equity, royalty financing or debt financing.

Raising funds in the current economic environment may be challenging, and such financing may not be available in sufficient amounts or on acceptable terms, if at all.

The terms of any financing may harm existing shareholders.

The terms of any financing may harm existing stockholders.

The issuance of additional securities, whether equity or debt, or the possibility of such issuance, may cause the market price of our shares to decline.

The sale of additional equity or convertible securities may dilute the ownership of existing shareholders.

The sale of additional equity or convertible securities may dilute the ownership of existing stockholders.

Incurring debt would result in increased fixed payment obligations, and we may agree to restrictive covenants, such as limitations on our ability to incur additional debt or limitations on our ability to acquire, sell or license intellectual property rights that could impede our ability to conduct our business.

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Consequently, any predictions you may make about our future success or viability may not be as accurate as they could be if we had a longer operating history.

We have identified certain material weaknesses in our internal control over financial reporting and if our remediation of such material weaknesses is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired, which may cause investors to lose confidence in our reported financial information and may lead to a decline in the market price of our common stock.

Two of the material weaknesses were identified and reported in the Annual Report on Form 10-K for the year ended December 31, 2023.

As the Company reported in a Current Report on Form 8-K filed with the SEC on May 1, 2024, we were a victim of a criminal scheme involving the impersonation of a purchaser of Secured Notes.

The scheme resulted in the misdirection of approximately $1.3 million held in Company accounts to a fraudulent account controlled by a third party and a default on a legally binding commitment to purchase Secured Notes.

As a result of the default and the related misdirection of funds, management re-evaluated the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of December 31, 2023.

Based on this assessment, management identified material weaknesses in two areas, including the methods used to review, evaluate and accept financing proposals from investors and lenders and the process used to enter unusual significant transactions.

As a result of the material weakness to protect the Company’s assets from fraud committed by third parties, there was a $1.3 million loss recognized on the Company’s audited financial statements.

As of September 30, 2024, the Company identified two additional material weaknesses in internal controls over financing reporting related to the classification of the Cogent Loan and accounting for the Secured Notes.

On August 15, 2022, the Company entered into the 2022 Loan Agreement with Cogent Bank, pursuant to which we received $6.5 million in proceeds to purchase a building.

The loan is secured by a first priority lien on the building.

As of September 30, 2024, certain subcontractors have filed mechanics liens related to unpaid invoices issued in connection with the Company’s construction and improvements on the building.

The 2022 Loan Agreement contains a provision for a discretionary default in the event that the Company fails to pay sums due in connection with construction of any improvements.

The Company did not identify and account for the loan as Short-term debt, net, to reflect that the lender has the right to accelerate the loan under a discretionary default provision as of September 30, 2024.

The second material weakness identified as of September 30, 2024 related to accounting for complex transactions.

This involved appropriately accounting for the Secured Notes and disclosing the amended terms that were executed during the third quarter of 2024.

The Secured Notes were deemed to be a hybrid instrument, consisting of a debt host with embedded derivatives requiring bifurcation and accounting for separately.

Prior to correcting the initial accounting treatment for the Secured Notes, as amended, the Company neglected to identify and account for the embedded derivatives.

In addition, the disclosures for the Secured Notes would not have identified the embedded derivatives.

The aggregation of these factors could have resulted in a material misstatement in the Company’s financial statements.

For the reporting period ended September 30, 2024 and December 31, 2024, there was no impact to the financial statements related to correcting the accounting treatment for embedded derivatives.

Another amended term for the Secured Notes is a fixed bonus payment that holders will receive if the Secured Notes are repaid on the Maturity Date.

The Company determined that the fixed bonus payment should be accreted to the principal owed to holders over the term.

As of and for the three and nine months ended September 30, 2024, the Company did not accrete the fixed bonus payment.

Accretion during the reporting period ended September 30, 2024 did not materially misstate the amount owed to the holders.

Accretion was reported in the year ended December 31, 2024 and reported within Depreciation expense.

If the Company did not correct the accounting treatment for the accretion of the fixed bonus payment at maturity, we would understate our obligations.

Over the term, this could have resulted in a material misstatement in the Company’s financial statements.

In the year ended December 31, 2024, the Company implemented various steps to remediated these material weaknesses.

In the second quarter of 2024, a remediation plan was adopted to strengthen controls and procedures used by the Company to review and accept financial proposals, particularly where there are upfront payments and other forms of payments made by the Company to third parties.

These efforts include development of a process for assessment and communication, as well as involvement of additional key stakeholders, such as members of our Board of Directors.

In the fourth quarter of 2024, the Company enhanced its controls to evaluate triggering events in debt and other financial instruments, to ensure the appropriate classification of obligations as current or noncurrent in the correct period.

In addition, the Company strengthened controls to ensure timeliness in the determination of proper accounting and reporting for complex transactions by engaging consultants with technical accounting expertise to support the Company in our accounting analysis and conclusions for complex transactions.

Also, the fourth quarter of 2024, the Company engaged advisors to support and assist in the review and augmentation of design and effectiveness of controls over financial reporting.

As of December 31, 2024, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.

Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2024, our disclosure controls and procedures were effective at a reasonable assurance level.

However, we cannot assure you that any such actions we have or will take will prevent or avoid potential future material weaknesses.

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.

Further, weaknesses in our internal control over financial reporting may be discovered in the future.

Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations.

The remediation efforts are intended both to address the identified material weakness and to enhance our overall financial control environment.

This material weakness and any other failure to maintain effective internal control over financial reporting could result in a loss of confidence in the reliability of our financial statements which could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements.

In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result.

We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.

As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies or determine to modify remediation measures.

We cannot assure you that the measures we have taken to date, and may take in the future, will be sufficient to remediate the control deficiencies that led to the material weakness in internal control over financial reporting or that we will prevent or avoid potential future material weaknesses.

Effective internal controls are necessary for us to provide reliable financial reports.

These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.

We will require additional funding in order to complete development of our product candidates and commercialize our products, if approved.

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Our operations have consumed significant amounts of cash since inception.

We expect our expenses to increase in connections with our ongoing activities, particularly as we continue to initiate clinical trials of, and seek marketing approval for, our product candidates.

As of December 31, 2024, we held $4.7 million of cash and cash equivalents and there was substantial doubt about our ability to continue as a going concern for at least 12 months from the issuance date of the financial statements included elsewhere in this Annual Report.

We expect our expenses to increase in connections with our ongoing clinical development activities, particularly as we continue to initiate clinical trials of, and seek marketing approval for, our product candidates.

In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.

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

On March 3, 2025, the Nasdaq Hearings Panel accepted our plan to regain compliance with all applicable continued listing rules of The Nasdaq Stock Market LLC (“Nasdaq”).

There can be no assurance that the Company will be able to comply within the period of time granted by the Panel.

If the Company does not execute our compliance plan or is delayed in doing so, the result could be the delisting of our Common Stock from Nasdaq.

On March 3, 2025, the Company was granted an extension through April 28, 2025, to comply with the Bid Price Rule and through June 15, 2025 to comply with all Exchange Listing Rules by the Nasdaq Hearings Panel (the “Panel”).

The Nasdaq Listing and Hearing Review Council may, on its own motion, determine to review any Panel decision within 45 calendar days after issuance of the written decision.

If the Listing Council determines to review this Decision, it may affirm, modify, reverse, dismiss or remand the decision to the Panel.

The Company will be immediately notified in the event the Listing Council determines that this matter will be called for review.

As previously disclosed, the Company is currently out of compliance because the Company’s market value of listed securities (“MVLS”) closed below the $50,000,000 MVLS threshold required for continued listing on the Nasdaq Global Market under Nasdaq Listing Rule 5450(b)(3)(A) (the “MVLS Rule”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company was provided a compliance period of 180 calendar days in which to regain compliance with the MVLS continued listing requirement, or until December 16, 2024 (the “Compliance Date”).

The Company did not regain compliance with the MVLS Rule by the given deadline and, accordingly, the Listing Qualifications Staff (“Staff”) notified the Company that its securities were subject to delisting from Nasdaq unless the Company timely requested a hearing before the Panel (which we did).

Additionally, on August 12, 2024, the Company received written notices from the Staff of Nasdaq which notified the Company that, for the 30 consecutive business days ended August 6, 2024, the Company’s security did not maintain a minimum bid price of $1 per share, in accordance with Nasdaq Listing Rule 5810(c)(3)(A) (“Bid Price Rule”).

Also on August 12, 2024, the Company received written notification from the Staff that for the 30 consecutive business days ended August 8, 2024, the Company’s market value of publicly held securities (“MVPHS”) closed below the $15,000,000 MVPHS threshold required for continued listing on the Nasdaq Global Market under Nasdaq Listing Rule 5450(b)(2)(C) (the “MVPHS Rule”).

The Company was granted a compliance period of 180 calendar days from the date of the notice (“Compliance Period”) for these delinquencies, in accordance with Nasdaq Listing Rule 5810(c)(3)(A) for the Bid Price Rule and Nasdaq Listing Rule 5450(b)(2)C) for the MVPHS Rule.

The Company did not regain compliance with the Bid Price Rule by February 3, 2025 or the MVPHS Rule by February 4, 2025.

Accordingly, by letter dated February 5, 2025, the Staff notified the

Company that its securities were subject to delisting from Nasdaq unless the Company timely requested a hearing.

The Company timely requested and received a hearing at which time it outlined its compliance plan before the Panel.

The Panel accepted our compliance plan and granted us the above-referenced extensions.

During the extension periods, the Company intends to implement its compliance plan and continue to actively monitor MVLS, the Bid Price and MVPHS while it considers all options available to it and to take other action, if necessary and as deemed appropriate by the Company’s Board, to remedy the deficiency, including potentially effecting a reverse stock split, entering into a $20.0 million equity life of credit and converting at least $6.6 million in senior secured notes to equity.

On February 21, 2025, the Company filed its Definitive Proxy for a Special Meeting to obtain the requisite stockholder approvals to ensure it has the ability to take the certain of the actions that are part of its compliance plan.

There can be no assurance that the Company will be able to comply within the period of time granted by the Panel.

The Company’s balance sheet has liabilities that will require payment, and use of funds for this purpose will make less funding available for operations and clinical development.

Included in the Company’s balance sheet in the accompanying audited financial statements are $17.8 million of obligations included in accounts payable that represent amounts past due.

These include $13.5 million due for legal fees incurred as a result of mounting a defense for the Company and our Chief Executive Officer in a long-running arbitration proceeding that was settled on July 13, 2024.

After year end, we received a $2.0 million insurance payment which was used to offset obligations for legal fees for our Chief Executive Officer.

Also included in outstanding obligations is $4.3 million of obligations included in accounts payable for amounts owed for construction of a manufacturing facility that the Company is building at a property it owns in Miramar, Florida (the “Property”).

As of December 31, 2024, certain subcontractors had filed mechanics liens related to unpaid invoices issued in connection with the facility.

On December 16, 2024, BE&K Building Group, the prime contractor on the project, sent the Company a draft, unfiled lawsuit and requested the parties discuss payment.

On January 22, 2025, the Company entered into a forbearance agreement with BE&K to allow the Company until March 31, 2025 to continue efforts to find the financing required to complete the construction and renovation of the Property.

Pursuant to the forbearance agreement, the Company made an initial payment of $1.0 million in partial satisfaction of amounts owing to BE&K and its subcontractors.

The Company has continued to pursue financing alternatives to provide the funding needed to come current in past amounts due and complete the construction and renovation of the Property

Risks Related to our Business

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Supporting diligence activities conducted by potential licensors and negotiating the financial and other terms of a license agreement are long and complex processes with uncertain results, and we may fail to derive any revenues from these activities.

Further, our potential licensors may develop alternative products or pursue alternative technologies either on their own or in collaboration with others, potentially resulting in our receiving no future milestone or royalty payments under any such licenses.

For example, we have an exclusive worldwide license arrangement with Wugen pursuant to the development of certain cellular therapy products under which we may earn additional milestone or royalty payments, but there can be no assurance that Wugen will be successful in commercializing any products related to this license or that any such payments will ever be earned.

If we fail to successfully out-license to third parties internally-developed molecules that are outside our focus areas, our revenues and return on our research and development activities would be negatively affected and we could be required to seek additional funding.

If we fail to successfully out-license to third parties internally-developed molecules that are not part of the Company’s in-house clinical development programs, our revenues and return on our research and development activities would be negatively affected and we could be required to seek additional funding.

The success of our business development efforts, including license agreements, depends on our ability to realize the anticipate benefits of these transactions and is subject to numerous risks and uncertainties, many of which are outside of our control.

Our potential licensors intend to develop alternative products or pursue alternative technologies either on their own or in collaboration with others, potentially resulting in our receiving no future milestone or royalty payments under any such licenses.

We enter exclusive worldwide license arrangements pursuant to which licensors will develop certain immunotherapy products under which we may earn upfront license fees, additional milestone or royalty payments, but there can be no assurance that licensors will perform as required under the terms of the license agreements or will be successful in commercializing any products related to this license or that any such payments will ever be earned.

We view our business development activities as an enabler of our strategy for clinical development activities and seek to generate growth by pursuing selected opportunities that have the potential to strengthen our clinical development program and provide a source of capital for our operations, including in-house development programs.

The success of our business development activities is dependent on the availability of licensing partners, as well as being provided sufficient information that will enable us to accurately evaluate an opportunity.

The success of our business development transactions also depends on our ability to realize the anticipated benefits of these transactions and is subject to numerous risks and uncertainties, many of which are outside of our control.

Unsuccessful clinical trials, regulatory hurdles, new information and commercialization challenges, inability to raise the capital necessary to execute the clinical development program, among other factors, may adversely impact revenue and income contribution from business development transactions and may lead to an adverse impact on our business.

While we seek to mitigate risks and liabilities through, among other things, due diligence, we may be exposed to risks and liabilities as a result of business development transactions.

There is no assurance that we will be able to enter into strategic business relationships on favorable terms with desired positive outcomes that are accretive to our business.

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

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Additionally, any safety concerns observed in any one of our clinical trials, including adverse safety events in later trials that were not observed in prior trials, could limit the prospects for regulatory approval of that product candidate or other product candidates in any indications.

Even if the trials are successfully completed, clinical data are often susceptible to varying interpretations and analyses, and we cannot guarantee that the FDA or comparable foreign regulatory authorities will interpret the results as we do, and more trials could be required before we submit our product candidates for approval.

We cannot guarantee that the FDA or comparable foreign regulatory authorities will view our product candidates as demonstrating substantial evidence of efficacy even if positive results are observed in clinical trials.

Even if the trials are completed and successful, clinical data are often susceptible to varying interpretations and analyses, and we cannot guarantee that the FDA or comparable foreign regulatory authorities will interpret the results as we do, and more trials could be required before we submit our product candidates for approval.

Moreover, results acceptable to support approval in one jurisdiction may be deemed inadequate by another regulatory authority to support regulatory approval in that other jurisdiction.

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These considerations also apply to new clinical trials we may submit as amendments to existing INDs.

Clinical trials must be conducted in accordance with the FDA’s and other applicable regulatory authorities’ legal requirements, regulations or guidelines, and are subject to oversight by these governmental agencies and Ethics Committees or IRBs at the medical institutions where the clinical trials are conducted.

We could encounter delays if a clinical trial is suspended or terminated by us, by the IRBs or Ethics Committees of the institutions in which such trials are being conducted, by the Data Review Committee or Data Safety Monitoring Board for such trial or by the FDA, or other regulatory authorities.

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

Clinical trials must be conducted in accordance with the FDA’s and other applicable regulatory authorities’ legal requirements, regulations or guidelines, and are subject to oversight by these governmental agencies and IRBs or Ethics Committees at the medical institutions where the clinical trials are conducted.

We could encounter delays if a clinical trial is put on hold by the FDA or other regulatory authorities, suspended or terminated by us, by the IRBs or Ethics Committees of the institutions in which such trials are being conducted or by the Data Review Committee or Data Safety Monitoring Board for such trial.

For example, in November 2024, the FDA placed a full clinical hold on the Phase 1 study of HCW9302 due to insufficient information regarding chemistry, manufacturing and controls, which prevented us from initiating the study until the FDA lifted the clinical hold in January 2025 after finding our complete response to be satisfactory.

If we experience further delays in the completion of, or termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of these product candidates will be delayed.

In addition, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process, and jeopardize our ability to commence product sales and generate revenues.

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In addition, clinical trials that are conducted in countries outside the United States may subject us to further delays and expenses as a result of increased shipment costs, and additional regulatory requirements, as well as expose us to risks associated with clinical investigators who are unknown to the FDA, and different standards of diagnosis, screening, and medical care.

Our lead product candidate, HCW9218, is currently being evaluated in multiple clinical trials in cancer indications.

Our ability to advance HCW9218 through Phase 2 clinical trials depends on timely completion of current clinical studies, successfully meeting those studies’ objectives, including dose finding and/or optimization for the Phase 2 evaluation, and obtaining FDA authorization to proceed to additional Phase 2 trials.

Our lead product candidate, HCW9302, has been cleared by the FDA to initiate a first-in-human Phase 1 dose escalation clinical trial to evaluate HCW9302 in patients with moderate-to-severe alopecia areata, a common autoimmune disease in humans that currently has no curative FDA-approved treatments.

Our ability to advance development of HCW9302 depends on timely completion of current clinical studies, successfully meeting those studies’ objectives, including dose finding and/or optimization for the Phase 2 evaluation, and obtaining FDA authorization to proceed to Phase 2 trials.

If the FDA does not allow our Phase 2 clinical trials to proceed, we may be required to undertake additional IND-enabling activities or dose finding activities, which would result in further delay and additional costs.

If we experience delays in the progression and completion of our clinical trials, or if we terminate a clinical trial prior to completion, the commercial prospects of HCW9218 could be harmed, and our ability to generate revenues from HCW9218 may be delayed.

If we experience delays in the progression and completion of our clinical trials for HCW9302, or if we terminate a clinical trial prior to completion, the commercial prospects of such product candidate could be harmed, and our ability to generate revenues from the product candidate may be delayed.

In addition, any delays in our clinical trials would require us to store material which could expose us to inventory risk, increased costs, slow down in development and approval process, as well as jeopardize our ability to commence product sales and generate revenues.

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

In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

Our other lead product candidate, HCW9302, is currently completing IND-enabling activities for an autoimmune indication.

We rely on third-party providers for toxicology testing services for information required to be included in the submission of an IND.

Any delays in completing toxicology studies and other IND-enabling activities will increase our costs, slow down our product candidate development and approval process, and jeopardize our ability to commence product sales and generate revenues.

Significant delays in commencing clinical trials could also allow our competitors to bring products to market before we do or shorten any periods during which we have the exclusive right to commercialize our product candidates and impair our ability to commercialize our product candidates and may harm our business and results of operations.

We depend on enrollment of patients in our clinical trials for our product candidates.

If we experience delays or difficulties enrolling in our clinical trials, our research and development efforts and business, financial condition, and results of operations could be materially adversely affected.

Successful and timely completion of clinical trials will require that we enroll a sufficient number of patient candidates.

These trials and other trials we conduct may be subject to delays for a variety of reasons, including delays in completion of internal procedures required to open a clinical site, patient enrollment taking longer than anticipated, patient withdrawal, or adverse events.

For example, there were delays in commencing clinical trials of HCW9218 as a result of the ongoing pandemic and staffing shortages at clinical sites.

These types of developments could cause us to delay the trial or halt further development.

Our clinical trials will compete with other clinical trials that are in the same therapeutic areas as our product candidates, and this competition reduces the number and types of patients available to us, as some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors.

Moreover, enrolling patients in clinical trials for cancer therapies is challenging, as cancer patients will first receive the applicable standard of care.

This may limit the number of eligible patients able to enroll in our clinical trials who have the potential to benefit from our drug candidates and could extend development timelines or increase costs for these programs.

Patients who fail to respond positively to the standard of care treatment will be eligible for clinical trials of unapproved drug candidates.

However, these patients may have either compromised immune function from prior administration of chemotherapy or an enhanced immune response from the prior administration of checkpoint inhibitors.

Either of these prior treatment regimens may render our therapies less effective in clinical trials.

Additionally, patients who have failed approved therapies will typically have more advanced cancer and a poorer long-term prognosis.

Patient enrollment depends on many factors, including but not limited to the size and nature of the patient population, the severity of the disease under investigation, and the availability of competing clinical trials, which may make it difficult for us to enroll enough patients to complete our clinical trials in a timely and cost-effective manner.

Delays in the completion of any clinical trial of our product candidates will increase our costs, slow down our product candidate development and approval process, and delay or potentially jeopardize our ability to commence product sales and generate revenue.

In addition, some of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

We may become exposed to costly and damaging product liability claims, either when testing our product candidates in the clinic or at the commercial stage, and our product liability insurance may not cover all damages from such claims.

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For example, the FDA has convened its Oncologic Drugs Advisory Committee to review what the FDA has called dangling or delinquent accelerated approvals where confirmatory studies have not been completed or where results did not confirm benefit.

In addition, the Oncology Center of Excellence has announced Project Confirm, which is an initiative to promote the transparency of outcomes related to accelerated approvals for oncology indications and provide a framework to foster discussion, research and innovation in approval and post-marketing processes, with the goal to enhance the balance.

The recent enactment of FDORA included provisions related to the accelerated approval pathway.

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FDORA enables the FDA to initiate enforcement action for the failure to conduct with due diligence a required post-approval study, including a failure to meet any required conditions specified by the FDA or to submit timely reports.

There is substantial uncertainty regarding the new Administration’s initiatives and how these might impact the FDA, its implementation of laws, regulations, policies and guidance and its personnel.

Similar initiatives may also be directed toward other government agencies.

These initiatives could prevent, limit or delay development and regulatory approval, and/or impact commercialization, of our product candidates, which would impact our business.

FDA-regulated industries, such as ours, face substantial uncertainty regarding the regulatory environment we will face as we proceed with research and development, and possibly in future commercialization, efforts following the inauguration of President Trump in January 2025 (the “Administration”).

Some of these efforts have manifested to date in the form of personnel measures that could impact the FDA’s ability to hire and retain key personnel, which could result in delays in or limitations on our ability to obtain guidance from the FDA on our product candidates in development and obtain the requisite regulatory approvals in the future.

Moreover, the new Administration has proposed action to freeze or reduce the budget of the National Institutes of Health (“NIH”) as related to its funding for medical research, which could decrease the ability of facilities that rely on NIH funding to enroll and conduct clinical trials or increase the costs to us of conducting clinical trials.

There remains general uncertainty regarding future activities.

The new Administration could issue or promulgate executive orders, regulations, policies or guidance that adversely affect us or create a more challenging or costly environment to pursue the development and sale of new therapeutic products.

For example, on January 20, 2025, President Trump announced an executive order establishing the Department of Government Efficiency to maximize government efficiency and productivity.

Pressures on and uncertainty surrounding the U.S.

federal government’s budget and potential changes in budgetary priorities could adversely affect the funding for existing programs and grants and increase the costs to us of conducting clinical trials.

Alternatively, state governments may attempt to address or react to changes at the federal level with changes to their own regulatory frameworks in a manner that is adverse to our operations.

If we or our collaborators become negatively impacted by future governmental orders, regulations, policies or guidance as a result of the new Administration, there could be a material adverse effect on us and our business.

Even if our product candidates obtain regulatory approval, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense.

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Other recent Oncology Center of Excellence initiatives have included Project FrontRunner, a new initiative with a goal of developing a framework for identifying candidate drugs for initial clinical development in the earlier advanced setting rather than for treatment of patients who have received numerous prior lines of therapies or have exhausted available treatment options;

Project Equity, which is an initiative to ensure that the data submitted to the FDA for approval of oncology medical products adequately reflects the demographic representation of patients for whom the medical products are intended;

and Project Confirm, which is an initiative to promote the transparency of outcomes related to accelerated approvals for oncology indications and provide a framework to foster discussion, research and innovation in approval and post-marketing processes, with the goal to enhance the balance.

Project Confirm, which is an initiative to promote the transparency of outcomes related to accelerated approvals for oncology indications and provide a framework to foster discussion, research and innovation in approval and post-marketing processes, with the goal to enhance the balance of access and verification of benefit for therapies available to patients with cancer and hematologic malignancies;

and Project Equity, which is an initiative to ensure that the data submitted to the FDA for approval of oncology medical products adequately reflects the demographic representation of patients for whom the medical products are intended.

More recently, as part of FDORA, sponsors will be required to submit Diversity Action Plans (“DAPs”) for Phase 3 studies or other pivotal studies of new drugs.

DAPs must include the sponsor’s goals for enrollment for such studies, disaggregated by age group, sex, and racial and ethnic demographic characteristics of clinically relevant study populations;

the sponsor’s rationale for such goals;

and an explanation of how the sponsor intends to meet such goals.

Actions taken in the early days of the new presidential administration have created significant uncertainty as to whether Project Equity will continue and whether the statutory requirements related to DAPs will be implemented by FDA in the near future.

We are considering these and other policy changes as they relate to our programs.

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In addition, increased scrutiny by the U.S.

Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other

requirements.

Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

Furthermore, government shutdowns could also impact the ability of regulatory authorities and government agencies to function normally and support our operations.

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Previously, in March 2010, the ACA was enacted, which was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.

Healthcare reform initiatives recently culminated in the enactment of the IRA in August 2022, which, among other things, allows HHS to directly negotiate the selling price of a statutorily specified number of drugs and biologics each year that CMS reimburses under Medicare Part B and Part D.

Only high-expenditure single-source drugs that have been approved for at least 11 years for single-source biologics (7 years for drugs) are eligible to be selected by CMS for negotiation, with the negotiated price taking effect two years after the selection year.

Negotiations for Medicare Part D products take place in 2024 with the negotiated price taking effect in 2026, and negotiations for Medicare Part B products will begin in 2026 with the negotiated price taking effect in 2028.

In August 2023, HHS announced the ten Medicare Part D drugs and biologics that it selected for negotiations.

HHS will announce the negotiated maximum fair prices by September 1, 2024, and this price cap, which cannot exceed a statutory ceiling price, will go into effect on January 1, 2026.

Healthcare reform initiatives culminated in the enactment of the IRA in August 2022, which, among other things, allows HHS to directly negotiate the selling price of a statutorily specified number of drugs and biologics each year that CMS reimburses under Medicare Part B and Part D.

The negotiated price may not exceed a statutory ceiling price.

Only high-expenditure single-source drugs that have been approved for at least 11 years for single-source biologics (7 years for single-source drugs) are eligible to be selected by CMS for negotiation, with the negotiated price taking effect two years after the selection year.

For 2026, the first year in which negotiated prices become effective, CMS selected 10 high-cost Medicare Part D products in 2023, negotiations began in 2024, and the negotiated maximum fair price for each product has been announced.

These negotiations resulted in significant price reductions for the products from their 2023 list prices, ranging from 38 to 79 percent, with an average price reduction of 59.4 percent.

CMS has selected 15 additional Medicare Part D drugs for negotiated maximum fair pricing in 2027.

For 2028, an additional 15 drugs, which may be covered under either Medicare Part B or Part D, will be selected, and for 2029 and subsequent years, 20 Part B or Part D drugs will be selected.

A drug or biological product that has an orphan drug designation for only one rare disease or condition will be excluded from the IRA’s price negotiation requirements, but will lose that exclusion if it receives designations for more than one rare disease or condition, or if is approved for an indication that is not within that single designated rare disease or condition, unless such additional designation or such disqualifying approvals are withdrawn by the time CMS evaluates the drug for selection for negotiation.

The negotiated prices will represent a significant discount from average prices to wholesalers and direct purchasers.

The law also imposes rebates on Medicare Part D and Part B drugs whose prices have increased at a rate greater than the rate of inflation.

The negotiated prices have represented, and will continue to represent, a significant discount from average prices to wholesalers and direct purchasers.

The law also imposes rebates on Medicare Part D and Part B drugs whose prices have increased at a rate greater than the rate of inflation, and in November 2024, CMS finalized regulations for these inflation rebates.

The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.

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In some states, laws have been enacted to encourage importation of lower cost drugs from other countries and bulk purchasing.

For example, the FDA released a final rule in September 2020 providing guidance for states to build and submit plans for importing drugs from Canada, and FDA authorized the first such plan in Florida in January 2024.

It is unclear how this program will be implemented, including which drugs will be chosen, and whether it will be subject to legal challenges in the United States or Canada.

Other states have also submitted proposals that are pending review by the FDA.

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

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Our success is highly dependent on our ability to discover, develop, and obtain marketing approval for new and innovative products on a cost-effective basis and to market them successfully.

In doing so, we face and will continue to face intense competition

from a variety of businesses, including large pharmaceutical and biotechnology companies, academic institutions, government agencies, and other public and private research organizations.

In doing so, we face and will continue to face intense competition from a variety of businesses, including large pharmaceutical and biotechnology companies, academic institutions, government agencies, and other public and private research organizations.

These organizations may have significantly greater resources than we do and conduct similar research, seek patent protection, and establish collaborative arrangements for research, development, manufacturing, and marketing of products that compete with our product candidates.

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Pharmaceutical manufacturers are also subject to extensive post-marketing oversight by the FDA and comparable regulatory authorities in the jurisdictions where the product is marketed, which include periodic unannounced and announced inspections by the FDA to assess compliance with cGMP requirements.

If an FDA inspection of a manufacturer’s facilities reveals conditions that the FDA determines not to comply with applicable regulatory requirements, the FDA may issue observations through a Notice of

Inspectional Observations, commonly referred to as a “Form FDA 483”.

If observations in the Form FDA 483 are not addressed in a timely manner and to the FDA’s satisfaction, the FDA may issue a warning letter or pursue other forms of enforcement action.

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Even if patents do successfully issue and even if such patents cover our product candidates, third parties have initiated or may initiate opposition, interference, re-examination, post-grant review, inter partes review, nullification, or derivation actions in court or before patent offices, or similar proceedings challenging the validity, ownership, enforceability, or scope of such patents, which may result in the patent claims being narrowed, invalidated, or held unenforceable or circumvented.

For example, as described further below, we are engaged in legal proceedings with Altor/NantCell pursuant to which Altor/NantCell is seeking specific performance for assignment of and a constructive trust over certain of our patents, which if successful would materially impact our core intellectual property assets.

Because patent applications in the United States and other jurisdictions are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we were the first to make the inventions claimed in our patents or pending patent applications, or that we were the first to file any patent applications related to such inventions.

Our patent applications

cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent is issued from such applications, and then only to the extent the issued claims cover the technology.

Our patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent is issued from such applications, and then only to the extent the issued claims cover the technology.

Furthermore, even where we have a valid and enforceable patent, we may not be able to exclude others from practicing our invention where the other party can show that it used the invention in commerce before our filing date or that the other party benefits from a compulsory license.

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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 and our Chief Executive Officer are currently involved in legal proceedings with Altor/NantCell, in which Altor/NantCell has alleged, among other things, a claim of trade secret misappropriation and other related claims against us and breach of contract and fiduciary duty, among other claims, against our chief executive officer in arbitration, and an adverse result could have a negative material impact on our business and operations.

On December 23, 2022, a lawsuit was filed by Altor BioScience, LLC and NantCell, Inc., collectively, Altor/NantCell, against the Company in U.S.

District Court for the Southern District of Florida (the “Court”), alleging misappropriation of trade secrets under state and federal laws, inducement of breach of contract and breach of fiduciary duty, tortious interference with contractual relations, specific performance, conversion, unjust enrichment, specific performance for assignment of patents and patent applications, constructive trust, and replevin.

The complaint against us is based on very similar allegations as those alleged by Altor/NantCell in an arbitration commenced in December 2022 against our Founder and Chief Executive Officer, Dr.

Wong, who was formerly employed by Altor/NantCell.

Altor/NantCell alleges that Dr.

Wong purportedly took Altor/ NantCell’s confidential and trade-secret information and used it to form and build competing products for us.

On January 31, 2023, the Company filed a motion to compel arbitration, a motion for the stay of the litigation, and a motion to dismiss the complaint (“motion to compel”).

On April 18, 2023, the U.S.

District Court for the Southern District of Florida (the “Court”) heard oral argument on the Company’s motion to compel and ordered the parties to provide supplemental briefing by April 28, 2023.

Before the Court ruled on the Company’s motion to compel, on April 26, 2023, the parties stipulated that Altor/NantCell’s action against the Company would be consolidated with the Altor/NantCell arbitration demand against Dr.

On April 27, 2023, the Court approved the parties’ stipulation and ordered the parties to arbitration.

On May 1, 2023, Altor/NantCell filed a demand against the Company before JAMS.

On May 3, 2023, Altor/NantCell dismissed the federal court action without prejudice and the Court ordered the case dismissed without prejudice and closed the case.

Altor/NantCell’s proceeding against the Company is now proceeding in arbitration before JAMS, with an arbitration hearing scheduled for May 20, 2024.

On March 26, 2024, Altor/NantCell gave notice that they are filing a complaint (the “Complaint”) against the Company in the Chancery Court of the State of Delaware for the contribution of legal fees and expenses advanced to Dr.

Wong, our founder and chief executive officer, in connection with the arbitration discussed above.

Prior to the filing of the Complaint, Altor/NantCell had previously sought advancement from the Company and the Company agreed to advance 50% of Dr.

Wong’s legal fees going forward from December 2023.

On January 8, 2024, Altor/NantCell reserved their right to pursue contribution against the Company for 50% of the amount Altor/NantCell sent for advancement of expenses for Dr.

In the Complaint, Altor/NantCell seek 50% of the fees they have already advanced to Dr.

Wong, a declaration that the Company has an obligation to contribute 50% of the advancement of Dr.

Wong’s expenses including 50% of Dr.

Wong’s expenses incurred in connection with the arbitration through final resolution of the matter, and costs and fees in bringing this action.

We have incurred and expect to continue to incur significant expenses in connection with our defense in the arbitration proceedings with Altor/NantCell.

Altor/NantCell has considerable resources available to it;

we, on the other hand, are a company in the early stages of our clinical trials with comparatively few resources available to us to engage in costly and protracted litigation.

These claims asserted against us have been and are expected to continue to be costly to defend and could limit our ability to use some technologies in the future.

They have been, and will be, time consuming, have diverted and will divert our chief executive officer’s, management’s and scientific personnel’s attention, may be used by Altor/NantCell in an effort to generate negative publicity with our customers and investors, and may result in liability for substantial damages and reimbursements.

For example, we have incurred and anticipate that we will continue to incur significant expense and substantial time in defending ourselves in the current disputes with Altor/NantCell and our advancement of legal expenses of Dr.

Wong in connection therewith.

There can be no assurance that we will not be required to pay damages or reimburse Altor/NantCell for the amounts they are seeking in connection with these matters.

We anticipate that Altor/NantCell may continue to use options available to it through the arbitrator, including filing amended or new demands, other arbitration submissions, public statements and press releases, regardless of merit, in an attempt to disrupt our business and create uncertainty about our future prospects, which could create volatility in the trading price of our common stock or damage to our reputation.

An adverse judgment in the Altor/NantCell arbitration proceedings could require us to pay damages, attorneys’ fees, costs and expenses, or result in injunctive relief, or generate negative publicity, any of which could materially adversely affect our business, financial condition, results of operations, and prospects.

We may also in the future be involved with other litigation.

We expect that the number of such claims may increase as our scale and the level of competition in our industry segments grows.

Intellectual property rights of third parties could adversely affect our ability to develop or commercialize our product candidates, such that we could be required to litigate or obtain licenses from third parties in order to develop or market our product candidates.

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Under certain circumstances and to make it more likely that we have freedom to operate, we may also decide to publish some know-how to make it difficult for others to obtain patent rights covering such know-how, at the risk of potentially exposing our trade secrets to our competitors.

We are currently and may be in the future subject to third-party claims asserting that our employees, consultants, contractors, collaborators, or advisors have misappropriated or wrongfully used or disseminated their intellectual property, or claiming ownership of what we regard as our own intellectual property.

We may be in the future subject to third-party claims asserting that our employees, consultants, contractors, collaborators, or advisors have misappropriated or wrongfully used or disseminated their intellectual property, or claiming ownership of what we regard as our own intellectual property.

Many of our employees, including our senior management, were previously employed at universities or at other biopharmaceutical companies, including our competitors or potential competitors.

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Although we try to ensure that our employees, consultants, contractors, collaborators, advisors, or other third parties do not use or disclose the proprietary information or know-how of others in their work for us, we are and may become subject to claims that we or these employees or individuals that we work with have used or disclosed confidential information or intellectual property of others, including trade secrets or other proprietary information, or that we caused an individual to breach the terms of his or her non-competition or non-solicitation agreement with a current or former employer or competitor.

For example, as described above, we are engaged in legal proceedings with Altor/NantCell, which alleges misappropriation of trade secrets, inducement of breach of contract and breach of fiduciary duty, among other claims against the company relating to our founder and chief executive officer’s former employment with Altor/NantCell.

Litigation may be necessary to defend against these claims and, even if we are successful, could result in substantial costs and could be a distraction to management, our employees, and our routine business.

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If our privacy or data security measures fail to comply with the GDPR requirements, we may be subject to litigation, regulatory investigations, enforcement notices, and/or enforcement actions requiring us to change the way we use personal data and/or fines.

In addition to statutory enforcement, a personal data breach can lead to negative publicity and a potential

loss of business.

In addition to statutory enforcement, a personal data breach can lead to negative publicity and a potential loss of business.

Further, following the United Kingdom’s withdrawal from the E.U.

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The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including the factors described in this “Risk Factors” section and elsewhere in this Annual Report.

In addition, the stock market in general, and the Nasdaq Stock Market, or Nasdaq, and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

The Company has been out of compliance with three applicable rules with respect to its continued listing on The Nasdaq Stock Market, namely, Nasdaq Listing Rule 5450(b)(2)(A) (the “MVLS Rule”), Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”) and Nasdaq Listing Rule 5450(b)(2&3)(C) (the “MVPHS Rule”).

If the Company’s Common Stock were to be delisted from Nasdaq, it could have a material adverse effect on us and our stockholders.

In addition, the stock market in general, and Nasdaq, and biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.

Additionally, the trading prices for pharmaceutical, biopharmaceutical and biotechnology companies have been highly volatile.

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As of December 31, 2024, our executive officers, directors and their respective affiliates beneficially owned approximately 40.6% of our outstanding voting stock (excluding any stock options exercisable within 60 days of such date held by such persons).

Additionally, in February 2024, certain of our directors and officers, in the aggregate, acquired approximately 4% of our outstanding voting stock in private placement of common stock, further increasing the beneficial ownership of these stockholders.

Further, these stockholders invested $2.9 million in senior secured notes, which will be converted according to the Principal Terms agreed if approved by nonaffiliated stockholders at a Special Meeting of the Stockholders to be held on March 31, 2025.

Therefore, these stockholders have the ability to influence us through this ownership position.

These stockholders may be able to determine all matters requiring stockholder approval.

These stockholders may be able to determine all matters requiring stockholder approval, in matters where they are eligible to vote.

For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction.

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Although we believe these provisions benefit us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, the provisions may have the effect of discouraging lawsuits against us or our directors and officers.

These provisions may limit an investor’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, including by increasing the cost of such lawsuits, which may discourage such

Alternatively, if a court were to find the choice of forum provision 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, which could harm our business, financial condition, and operating results.

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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-K

Item 1A. Risk Factors