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Item 1A. Risk Factors

2021-05-14 compared with 2020-11-09 · 1723 added, 1193 removed, 156 unchanged (95% of the section changed)

1 unchanged sentence

Investing in our common stock involves a high degree of risk.

You should carefully consider the risks described below, as well as other information included in our 2019 Annual Report on Form 10‑K, including our financial statements and the related notes, and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” any of which may be relevant to decisions regarding an investment in or ownership of our stock.

You should carefully consider the risks described below, any of which may be relevant to decisions regarding an investment in or ownership of our stock.

The occurrence of any of these risks could have a significant adverse effect on our reputation, business, financial condition, results of operations, growth and ability to accomplish our strategic objectives.

We have organized the description of these risks into groupings in an effort to enhance readability, but many of the risks interrelate or could be grouped or ordered in other ways, so no special significance should be attributed to the groupings or order below.

Any risk factors that have changed since our Annual Report on Form 10‑K will be noted with an asterisk (*).

On March 9, 2021, we completed t h e merger with ImmunityBio, Inc .

, a private company r e ferred to below as “Imm u nityBio.” After t he completion of this merger, we (formerly known as NantK w est, Inc.) changed our name to ImmunityBio, Inc., and references below to “the c ompan y ,” “the combined company,” “we,” “us,” and “our” refer to ImmunityBio, Inc.

and its subsidiaries .

Risk Factor Summary

R i sks Relat e d to Our F inan c ial Condition and Capital R e qui r em e n ts

W e will need additional f i nancing to fund our operations and complete the dev e lopment and comme r cialization of our various pr o duct candidates, and if we are unable to obtain such financing, we may be unable to complete the dev e lopment and commercialization o f our product candidates.

Raising addit i onal capital may cause dilution to our stockholders, restrict our operat i ons or require us to relinquish rights to our technologies or product candidates.

Our debt could adversely affect our cash flows and limit our f l exib i li t y to ra i s e a ddit i onal c a pit a l.

T he synergies and benefits expected from the integration of our operations may not be re a l i zed with i n the e xpe c ted ti m e fra m e .

Our b u sinesses may not be integrated succ e ssfully, or such integration may be more d i fficult, time consuming or costly than ex p ected.

Operating costs, customer loss and business disruption, including difficult i es i n m a int a in i ng re l a t ionsh i ps with e m ploye e s , c u s tom e r s , suppliers or vendors, may be greater than expected for the combined company .

Revenues may be lower than expec t ed for the combined company.

W e have a history of operat i ng losses, and we expect to continue to incur losses and may never be profitable.

W e have a limited o perating h i story, and the biotechnology in d ust r y in w h ich we operate, makes it diff i cult to evaluate our busin e ss plan and prospects.

R i s k s Related to Our Business and I n d u stry R e gulation

W e may develop product candidates in combination with other therapies, which exposes us to additional risks.

It may take longer and cost more to complete our cli n ical tri a ls than we project, o r we may not be able to complete them at al l.

Our clinical trial costs may be higher than for more conventional therapeutic t e chnologies or drug products.

Our clinical trials may f a il to demonst r ate adequately the sa f e ty a nd efficacy of our product cand i dates, which would prevent o r delay regulatory approval and co m mer c i a li z at i on.

Interim, initial, “top-line” and preliminary data from our clinical tri a ls that we announce or publi s h from time to time may c hange as more patient data become a v a i lab l e and a re sub j e c t t o audit and veri f ication procedures that c ould re s ult in m a t e rial c hang e s in the final data.

W e have limited experience conducting clinical trials and have r e lied and will rely on third p a rties and relat e d parties to c o nduct many of our preclinical studies and clin i cal trials.

Our clinical trials may not be initiated or completed when we expec t , and we may be required to conduct additional clinical t r i a ls or modify current or future cli n ical trials based on feedback we receive from the F DA.

W e use Immuno-Oncology Clinic, Inc .

, a related party, in some of our clinical trials which may expose us to significant regul a tory risks.

If our data f o r this site is not sufficiently robust or if there are any data integrity i s sues, we may be requ i red to repeat such studies or required t o c ontra c t w i th o t her cl i ni c al tr i a l s i t e s, and our clinical developme n t plans will be significantly delayed, and we will inc u r additional c o s t s.

If we encounter difficulties enr o lling patients in our clinical trials, our clinical devel o pment activities and receipt of ne c essary marketing approvals could be delayed or otherwise adversely affected.

Our prod u ct candidates may cause undesirable side effects or h a ve other properties that could halt their clinical development, prev e nt t heir regulatory approval, limit the i r c omm e rc i a l pot e nti a l or result i n significant negative consequences.

T he manufacture of our product c a ndidates is complex, and we may encounter difficulties in p r o duction, particularly with resp e c t t o process development, quali t y control, or scaling-up of our m a nufacturing capabili t ies.

If we or our related parties, or any of our third-party manufacturers encounter such d i fficulties, our ability to provide supply of our product candidates for clinical trials or our p roducts for patients, if approved, could be delayed or stoppe d , or we may be unable to maintain a commerc i ally viable cost structure.

Obtaining and maintaining regulatory approv a l of our product candidates in one jurisdi c tion does not mean that we will be suc c e ssful in obtaining regulatory approval of our product candidat e s in other jurisdictions.

A variety of risks associated with mar k eting our product candidates int e rnationally could materially adversely affect our bus i ness.

W e have never commercial i zed a product candidate before, and we may lack the necessary exper t ise, personnel and resources to successfully commercia l ize any products on our o w n or together with suitable collaborators.

Risks Related to Government Regulation

T he FDA regulatory approval pro c ess is lengthy and time- c onsumin g , and we may experience signif i c a nt d e l a ys in the c l ini c al development and regulatory app r oval of our product candidates.

Results for any patient who r e ceives compassionate use access to our product candidates should not be viewed as representative of how the product candidate will perform in a well-controlled clinical trial, and cannot be used to establish safety or efficacy for regulatory approval.

T he clinical and commercial utility of our product candidates are uncertain and m a y never be realized.

W e are, and if we receive r e gulatory approval of our product candidates, will con t inue to be subject to ongoing r e gulatory ob l igations and continued regulatory review, which may result in significant additional expense and we may b e sub j e c t to p e nalt i e s if we f a il t o comply with regulatory requirements or experience unanticipa t ed problems with our product candidates.

Our GMP - in-a-Box will be regulated by the FDA as a medical device, and regulatory compliance for m e dical devices is expensive, complex and uncertain, and a failure to com p ly could lead to enf o r c e m ent a c tions aga i nst us and other negative consequences for our business.

R i s k s R e lat e d to I n te l le c tual P r o p er t y

If we are unable to obtain, maintain, p r o t ect and enforce p a tent protection and other propri e tary rights for our product cand i dates and technologies, we may not be able to compete effectively or operate profitably.

If any of our owned or in-lice n sed patent appli c ations do not issue as patents in any jurisdiction, we may not be ab l e to com pe te eff e ctively.

If the scope of any patent pro t ection we obtain is not sufficie n t l y broad, or if we lose any of our patent protection, our ab i l i ty t o pr e vent our competitors from comme r cializing sim i lar or identical technology and product candidates would be a d v e rsely affected.

W e may be involved in lawsuits to protect or enforce our patents or o t her intellectual property or the patents or other intellectual property of our licenso r s, which c o uld be expensive, time-consuming a nd unsuccessful.

Issued patents covering our techn o logy and product candidates could be found invalid or unenforceable if challenged in court o r b e f o re administrative bodies in the United States or abroad.

T he use of our technology a n d p r oduct candidates could potentially conflict with the rights of others, and third-party claims of i nt e ll e ctu a l property infringement, misa p p r o p r iation or other violation against us, our licensors or our collaborators may prevent or delay the development and commercialization of our product candidat e s and technologies.

Obtaining and maintaining our patent pro t ection depends on compliance with various p r ocedural, document submission, fee payment, and other requirements imposed by government patent agencies, and our patent protection could be r e duced or eliminated for non-compl i an c e with t h ese r e quirements.

Risks Related to Our Common Stock

Patrick Soon-Shiong, o ur E xecutive C hairman a nd our principal stockholder, has significant interests in other companies which may conflict wi t h our int e rests.

Soon-Shiong, th r o u gh his voting c ontrol of the company, has the ability to con t rol actions that re q uire stockholder approval.

T he market price of our common stock has b e en and may continue to be volatile, and inves t ors may have difficulty selling their shar e s.

W e have incurred and will continue to incur costs as a result of operating as a public company and our management has been and w i ll be required to devote substantial time to compliance initiatives and corporate governance p r actices, including maintaining an eff ec tive sys t em of internal control over financial r e porting.

Risks Related to Our Financial Condition and Capital Requirements

*We are a clinical-stage biopharmaceutical company with a limited operating history and have incurred significant losses since our inception, and we anticipate that we will continue to incur losses for the foreseeable future, which makes it difficult to assess our future viability.

We are a clinical-stage biopharmaceutical company with a limited operating history upon which our business can be evaluated.

To date, we have generated minimal revenue related to the non-clinical use of our cell lines and intellectual property, and we have no products approved for commercial sale and have not generated any revenue from product sales.

We have incurred operating losses on an annual basis since our formation and we may never become profitable.

As of September 30, 2020, we had an accumulated deficit of $722.4 million.

We incurred net losses of $60.3 million and $50.1 million for the nine months ended September 30, 2020 and 2019, respectively.

Our losses have resulted principally from costs incurred in ongoing preclinical studies, clinical trials and operations, as well as research and development expenses, and general and administrative expenses.

A critical aspect of our strategy is to invest significantly in expanding our haNK, taNK, t‑haNK, MSC and ceNK platforms and the development of our product candidates.

We expect to incur significant expenses as we continue to expand our business, including in connection with conducting research and development across multiple therapeutic areas, participating in clinical trial activities, continuing to acquire or in-license technologies, maintaining, protecting and expanding our intellectual property, seeking regulatory approvals and, upon successful receipt of U.S.

Food and Drug Administration, or FDA, approval, commercializing our products.

We will also incur costs as we hire additional personnel and increase our manufacturing capabilities, including the lease or purchase of a facility for the manufacturing of our product candidates for our ongoing and any future clinical trials and, upon receipt of any FDA approval, for our initial commercialization activities.

Moreover, we do not expect to have any significant product sales or revenue for at least the next several years.

These losses have had and, as our operating losses continue to increase significantly in the future due to these expenditures, will continue to have an adverse effect on our stockholders’ equity and working capital.

Because of the numerous risks and uncertainties associated with our product development efforts, we are unable to predict when we may become profitable, if at all.

Additionally, our net losses may fluctuate significantly from quarter to quarter, and as a result, a period-to-period comparison of our results of operations may not be meaningful.

For example, we expect our operating expenses to continue to increase in the fourth quarter of 2020 due to increased research and development expenses including personnel related costs and capital and facility operating expenditures in continued efforts for our Joint COVID‑19 Collaboration with ImmunityBio.

We will need ad d iti o nal financing to fund our operations and compl e te the de v e lop m ent and com m e r cialization of our various pro d u c t candidat e s , and if we are unable to obtain such financi n g, we may be u n able t o co m ple t e t h e dev e lopment and commercia l ization of our produ c t ca n didat e s.

Raising additional capital may cau s e dilution to our stock h olders, restrict our operations or require us to relinquish rights t o our technologies or product candidates.

Our operations have consumed sub s tantial amounts of cash since inception.

We have incurred net losses in each year since our inception and, as of March 31, 2021, we had an accumulated deficit of $1.7 billion.

In ad d i ti o n, r e search and development and operating costs have also b een substantial and are expected to in c r e ase.

A sign i fic a nt p o r tion of our funding had been in the form of promissory notes r e presenting $297.5 million in i ndebtedness, including interest thereon, as of March 31, 2021 held by entities affiliated with Dr.

Soon-Shiong with a maturity date of Se p t ember 3 0, 2025.

As of March 31, 2021, we held cash, cash equiv a lents and ma r k etable securities totaling $84.3 million.

In order to complete the development of our current product candidates, and in order to implement our business plan, we anticipate that we will have to spend more than the funds currently available to us.

Furthermore, changing cir c umstances may cause us to increase our spending s i gnif i can t ly faster th a n we curr e ntly an t ic ip ate, and we may require additional capital for the furth e r development and commercialization of o ur product candidates and may need to raise additional funds sooner if we choose to expand more rapidly than we presently anticipate.

Moreover, our fixed expenses such as rent and other contractual co m mitm e nt s , in c l uding those for our research collaborat i ons, are subs t a nt i a l and are e xpec t ed to i ncr e a se in the futur e .

We will need to obtain a dditional financing to fund our fut u re o p erations, including completing the development and commercial i zation of our product candidates.

Our future funding requ i rements will depend on many factors, including, but not limited to:

progr e s s, t i ming, scope a nd c os t s of our c l ini c al tr i a ls, in c luding the a bil i ty t o t im e ly i nit i a t e c l i nic a l s i tes, enro l l sub j ec t s and m a nufac t ure Anktiva and other therapies for the treat m ent of patients in our on g oing, plan n e d a nd po t ent i al future c lin i c a l t ria l s ;

t ime and cost necessary to obtain regulatory approvals that may be required by regula t ory a uthori t ies t o e xe c ute c l ini c al tr i als;

our ability to successfully commercialize any product candidates, if approved;

our ability to have clinical and commercial product successfully manufact u red consistent with FDA and European Medicines Agen c y regulations;

a mount of sales and other revenues from p r oduct candidates that we may commercialize, if any, i n cluding the selling prices for su c h potential products and the availabi l ity of adequate third-party cover a ge and reimbursement for patients;

sales and marketing costs associated w i th commercializing any product candidates, if approved, including the cost and timing o f building our marketing and s a l e s c a pab i li t ies;

c ost of building, staffing and validating our own manufacturing facilities in t he Un i ted Sta t es;

t erms and timing of our current and any pote n tial future collaborations, contingent value rights (“CVRs”), m i lestones, r o yalti e s, l i c e n s i n g or other arrangements that we have established or may establish;

c ash requirements of any fut u r e acquisitions or the developme n t of other product candidates;

t ime and cost necessary to respond to technological, regulatory, po l itical and market developments;

c osts of filing, prosecuting, maintaining, defending and enforcing any patent claims a n d other intellectual property rights;

c osts associated with any po t e n tial business or product acquis i tions, strategic collaborations, licensing agreements or other arrangements that we may establish.

Unless and until we can generate a suffic i ent amount of reve n ues, we m a y finance f uture cash needs through pu b lic or private equity offerings, license agreements, debt financings, col l abor a t i ons, str a teg i c al l ian c e s and marketing or dis t ribution arrangements.

W e expect to issue additional shares in connection with one or more future capital raising t r ansactions.

However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms, or at all, including but not limited to the offering, issuance and sale by us of up to a maximum aggregate offering of $500.0 million of our common stock that may be issued and sold under an “at-the-market” sales agreement with Jefferies LLC, or the ATM.

We have no committed source of additional capital and if we are u n ab l e to r a ise add i tion a l capital in sufficient amounts or on terms acceptable to us, we may be r e quired to del a y or reduce the scope of or eliminate one or more of our research or development programs or our commercialization ef f orts.

Our current license and collaboration a g r e ements m a y also be t e rmin a ted if we are unable to meet the payment obligations under those agr e ements.

As a result, we may seek to acc e ss the public or private capital markets w henever conditions are favorable, even if we do not have an immediate need for additional c a p i t a l a t th a t t i m e .

To the extent that we raise additional c a pital through the sale of equity or conver t ible debt securitie s including through the ATM or other offerings , your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder.

The incurrence of additional indebtedness would result in increased fixed payment obligations and could involve certain r e strictive covenants, such as limitations on o u r abil i ty to incur additional debt, li m it a tions on our a bil i ty to a c qu i re or l i c e nse i n t e l le c tu a l p r operty rights and other operating r e strictions that could adversely impact our ability to conduct our business.

If we raise additional funds through strategic partnerships a nd alliances and licensing arrangements with third parti e s, w e m a y have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms unfavorable to us.

Our debt could adversely affect o u r cash flows and limit our flexib i li t y t o raise addit i onal c apita l .

We have a significant amount of debt and m a y need to incur additional debt to support our growth.

As of March 31, 2021 , our in debtedness was $297.5 mill i on, consisting of related - party promissory notes and interest thereon, all held by ent i ties affiliated w ith Dr.

Soon-Shiong, w i th a m a t urity date of September 30, 2025.

Our substantial amount of debt could have important consequences and could:

require us to dedicate a substantial portion of our cash and c a sh equivalents to make interest and p r incipal payments on our d ebt, reducing the availability of our cash and cash equivalents and c a sh flow from operations to fund future capital expenditures, working c a pit a l, execution of our strategy and other general corporate requirements;

i ncrease o ur cost of borrowing and even limit our ability to access additional debt to fund future growth;

i ncrease o ur vulnerability to general adverse economic a nd industry conditions and adverse c h anges in governm e ntal regulation s ;

l imit our flexibility in planning for, or reacting to, changes in our business and industry, which may place us at a disadvantage compared with our competitors;

l imit our ability to borrow additional fund s , even when necessary to m a intain adequate liquidity, w h ich would also limit our a bi l ity to further expand our business.

The occurrence of any of the foregoing facto r s could have a material adverse effect on our business, results of o perations and financial condition.

We may also need to refinance a portion of our outstanding debt as it mat u res.

We may not be able to refina n c e existing debt or the terms of any refinanci n g may not be as f a vorable as the terms of our existing debt.

F u rthermore, if prevailing int e rest rates or other fact o rs at the time of refinancing result in higher interest rates upon refinancing, then the interest expense relating to that refinanced ind e btedness would inc re a s e .

The s e risks could materially adversely a ffect our financial condition, cash flows and results of ope r a tions.

The synergies and benefits e xp e c t e d fro m t h e i n t e gration of our operations may not be reali z ed wit h in t h e e xpe c ted time frame.

The ability of the compan y , now renamed ImmunityBio, Inc.

and forme r ly known as Nan t Kwest, Inc., to realize the anticipated be n e f its of the m e rger with ImmunityBio will depend, to a large extent, on our ability to integrate our businesses in a manner t hat fa c i l it a tes grow t h opportunities and achieves the projected synergies identified by each c o mpany without adversely affecting c u r rent revenues and investments in future grow t h.

E ven i f we are a ble to i ntegr a te the t w o co m pani e s succ e ssfu l ly, the a n ticipated benefits of the merger, including the e xpected synergies, may n o t be realized f u lly or at all or may take longer to realize than expected.

O u r b u s i n e s s es may not be i n t e gra t ed s u c c essfu l ly, or su c h integrat i on m a y be more difficult, time consuming or cos t ly than exp e c t ed.

Operat i n g costs, customer loss and busin e ss disruption, including d i ffi c u l ti e s in m aintaining re l ationsh i ps with employe e s , c u stom e rs, s uppliers or vendors, may be greater than e xp e cted for the combined company .

R ev e n u es may be low e r t h an exp e ct e d for the combined company.

The co m bina t ion of two busin e s s e s is c ompl e x, costly and time-consuming and may divert significant managem e nt attention and re s ources to c o mbining o u r prior businesses.

This process may dis r upt our businesses.

The failure to meet the challenges involved in combining the two businesses and to rea l i z e t he ant i c i p a t e d b e nefi t s of t he merg e r c ould cause an i n terruption of, or a loss of mom e n t um i n, the a c tiv i ti e s of the combined company and could adversely affect the results of operations of the combined comp a ny.

The overall combination of our b usines s es may a l s o r e sult in m a t e rial un a nti c ipa t ed problems, expenses, li a bilities, competitive responses, and loss of customer and other business relationships.

The difficulties of combining the o p erations of the companies include, among others:

t he diversion of management attention to integration matters;

d i fficu l ti e s in in t e gra t ing operations and systems, including intellectual property and communications syste m s, a dmin i s t ra t ive and information technology infrastruc t ure and financial reporting and internal control systems;

c hallenges in conforming standards, controls, procedu r es and accounting and o t her policies, business cultures and compensation struc t ures between the two companies;

difficulties in integrating employees and attracting and r e taining key personnel, including talent;

c hallenges in retaining existing, and obtaining supplie r s and employees;

difficulties in achiev i ng anticipated cost savings, synergies, accretion targets, business opportunit i es, financing plans and growth prospects from the combination;

difficulties in managing the exp a nded operations of a significantly l a rger and more complex company;

c onting e nt li a bil i ti e s th a t are l a rger than exp e ct e d;

potential unknown liabili t ies, adverse cons e quences and unforeseen increased exp e nses ass o ciated with the merger.

Many of these factors are outside of our c ontrol, and any one of them could result in lower revenues, higher costs and diversi o n of management time and energy, which could materially i m pact the b usiness, financial cond i tion and results of operations of the combined company.

In a ddit i on, even if the o p erations of our businesses are integrated su c c e s sful l y, the full ben e fits of the m e r g er may not be real i zed, i nc l ud i ng, a m ong others, the synergies or growth opportunities that are expected.

These b e nefits may not be achieved within the anticipated time frame or at all.

Furthe r , additional unanticipated costs may be incurred in the integration of our businesses.

All of these factors cou l d negatively impact the company’s operations and/or the price of the company’s common stock .

As a result, it cannot be assured that the combination of our businesses will result in the re a l i za t ion of the full ben e fits e xpe c ted from the m e rger w i thin the a nti c ipa t ed ti m e fram e s or a t al l .

A c cord i ngly, hold e rs of t he combined comp a ny’s common stock may experie n ce a loss a s a res u lt of a de c line in the m a rket pri c e of s uch common sto c k.

In addition, a dec l ine in the m a rket pri c e of the combined company’s com m on stock could adversely affect the c o mpany’s ability to issue a d d i t i on a l s e cur i ti e s and to obta i n additio n al financing in the future.

We have a history of operating losses, and we expect to continue to incur loss e s and may never be profitable.

We are a bio p harmaceutical company, and now t h at the merger with ImmunityBio has been completed, we have a much broader portfolio of product candidates at various stages of development.

None of our products have been approved for commercial sale or for which marketing approval has been sought, althou g h w e have generated revenues from non-exclusive license a g reements related to our cell li n es, the sale of our bioreactors and related consumables and grant programs.

We expect to incur significant expenses as we seek to expand our business, including in connection with conducting research and development across multiple therapeutic areas, participating in clinical trial activities, continuing to acquire or in-license technologies, maintaining, protecting and expanding our intellectual property, seeking regulatory approvals and, upon successful receipt of FDA approval, commercializing our products.

We will also incur costs as we hire additional personnel and increase our manufacturing capabilities, including the lease or purchase of a facility for the manufacturing of our product candidates for ongoing and future clinical trials and, upon potential receipt of FDA approval, for our initial commercialization activities.

Moreover, we do not expect to have significant product sales or revenue for the next 12 to 24 months.

These losses have had an adverse impact on our stockholders’ equity and working cap i tal and, as these operating losses continue to increase significantly in the future due to such expenditures, will continue to have an adverse effect on our stockholders’ equity and working capital.

Because of the numerous risks and uncertainties associated with our product development efforts, we are unable to predict when the c ompany may become p r ofit a bl e , if at a l l.

Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis.

In addition, we expect increased expenses in future quarters as a result of the Joint COVID-19 Collaboration.

* We do not have any therapeutic products that are approved for commercial sale.

Our ability to generate revenue from product sales and achieve and maintain profitability depends significantly on our success in a number of factors.

We currently do not have any therapeutic products that are approved for commercial sale.

We have not received, and do not expect to receive for at least the next several years, if at all, any revenues from the commercialization of our product candidates if approved.

To obtain revenue from sales of our product candidates that are significant or large enough to achieve profitability, we must succeed, either alone or with third or related parties, in developing, obtaining regulatory approval for, manufacturing and marketing therapies with commercial potential.

Our ability to generate revenue and achieve and maintain profitability depends significantly on our success in many areas, including:

our research and development efforts, including preclinical studies and clinical trials of our haNK, taNK, t‑haNK, ceNK and MSC platforms and our product candidates;

continuing to develop sustainable, scalable, reliable and cost-effective manufacturing and distribution processes for our product candidates, if approved, including establishing and maintaining commercially viable supply relationships with third and related parties and establishing our own current Good Manufacturing Practices, or cGMP, manufacturing facilities and processes to support clinical development and meet the market demand for product candidates that we develop, if approved;

addressing any competing therapies and technological and industry developments;

identifying, assessing, acquiring and developing new technology platforms and product candidates across numerous therapeutic areas;

establishing and maintaining relationships with contract research organizations, or CROs, and clinical sites for the clinical development, both in the U.S.

and internationally, of our product candidates;

successful and timely completion of preclinical and clinical development of our product candidates and any other future product candidates;

obtaining regulatory approvals and marketing authorizations for our current and future product candidates, including a continued acceptable safety profile both prior to and following any marketing approval of our product candidates;

making any required post-marketing approval commitments to applicable regulatory authorities;

launching and commercializing any approved products, either directly or with a collaborator or distributor, including the development of a commercial infrastructure;

obtaining market acceptance of and acceptable reimbursement for any approved products;

completing collaborations, licenses and other strategic transactions on favorable terms, if at all;

maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how;

defending against third-party interference or infringement claims, if any;

attracting, hiring and retaining qualified personnel.

Even if one or more of our product candidates is eventually approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate and we may not generate significant revenue from sales of such products, resulting in limited or no profitability in the future.

Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital for the foreseeable future.

Any failure to become and remain profitable may adversely affect the market price of our common stock, our ability to raise additional capital and our future viability.

*We will need to obtain substantial additional financing to complete the development and any commercialization of our product candidates, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our commercialization efforts, product development or other operations.

Since our inception, we have used substantial amounts of cash to fund our operations and expect our expenses to increase substantially in the foreseeable future.

Developing our product candidates and conducting clinical trials for the treatment of cancer, virally infectious diseases, and other diseases requires substantial amounts of capital.

We will also require a significant additional amount of capital to commercialize any approved products.

As of September 30, 2020 , we had cash and cash equivalents of $ 27.7 million and marketable debt securities of $ 62.1 million .

We are using and expect to continue to use our existing cash and cash equivalents and marketable debt securities to fund expenses in connection with our ongoing and any future clinical trials, our manufacturing facilities and processes and the hiring of additional personnel, and for other research and development activities, working capital and general corporate purposes, including our previously announced share repurchase program.

We believe that our existing cash, cash equivalents, and investments in marketable debt securities will be sufficient to fund our operations for at least the next 12 months following the issuance date of the financial statements.

Our estimate as to how long we expect our existing cash and cash equivalents to be available to fund our operations is based on assumptions that may be proved inaccurate, and we could deplete our available capital resources sooner than we currently expect.

In addition, changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control.

We may require additional capital for the further development and any commercialization of our product candidates and may need to raise additional funds sooner than we anticipate if we choose to expand more rapidly.

Our future capital requirements may depend on, and could increase significantly as a result of, many factors, including:

the timing of, and the costs involved in, preclinical and clinical development and obtaining any regulatory approvals for our oncology product candidates;

the timing of, and the costs involved with, the joint development, manufacturing and marketing of a vaccine and multiple therapeutics for COVID‑19 with ImmunityBio;

the costs of manufacturing, distributing and processing our product candidates and any products for which we receive regulatory approval, if any;

the number and characteristics of any other product candidates we develop or acquire;

our ability to establish and maintain strategic collaborations, licensing or other commercialization arrangements and the terms and timing of such arrangements, including our arrangements with ImmunityBio and its subsidiaries and Viracta;

the degree and rate of market acceptance of any approved products;

the emergence, approval, availability, perceived advantages, relative cost, relative safety and relative efficacy of other products or treatments;

the expenses needed to attract and retain skilled personnel;

the costs associated with being a public company;

the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing intellectual property claims, including litigation costs and the outcome of such litigation;

the costs related to commercializing product candidates independently;

the timing, receipt and amount of sales of, or royalties on, any approved products;

any product liability or other lawsuits related to our product candidates or the company.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our common stockholders’ rights.

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

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

Additional capital may not be available when we need it, on terms that are acceptable to us or at all.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market any approved products that we would otherwise prefer to develop and market ourselves, or be unable to continue or expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations and cause the price of our common stock to decline.

* We expect o ur business to be adversely affected by outbreaks of epidemic, pandemic or contagious diseases, including the ongoing coronavirus pandemic .

Outbreaks of epidemic, pandemic or contagious diseases, such as the coronavirus pandemic, may significantly disrupt our operations and adversely affect our business, financial condition and results of operations.

In March 2020, the World Health Organization declared the outbreak of COVID‑19 a global pandemic as the novel coronavirus continued to spread throughout the world.

Our ability to achieve profitability in the future is de p e ndent upon obtaining regulatory approvals for our product candidates a nd su c c e ssfully commercializing our product candidates alone or with third p a rties.

However, our operations may not be profitable even if one o r more of our product candidates under development are successfully developed and produced and thereafter commercialized.

We have a li m it e d operat i ng history, and the biotechnology ind u stry in which we op e rate, mak e s it difficult to evaluate our bu s iness plan and prospects.

We have only a limited o perating h i story on which a decision to invest in us can be based and against which we can test the pl a ns and assumptions in o u r business plan.

Our fut u r e is dependent upon our ability to implement our business plan, as that b usiness plan may be modified from time to time by our new management and board of dir e ctors.

Investo r s therefore cannot evaluate the likelihood of our success.

We face the problems, exp e nses, difficulties, compl i cations and delays normal l y associated with a pre-comme r cial biotechnology com p any, many of which are beyond our control.

Accordingly, our prospects should be conside r ed in light of the risks, expe n ses and difficulties frequently encountered in the establishment of a new b u siness developing technologies in an industry that is characterized by a number of market entrants and intense competition.

Because of our size and limited resources, we may not poss e ss the ability to successfully overcome many of the risks and uncer t ainties frequently encountered by pre-commercial companies invo l ved in the rapidly evolving field of immunotherapy.

If our resea r ch and development efforts are successful, we may also face the risks a ssociated with the shift from development to commercialization of new products based on innovative technologies .

There can be no assurance that we will be suc c essful in deve l oping our business.

We will be substantially dependent on the success of our product candidates and cannot guarant e e that these prod u ct can d idates will succ e ssfully complete development, receive regulatory app r oval or be success f ully commercialized.

Other than our proprietary GMP-in-a-Box bioreactors for which we have received nominal revenue to date, we currently have no p r oducts approved for commercial sale or for which regulatory approval to market has been sought.

We have invested a significant portion of our effo r ts and financial resources in the development of our main product candidates, Anktiva, a ldoxorubicin a nd human adenovirus serotype 5 (“hAd5”) vac c ine c a ndid a tes, some or all of which are used in combina t ion with our natural killer cells.

We expect to invest heavily in these product ca n di d a t es a s w e ll as in our existing product candidates and in any future product candidates that the com p any may develop.

Our business d e pends e n t i rely on t he successful development, regula t ory approval and commercialization of such product candidates, each of w h ich may never occur.

Our ability to generate revenues in the future is substantially d e pendent on our ability to dev e lop, obtain regulatory approv a l for, a nd th e n s uc c e s sful l y co m m e rci a li z e, our prod u ct candidates.

We currently generate no meaningful r e venues from the sale of any product candidates, and we may never be a ble to develop or commercialize a product.

Our product candidates will require additional clinical a nd non-clinical de v e lopment, regulatory approv a l, commerc i al manufacturing arrangements, estab l ishment of a com m er c ial o r ganization, significant m a rketing efforts, and further investm e nt before we can generate any revenues from product sales.

We cannot assure you t h at we will meet our timelines for current or future clinical trials, which may be delayed or not completed for a number of reasons, including the negative impact o f the COVID ‑ 19 pandemic.

We will not be permitted to market or promote any of our product candid a tes without receiving regulatory approval f rom the FDA or comparable fo r e ign regulatory authorities, and we may never receive such regulatory approval for a ny of our product candidates or regulatory appr o v a l that wi l l a llow us to successfully commercialize our product cand i dates.

If we do not receive FDA or compa r able foreign r e gulatory approval with the necessary conditions to allow successful commerciali z ation, and then successfully commercialize our p r oduct candidates, we will not be able to generate revenues f rom those prod u ct candidates in the United S t a tes or els e wh e re in the fore s e e a ble future, or at all.

Any signific a nt delays in obtaining approval for and commercializing our produ c t candidates will have a mat e rial adverse impact on our business and financial condition.

We have not previously s ubmitted a Biologics Licen s e Application (“BLA”) for a n y biologics p r o d uct candidates, or a New Drug Applicati o n (“NDA”) for any small molecule product c a ndidates or similar marketing a pplication to the FDA or compa r able foreign authorities, for a n y product candidate, and we cannot be certain that any of our curre n t product candidates or any future product c a ndidates will be su c cessful in clinical trials or receive regulatory approval.

Furthermore, al t hough we do not expect to submit a B L A and/or NDA with comparisons to existing or more established t h erapies, and we do n o t expect the FDA to base its determination with respect to product approval on such comparisons, the FDA may factor these co m p a risons into its decision whether to approve Ank t iva or any of our product candidates.

The FDA may also consider approvals of competing product s , which may alter the tr e a t m ent l a nds c a pe con c urren t ly w i th th eir review of our BLA and/or NDA filings, and which may l e ad to c hang e s in the FD A ’s review requirements that have been previously communicated to us and our interpretation thereof, including changes to requirements for c l ini c al da t a or c lin i cal trial design.

Such changes could d e lay approval or n e cessitate withdrawal of our BLA and/or NDA filings.

Our product candidates will be susceptible to the risks of fai l u r e inherent at any stage of product development, including the appearance of unexpected adverse events or failure to ac h i eve pri m ary endpoints in clinical trials.

Further, our product candidates may not receive reg u latory approval even if they are succ e ssful in c l ini c al tr i a ls.

If a p p r o ved for marketing by applicable regulatory authorities, our abil i ty to generate revenues from our product candidates w i ll depend on our ability to:

price our p r o d uct candidates competitively such that third-party and government reimbursement leads to broad product adoption;

prepare a broad network of clinical sites for administration of our product;

c reate market demand for our product candid a tes through our own marketing and sales a c tivities, and any other arrangements to promote these product candidates that we may othe r w i s e establish;

receive regulatory approval for the targeted patient popul a tion(s) and claims that are neces s ary or desirable for successful m arketing;

m anufacture product candid a tes through contract manufa c turing organizations (“CMOs”) or in our own, or our affiliates’, manufacturing f a c i li t ies i n suffi c i e nt qu a nti t i e s and at a c cep t a b l e qu a l i ty a nd manufacturing cost to meet commercial demand at launch and t h er e a f t er;

e stablish and maintain agree m ents with wholesalers, distributors, p harmacies, and group purc h asing organizations on commercia l ly reasonable terms;

obtain, maintain, p r otect and enforce pat e nt and other intellectual property protection and regulatory exclusivity for our pr o duct candidates;

successfully commercialize any of our product candidates that receive regulatory approval;

m ain t ain co m pli a nce with app l ic a ble l a ws, regulations, and guidance speci f ic to com m er c ia l iz a tion in c luding int e ra c tions w i th health care professionals, patient advocacy groups, and communication of health ca r e economic information to payors and formula r ies;

a chieve market acceptance of our product candidates by patient s , the medical community, and thi r d - party payors;

a chieve appropriate reimbursem e nt for our product candidates;

m aintain a distribution and logistics network capable of product storage within our specifications and regulatory guidelines, and fu r ther capable of timely product delivery to commercial clinical sites;

e ffectively compete with other therapies or competitors;

following launch, assure that our product will be used as directed and that a dditional unexpected safety risks will not arise.

Additionally, our ability to generate revenues from our c o mbination the r apy products will also depend on the availability of the other t h er a pi e s with which our products are intended to be used.

For example, we have in the past experienced, and m a y in t h e future experience, ch a llenges obtaining sufficient quantities of b a cillus Calmette-Guérin (“BCG”) for some of our clinical trials involving Anktiva due to global shor t ages.

The r e can be no assurance that we will be able to source adequate supplies of BCG to continue these c l inical trials in a timely fashion or at a ll, and in the future, th e re may be other supply-related challenges that delay or prevent patient e n rollment and continued prog r ess on our clinical trials.

For more information, see “ — Our clinical trials may not be initiated or completed when we expect, and we may be required to conduct additional clinical trials or modify current or future c l ini c al trials based on f e e dback we r e c e ive f r om the FDA .

We inv e st our cash on hand in various finan c ial ins t rum e n t s which are sub j ect t o ris k s that could adversely affect our busines s , r e sul t s of op e rations, l iquidi t y and finan c ial condi t ion.

We invest our cash in a variety of financi a l instruments, principally c o mmercial paper, corporate debt securities and foreign g overnment bonds.

All of these inv e s t men t s are subj e c t to cr e dit, li quidity, market and interest r a te ris k .

Such risks, in c luding the failure or severe financial distress of the financial institutions that hold our cash, cash equiv a lents and investments, may result in a loss of liquid i ty, impairment to our investments, realization of substantial future losses, or a complete l o ss of the investments in the long-term, which may have a material adverse effect on our business, results of o p erations, liquidity and financi a l condition.

In order to manage t h e risk to our investments, we maintain an investment policy that, among other things, limits the amount that we may invest in any one issue or any single issuer and re q uires us to only i n v e st in high credit quali t y secur i ti e s to preserve liqu i d i ty.

R i s k s Related to Our Business and I n d u stry

We may develop product can d idates in combination with other therapies, w h ich exposes us to additional risks.

We may develop product candidates in combination with one or more other therapies.

Even if any product candidate we develop we r e to r e c e ive marketing approval o r be commercialized for use in combination with other existing thera p ies, we would cont i nue to be subject t o the risks th a t the FDA or comparable foreign regulatory authorities outside of the United States could revoke approval of the the r apy used in combination with o ur product or that safety, efficacy, m a nufacturing or supply issues could arise with any of those existing therapies.

If the therapies we use in combination with our prod u ct candidates are rep l aced as the standard of care for the indications we choose for any of our product candidates, the F D A or comparable foreign regulatory authorities may require us to c onduct additional clinical trials.

The occurrence of any of these risks could result in our own products, if approved, being removed from the market or being less successful commercially.

We also may choose to evaluate product candid a tes in combination with one or more the r a p ies that have not yet been approved for marketing by the FDA or comparable foreign regulatory authorities.

We will not be able to market and sell any product candid a te we develop in c o mb i nat i on with an u n approved therapy for a combination indication if that unapproved therapy does not ultimately obtain marketing approval either alone or in combination with our p r o duct.

In addition, unapproved therapies f ace the same risks described with respect to our product candidates currently in development and clinical trials, including the potential for serious adverse effects, delays in c l ini c al t ria l s and la c k o f FDA approval.

If the FDA or comparable foreign regulatory authorities do not approve these other d r ugs or revoke t h eir approval of, or if safety, efficacy, quality, manufacturing or supply issues arise with, the drugs we choo s e to evaluate in combination with our product candidate we dev e lop, we may be unable to obtain approval of or m a rket such comb i nat i on t herapy.

It may take longer and cost more to complete our c lini c al t r i als t h an we project, or we may not be able to complete them at al l .

We have projected the date for the commencement of future trials, and continuation and co m pletion of our o n going clinical trials.

However, a number of factors, including s c heduling conflicts with partici p ating clinicians and clinical insti t utions, a nd difficulties in identi f ying and e n roll i ng p a ti e nts who m eet t rial e lig i bil i ty c ri t eria, may cause significant delays.

Our clin i c a l tr i a ls may a l so exp e rien c e delays related to the COVID ‑ 1 9 pand e mic;

for more information, see “ —Our business could be adversely a f fe c t e d by the e ff e cts of h e al t h ep i demi c s, p a ndemics o r contagious diseases, including t h e recent pandemic of t h e disease caused by the novel coronavirus SARS-CoV-2, or C O VID‑19, in regions where we or third parties on which we rely have sig n ificant manufacturing facilities, c oncentrations of cli n ical trial sites or ot h e r business operations .

” We may not commence or complete clinical trials involving any of our product candidates as pro j ected or may n ot conduct them suc ce ssfully.

We may experience difficu l ti e s in pat i ent enro l lm e nt in our c l ini c al tr i a l s for a v a rie t y of re a s ons.

Our ab i li t y t o enroll or treat patients in our other studies, or the duration or costs of those studies, could be affected by multip l e factors, including, pr e li m in a ry c l ini c al re s ults, w hi c h m a y in c l ude efficacy and safety results fr o m our ongoing P hase II trials, but may not be refle c ted in the final analyses of these trials.

Although preliminary data from o u r P hase I t r ials were generally positive, that data may not necessarily be representative of interim or final results, as new patients are cycled through the appl i c a ble tr e a t m ent r e g i m e s.

As the t ria l s con t inue, investigators may prioritize patie n ts with more progressed forms of c a n c er than the in i ti a l patient population, bas e d on the success or perceived succe s s of that initial population.

Patie n ts with more progressed forms of cancer may be less responsive to treatment, and accordingly, i n terim efficacy data may show a decline in patient respon s e rate or other assessment m e tri c s.

As t he tri a ls continue, investigato r s may shift their approach to the patient population, which may ultimately result in a decline in both i n terim and final efficacy data from the preliminary data, or conversely, an increase in final efficacy data follow i ng a decline in the i n terim effic a cy data, as patients with more progressed forms of cancer are cycled out of the trials a n d rep l aced by patients with less advanced forms of cancer.

This opportunity for investigator s e le c tion bi a s in our t r ia l s as a r e su l t of open-label design may not be adequately h a n dled and may cause a decline in or dist o r t ion of c l ini c al tr i a l da t a from our preliminary results.

Depending on the outcome of o ur stud i es, we may need to conduct one or more follow-up o r support i ng studies in order to successfully develop our product candidat e s for FDA approval.

Many companies in the biotechnology and pharmaceutical industries have suffered sig n ificant setbacks in late-st a ge clinical trials after achieving positive res u lts in earlier development, and we cannot be cert a in t hat we w i ll not face such s e tba c ks.

Furthermore, the timely completion of cli n ical trials in accordance with their p r otocols will depend, a m ong other things, on our a bil i ty to e nroll a sufficient number of patients who r e main in the study until its conclusion, incl u d ing the ability of us or our collaborators to conduct clinical trials under the constraints of the COVID ‑ 19 pandemic.

In addition, we expect that our c lin i c a l t ri a ls will c ompe t e w i th other c l ini c al tr i a ls for product candidates that are in the same therapeutic a r eas as our product candidates, and this competition will reduce the number and types of pat i ents av a il a ble to us, because 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.

Accordingly, we cannot guarantee that our trials will progress as planned or as scheduled.

Delays in p a tient enrollment may re s ult in increased costs or may affect the timi n g or outcome of our c l i nic a l tri a ls, wh i c h could prev e nt c omp l e t i on of these trials and adversely affect our ability to advance the development of our product candidates.

We expect to rely on medical institutions, academic instituti o ns or contract research o r ganiz a tions (“CROs”) to conduct, supervise or monitor some or all aspects of clinical t r ials involving our product candidates.

We will h a ve less control over the timing and other aspects o f th e s e c lin i c a l t ri a ls th a n i f we cond u cted t h em entirely on our own.

See “ — We have limited exp e rience conducting clinical trials and have relied and will rely on thi r d parties and related parties to conduct m any of our preclinical studies and clinical trials.

Any failure by a third party, related party, or by us to condu c t the clinical trials according to Good Clinical Practice (“GCP”) regulations, and in a timely manner may delay or prevent our ability to seek or obtain regulatory a p proval for or commercialize our product candidate s .” If we fail t o co m men c e or c ompl e t e , or exp e ri e n ce delays in, any o f our planned clinical trials, o u r stock price and our ability to conduct our bu s iness as currently pl a nned could be harmed.

We currently anticipate that we will have to rely on our CMOs or partners to manufacture our product candidates for some of our c l ini c al tr i a l s .

If th e y fail to commence or complete, or exper i ence delays in, manufacturing our product candid a tes, our planned cli n ical trials will b e delayed, which will adversely affect our stock pri c e and our ability to conduct our business as currently planned.

Our c l inical t r i al c osts may be higher t h an for mo r e co n v e n tional therapeutic techno l ogies or drug products.

Because our product candidates inc l ude, and we expect our future product candidates to include, candidates based on advanced t h erapy technologies, we expect that t h ey will require extensive research and developme n t and have substantial manufacturing costs.

In addition, costs to tr e a t p a ti e nts a nd to tr e a t p o tential side effects that m a y result from our product candidat e s can be significant.

Some clinical trial sit e s may not bill, or o btain coverage from Medicare, Medicaid, or other third-party p a yors for some o r all of these cos t s for pat i ents enrol l ed in our c l ini c al tr i a ls, an d c l ini c al tr i a l sites outside of the United States may not reimburse for c o sts t y pically covered by third-party payors in t he Un i ted S ta t es, and as a r e su l t we may be required by those tri a l si t e s t o p a y such costs.

A c cord i ngly, our c lin i c a l t ri a l costs are likely to be signific a ntly higher per patient than th o se of more conventional therapeutic technologies or drug products.

Our c l inical t r i als may fa i l to d e mons t r a t e adequately the safety and e fficacy of our product cand i dates, which would prevent o r d e lay regulatory a p proval and com m ercia l ization.

The clinical trials of our product candid a tes as well as the manufa c turing and marketing of our product candidates will be, su b j e ct to ext e nsive and rigorous review and regula t ion by numerous government authorities in the United States and in other countries where we intend t o test and ma r k et our prod u ct candidates.

Before obtaining regulat o r y approvals for the commercial sale of any of our product candidates, we must de m onstrate through lengthy, complex and expensive preclinical testing and clinical trials that our product candidates are both safe and effective, or safe, pure a n d potent, for use in each target ind i cation.

Because most of our produ c t candidates will be subject to regulation as biological drug product s , we w i ll n e ed to demonstrate that they are safe, pure, and potent f or use in t h eir target ind i cations.

For small molec u le product candidates, we will need to demonstrate that they are safe and effective for their target indications.

Each produ c t candidate must d e monstrate an adequate risk vers u s benefit profile in its intended patient population and for its intended use.

The risk/benefit profile required for p r o duct licensure will vary depend i ng on these factors and may include not only the ability to s how tumor shrinkage, but also adequate duration of response, a delay in the progression of the disease, and/or an improvement in survival.

For example, r e sponse rates from the use of our product candidates may not be sufficient to obtain regulatory approval unless we can also show an a d equate duration of response.

Regulatory authorities may ultimately disagree w i th our chosen endpoints or may find that our stu d ies or study results do not s upport product approval.

Clinical t e sting is expensive a nd can take ma n y years to complete, and its outcome is inherently u n certain.

Failure can occur at any t i me during the c l ini c al tr i a l proc e s s.

The res u lts of pr e c lini c al studies and early clini c al trials of our product candidates with small patient populations may n ot be predictive of the resul t s of later-stage clinical trials or the results o n ce the a p p l i c able c lin i c a l t ria l s are completed.

Additionally, early clinical trials may n ot produce data that su p po r t further development of our product candidates a n d regulato r y authorities may not allow continued clinical development of our product candidates.

P r eliminary, single coho r t or top-line res u l t s from cl i ni c al tr i a ls may not be representative of the final study results.

The results of studies in one set of patients or l i ne of treatment may not be predictive of those o b tained in another and the results in var i ous human clinical trials r e ported in scientific and med i cal literature may not be indicative of r e sults we obtain in our clinical trials.

Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials.

Preclinical studies may also reveal unfavorable product candidate cha r a c ter i s t i c s, i ncluding safety concerns.

There is typically an extreme l y high rate of attrition from the failure of p r oduct candidates proceeding throu g h clinical tria l s.

Product candidates in later stages o f clinical t r ials may fail to show the des i red safety and efficacy profile despite having p r ogressed through preclinic a l studi e s and in i ti a l cl i nic a l trials.

Many companies in the biopharmaceutical industry have suffered signi f icant setbacks in advanced clinical trials due to l ac k of effic a cy or u n acceptable safety issues, no t withstanding promising results in earlier trials.

Most product c a ndidates that begin clinical t r ials are never approved by regulatory authorities f o r c om m erc i al i z a tion.

In some inst a nc e s, th e re c a n be signif i c a nt v a ri a bil i ty i n saf e ty or e ffic a cy resul t s betw e e n d i ffer e nt cl i nic a l tri a ls of the same product cand i date due to n u merous factors, including changes in trial procedures set forth in pro t ocols, differences in t h e size and type of the patient populations, changes in and adherence to the clinical tri a l protocols and the rate of dropout among clinical trial partici p ants.

Our current and our f u ture c l ini c al tr i a l resul t s m a y not be successful.

Moreove r , should there be a flaw in a clinical trial or cross-s i te variation that are not properly addressed, it may not become apparent until the c l ini c al tr i a l is we l l advan c ed or un t il data from d i ffer e nt si t e s b e come a va i lab l e.

F or e xamp l e, our current c lin i c a l t ri a ls are, and we expect our clinical trials to be, conducted at multiple sites in different geograph i es, with different levels of experie n ce and expertise by medical professionals, and these professionals may make mistakes or in t roduce sit e -sp e c i fic var i at i on t h at could have an impact on clinical trials by disqualifying patients or impacting patient abi l ity to continue in a study or on the clinical data.

Further, because we currently plan to test our produ c t candidates for use with other oncol o gy products, the design, implementation and interpretat i on of the clinical trials n e cessary for marketing approval may be more complex than if we were developing our p r o d uct candidates alone.

In addition, even if such t r ials are suc c essfully completed, we cannot guarantee that the FDA or foreign regulatory authorities will i nterpr e t the resul t s as we do, a n d more trials could be required before we submit our product c a ndidates for approval.

To the extent that the results of the t ria l s are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, we may be r e quired to expend significant resources , which may not be available to us, to c onduct additional trials in s upport of p otential approval of our product candidates.

We have reported preliminary results for clinical trials of our product candidates, including Anktiva.

These preliminary resul t s, which include ass e s s m e nts of eff i ca c y, a r e subject to substantial risk of cha n ge due to sm a ll s a mple siz e s and m a y ch a nge as p a t i e nts a re ev a luated or as additional pat i ents are enro l led in these c l ini c al t r ia l s .

T hese outco m e s may be unfavorable, deviate from our earlier reports, and/or delay or prevent regulatory approval or commercialization of our produ c t candidates, including candid a tes for which we have reported preliminary efficacy r esul t s .

Further, certain of our hypothes e s regarding the potential bene f its of our product candidates compared to alternative therapies and tr e a t m ents are bas e d on cross-tr i a l comp a risons of results that were not derived from h e ad-to-he a d c l ini c al t r ia l s .

Such c l ini c al tr i a l da t a m a y not be directly comparable due to differences in study protocols, condit i ons and patient populations.

Accordingly, these cross-trial comparisons may not be r e l iab l e predi c tors of the relative efficacy or other bene f its of our product candidates c o mpared to other produ c t candidates that may have been approved previously.

Int e r i m, ini t ial, “top- l in e ” and preliminary data from our c lini c al trials that we ann oun ce or p u blish from ti m e to t ime m ay c h ange as more patient d a ta become available and are sub j ect to audit and verification p r ocedures that could result in mat e r i al ch anges in the final d ata.

From time to time, we may publi c ly disclose preliminary or top - line data from our preclinical studies and clinical trials, whi c h are based on preliminary ana l ys e s of t hen- a vai l able d a t a , and the results and r e lated find i ngs and conclusions a r e subject to change f o llowing a more comprehensive review of the data related to the particular stu d y or t r i a l.

We a lso m a y m a ke a s s u mptions, estimations, calculations and c onclusions as part of our analyses of data, and we may not have r eceived or h a d the opportunity to fully a n d carefully eva l uate all data.

As a resul t , the top-line or prelimi n ary resul t s th a t we r e port may differ from future results of the same studies, or di f ferent conclusions or con s iderations may qualify such r e sults, once a dditional data have been received and fully evaluated.

T op-line d a ta a l so re m a in subje c t to audit and verification procedur e s th a t m a y re s ult in the final data being m a t e ria l ly different from the prelimi n ary data we pre v iously published.

As a resul t , top-line data should be viewed with caution until the fin a l data a re ava i l a ble.

From t i me to ti m e, we may a l so disc l ose i nter i m d a ta from our p r ec l ini c al studi e s and c l ini c al tr i a ls.

Int e rim da t a from cl i ni c a l tri a ls t hat we m a y comp l e te a re sub j ect t o the r i sk th a t one or more of the c l ini c al outcomes may materially change as patient enrollment continu e s and more patient data beco m e ava i l a b l e or a s pa t ien t s from our c lin i cal t ria l s con t i nue other treatments for their dis e ase.

Adverse differences betw e en pre l im i nary or in t e rim data and final data c ould significantly harm our business p r ospects.

Further, disclosure of interim data by us or by our compe t itors could r e sult in v o latility in the p r ice of our common stock.

Further, others, including regulatory agencies, may not a c cept or agree with our assumptions, e s t im a t e s , c a l culations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvabili t y or commercialization of the particular product candidate or product a nd our company in general.

In addition, the information we choose to publicly dis c lose regarding a particular study or clinical tri a l is based on what is typically extensive information, and you or others may not agree with w ha t we d e ter m ine is m a t e ri a l or otherwise appropriate i n for m at i on to in c lude in our d i s c losure.

If the in t e r i m, top-line or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and co m mercialize, our product candidates may be harmed, which could harm our business, operating results, prospec t s or financial condition.

We h ave l i mi t e d experi e n c e co n du c t i ng cl i nical trials and have relied and will rely on third parties and related parties to co n duct many of our pr e c l i n i cal stud i e s and c l i n i c al trials.

Any failure by a third part y , r e l a t e d part y , or by us to c onduct t h e c lini c al t r i als a ccording to Good Clinical Practice (“GCP”) regulations, and in a timely manner, may delay or prevent our ab i lity to seek o r obtain regulatory approval for or commercialization of our product candidates.

We expect to be heavily reliant on third a nd related parties to conduct our clinical trials.

We h a ve a limited history of cond u c t ing c lin i c a l tr ials and have no experience as a company in filing and supporting the applications necessary to gain marketing approvals.

Securi n g marketing approval requires the submission of extensive preclini c al and clinical data and suppo r ting information to r e gulatory authorities for each therapeutic i ndic a t i on to est a blish t he prod u ct candidate’s safety, puri t y, and potency, or efficacy, for that indicat i on.

Securing marketing approval also requires t h e submission of information about the product manufacturi n g process to, and inspection of manufactur i ng facilities and c linical trial sit e s by, applicable regulatory authorities.

Larg e -s c a l e cl i nic a l tri a ls r e quire signif i cant financial and m a nagement resources, and reliance on third-party clini c al inves t igators, CROs, CMOs, if used, partners or cons u l tants.

Relying on third-party clinical investigato r s, CROs or CMOs may force us to encounter delays and ch a ll e nges t hat are o u tside of our cont r o l.

We may not be a b le to demonstrate sufficient comparability between products manufactured at different fa c i li t ies to a llow for inclusion of the clinical res u lts from patients treated with products from these dif f erent facilities, in our product registrations.

Further, if we u s e CMO s , they may not be able to manufacture Anktiva or our other product candidates or other w ise fulfill their obligations to us b e cau s e of interruptions to their b u siness, including the loss of their key staff or interruptions to their raw m a te r ial supply.

Our reliance on these third par t i e s for dev e lopm e nt ac t ivi t ies w i ll redu c e our c on t rol over these a c tiv i ti e s.

N e verth e l e ss, we are responsible for ensuring that each of our trials is conducted in a c cordance with the applicable trial protocol and legal, regulatory and scientific standards, and our reliance on CROs, clinical trial sites, and other third parties does not relieve us of t h ese responsibilities.

For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigat i onal plan and protocols for the trial and for ensuring that our preclinical stu d ies are conducted in accordance with Good Laboratory Practice (“GLP”) regulations, as appropriate.

Moreover, the FDA and c o mparable foreign regulatory authorities require us to comply with GCP for conducting, recording, and r e porting the results of clinical trials to assure that data and r e ported results a re cr e dible a nd a ccur a te a nd th a t the righ t s, i n t e gr i t y, and confidentiality of trial pa r ti c ipan t s are pro t ec t ed.

R e gula t ory a uthori t ies e nforce t hese requirements through periodic inspe c tions (inclu d i ng pre-approval ins p ections once a BLA or NDA is f i led with the FDA) of trial sponsors, clinical invest i gators, tr i a l sit e s and c e rtain third parties including CMOs.

If w e , our CROs, c l i nic a l tri a l s i tes, or o t her third par t ies fail t o c o m ply w i th applicable GCP or other regulatory requirements, we or they may be subject to enforcement or o t her l e gal a c tions, the c lin i cal data generated in our clinical trials may be deemed unreliable a nd the FDA or compa r able foreign r e gulatory authorities may require us to perform ad d i tion a l cl i ni c al tr i a ls.

We cannot assure you that upon inspe c tion by a given regulatory authority, such regulatory authority will determine that any of our cl i nic a l tri a ls comply with GCP regulations.

Our clinical trials will need to be c onducted with product candidates that were produced under curr e nt Good Manufacturing Prac t i c es ( “ cGM P ” ) regulations.

Our failure to comply or our CMOs’ f a ilure t o c o m ply w i th these regulations may require us to rep e at c l ini c al tr i als, which would delay the regulatory approval process.

We also are r e qu i red to regist e r c e r t ain c l ini c al tr i a ls and post the re s ults of ce rt a in c ompl e t e d cl i ni c al tr i a ls on a g o vernment sponsored database, ClinicalTrials.gov, wit h in specified timeframes.

Failure to do so could result in enforcement a c tio n s and adverse pub l i c ity.

We rely on third parties to manufacture, pac k age, label and ship some of our p r oduct candidates for the clini c al trials that we conduc t .

Any performance f a ilure on the part o f these third par t ies could delay clinical development or marketing approval of our product candidates or commerc i alization of our product candidates, if approved, producing additional losses and depriving us of potential product revenues.

In addition, we will be required to report certain finan c ial interests of our third-party inv e s t iga t ors if t h ese relationships e xc e ed c e rtain fin a nci a l thresholds or meet other criteria.

Immuno-Oncology Clinic, Inc.

(the “ C linic”) has conducted, and is currently conducting, and in the future may conduct clinical trials involving our product candid a tes.

Na n t Works is a colle c tion of healthcare and technology companies that is con t rolled, and a majority of which is owned, by our Executive Chairman, Dr.

Patrick Soon-Shion g , and provides certain admin i strative servic e s (and has loaned money) to the Clinic.

We are conducting ongoing clinical trials and single patient inv e stigational new drug (“spIND”) applications that may include the use of Anktiva, a ldoxorubicin or product cand i dates enabled by our adenovirus, or Ad, t e chnologies.

The FDA or comparable fore i gn regulatory authorities may question the int e grity of the data from those c l inical trials conducted by inve s tigators that are determined to have conflic t s of int e rest.

Our CROs, c lin i cal t rial sit e s and oth e r t hird parties may also have rel a tionships with other entities, some of which may be our competitors, for whom they may also be conducting clinical trials or other therapeutic deve l opment activities that could harm our competitive position.

In addition, these third parties are not our employ e es, and except for remedies available to us under our agreements with them, we cannot control wheth e r or not they devote sufficient time and res o u r ces to our ongoing c l inical and preclinical programs.

If these third parties do not successfully car r y out their contractual duties, meet expected deadli n e s or conduct our clinical trials in accordance with r e gulatory requirements or our stated protocols, if they need to be replaced or if the qual i ty or a ccur a cy of t he data t hey obtain is compromised due to the failure to adhere to our trial protocols, re g ulatory requirements or for other reasons, our trials may need to be repeated, e x tended, delayed or terminated, we may not be able to obtain, or may be d e layed i n obtaining, ma r k eting approvals for our product c a ndidates, we will not be able to, or may be delayed in our effor t s to, successfully commercialize o ur product candidates or we or they may be subje c t to r e gulatory enforcement actions.

As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could in c rease and our a bi l ity to g e nerate revenues could be del a yed.

To the extent we are unable to successfully identify and manage the performance of t h ird-party service providers in the future, our business may be m a terially and adverse l y affected.

Our reliance on third and relat e d parties can also present int e llectual prope r ty-related risks.

For example, collaborators may not p r o p erly obtain, maintain, enforce or defend intellectual p r o p erty or propriet a ry rights relating to our product candidates or technology or may use our proprietary information in such a way as to expose us to potential litiga t ion or other intellectual p r operty-related proceedings, including proceedings challen g ing the scope, ownership, validity and e n force a bi l ity of our int e l l ec t ual property.

Collaborators may also own or co-own intellectual p roperty covering our prod u ct candidates or technology that results from our collaboration with them, and in s u ch cases, we may not have the exclusi v e right to com m er c ia l ize such intellectual property or such product candidates or technology.

Col l aborators may also gain ac c ess to our trade secrets or form u l ations and impact o u r ability to c o mmercialize prop r ietary technology.

We may also need the cooperation of our collaborators to enfo r ce or defend any int e ll e c t ual property we contri b ute to or that arises out of our collaborations, which m a y not be provided to us.

If a n y of our relations h i ps with th e s e th i rd or re l a t e d p a rti e s t e rmin a t e , we m a y not be a ble to ent e r i nto a l t e rna t ive ar r a ng e ments or do so on commercially rea s onable terms.

Switching or adding additional contrac t ors involves additional cost and time and requires manag e ment time and focus.

In addition, there is a n a tural transition period w h en a new thi r d p a rty comm e n c es w ork.

As a re s ult, delays could occur, which could compromise our ability to meet our desi r e d d e velopment timelines.

In a dd i tion, if an agr e e m ent with any o f our collaborators terminates, our access to technology and intel l ectual property licensed to us by that coll a borator may be restri c ted or t e rm i na t e e nt i rely, which may delay our continued d e velopment of our product candidates utilizing the colla b o r ator’s technology or intellectual property or require us to stop development of those product candidates completely.

Our relative lack of experience conducting clinical trials may contribute to our planned clinical trials not beginning or completing on tim e , if a t a l l.

In addition, we h a ve entered into a g r eements with the Clinic, a related party, to co n t inue to conduct and oversee cer t a i n of our c l ini c al tr i a l s .

L a rge-s c ale c lin i c a l t ri a ls will require significant additional resources and reliance on CROs, clinical investigators or consultants.

Consequently, our reliance on outside parties may introduce delays beyond our control.

Our CROs, the Clinic and o t her third parties m u st communicate and coordinate with one another in order f o r our trials to be successful.

Additionally, our CROs, the C l inic a nd other third parties may also have relationships with o t her commercial entities, some of which may compete with us.

If our CROs, the Clinic or other third p a rties conducting our clinical trials do not perform their contractual duties or regulatory ob l igations, experience work stoppages, do not meet expect e d d e adl i nes, ter m in a te the i r a gree m ents w i th us or n e ed t o be r e pla c ed, or if the qua l ity or a c c u r acy of t he cl i nic a l data t hey obta i n is compro m is e d due to the failure to adhere to our clinical trial protocols, GCP or other regulatory requirements or for any other reason, we may need to conduct addition a l cl i nic a l tri a ls or en t e r into new a rrang e men t s w i th al t e rn a tive CROs, cl i nic a l invest i gato r s or other third parties.

We may be unable to enter into arr a ng e m e nts wi t h a l t e rnat i ve CROs on commercially reasonable terms, or at all.

We, the Clinic and the third parties upon which we intend to rely for conducting our clinical tri a ls are required to comply with GC P .

GCP are regulations and guidelines enforced by r e gulatory authorities around the world, th r o ugh periodic inspections, for products in clinical development.

If we or th e s e t hird part i e s f a il to comp l y wi t h app l i c able GCP regu l a t ions, the c l ini c al da t a gener a t e d in our c lin i c a l t ri a ls m a y b e deemed unreliable and have to be repeated, and our submiss i on of marketing applicatio n s may be delayed or the regulatory authorities may require us to perform a ddit i onal c l ini c al trials before approving our marketing app l ications.

We are sub j ect to the risk that, upon inspection, a regulatory authority w i ll determine that any of our cl i nic a l tri a ls f a ils to c omply or f a i l ed t o c omply with appl i c a ble GCP regulati o ns.

In addition, our c l i nic a l tri a ls m ust be c onducted with material prod u ced under GMP and/or Good Tissue Practice (“GTP”) regulations, which are enforced by regulatory authorities.

Our failure t o c omply w i th these regulations may require us to r e pe a t cl i nic a l tri a ls, wh i c h wou l d delay the reg u latory ap p r o v al process.

Moreover, our business may be significantly imp a ct e d i f our CROs, the C l ini c , cl i nic a l investigators or other third parties violate federal or state healthcare fraud and a buse or false claims laws and regulations or healthcare privacy and security laws.

We a l so an t ic i pate t hat part of our str a tegy for pursuing the wide ran g e of indicat i ons potentially addre s sed by Anktiva will i nv o lve further investigator-ini t ia t e d cl i nic a l tri a ls.

Wh i le th e s e t r ia l s gen e ral l y prov i de us w i th v a lu a ble c l ini c al da t a that c a n inform our fu t ure d e ve l opment strategy, we generally have less control over not only the conduct but a l so the design of these clinical trials.

Third-party investigators may design clinical trials involving our product candidates with clinical endpoints that are more dif f icult to achieve or in other ways that i ncre a se t he risk of nega t ive c l ini c al tr i a l resul t s co m par e d to c l ini c al tr i a ls we may design on our own.

Negative results from investigator-initiated cl i nic a l tri a ls, reg a rdl e ss of h o w the clinical trial was designed or conducted, could have a m a terial adverse effect on our business and the perception of o ur product candidates.

Moreover, principal investigators for our clinic a l tri a ls m a y serve a s sci e nti f ic adv i s o rs or consultants to us f r om time to t i me a nd r e c e i v e compen s a tion in connection with such services.

In add i tion, the Clinic has con d ucted, is currently conducting, and in the future may conduct, clinical trials invol v i ng our product can d id a tes, and in the future t he Clinic may conduct, clinical tri a ls involving our product can d idate s .

NantWorks, which is controlled by, and a majority of whi c h is owned by, our Executive Chairman, Dr.

Soon‑Shiong, p r ovides certain administrative services (and has loaned money) to the Cl i nic.

Under cer t a i n c i rcu m s t anc e s, we m a y be required to report some of the s e rel a t i onsh i ps to the FDA.

The FDA may conclude that a financ i al relationship between us, the Clinic a n d/or a principal investigator has created a conflict of int e rest or o t herwise aff e ct e d i nterpr e t a tion of the study.

The FDA may therefore question the integrity of the data gen e rat e d a t the app l ic a ble c l ini c al tr i a l site a nd t he u t il i ty of the c lin i c a l t r i a l its e lf m a y be j e op a rdi z ed.

This could result in a delay in approval, or rejection, of our marketing a pplications by the FDA and may ult i ma t e ly l e ad to t he den i al of regulatory approval of one or more of our product candidates.

Our c l inical t r i als may not be init i ated or c ompl e t e d w h en we e xpect, and we may be required to conduct addit i onal c lini c al t r i als or modify current or future clinical trials based on feedback we receive from the FDA.

Clinical testing is expen s ive, time consuming and subject to uncertainty.

We cannot guarantee t h at any current or future clini c al trials will be conducted as planned or completed on sc h e dule, if at all, or that any of our product candidates will receive regulatory approval.

We previously ini t i a ted c l ini c al tr i a ls i n p a ti e nts wi t h bl a dder c a ncer and in other indications, s om e t im e s in col l abor a tion w i th third parties.

We plan to initiate trials in new indicat i ons, and new cohorts in existing t r ials.

Even as these trials progress, i s sues may arise that c o uld require us to suspend or terminate such clin i cal trials or could ca u se the resul t s of one cohort to differ from a pri o r cohort.

For exa m ple, we may exp e ri e nce slower th a n ant i cip a t e d enro l lm e nt in our c l ini c al tr ia ls, which may consequently d e lay our BLA and/or NDA filing timelines or permit comp e titors to obtain approvals that may alter our BLA and/or NDA filing strategy.

A f a ilure of one or more c lini c a l tri a ls c a n o c cur at any stage of testing, and our future cl i nic a l tri a ls m a y not be successful.

Events that may prevent successful or timely initiation or compl e tion of clinical developme n t or product approval include:

regulators or Institutional Review Boards (“IRBs”) may not authorize us or our inv e s t iga t ors to com m ence a c lin i c a l t ri a l, co n duct a c lin i c a l t ri a l a t a prosp e ct i ve tri a l s i te, or a m end t ri a l pro t oco l s, or regulators or IRBs may r e quire that we modify or amend our c l ini c al trial protocols;

delays in reaching a consensus or inability to obta i n a gree m ent with the F D A or c om p arable foreign regulatory authorities on t rial design or e l igib i li t y c r it e ria for p a t i ent enro l lm e nt;

t he FDA or comparable foreign regulatory authorities may disagree with our intended indications, t r ial des i gn or o ur interpre t ation of data from preclinical studies and clinical trials or find that a product candidate’s benefits do not outweigh its safety risks;

t he FDA or comparable foreign regulatory author i ti e s m a y not a cc e pt data from t r ia l s w i th cl i nic a l tri a l s i tes in for e ign cou n tr i e s;

t he FDA may not allow us to use the cli n ical trial data from a research institution to support an investigational new drug (“IN D ”) if we cannot demonstrate the comparability of our product candidates with the product candidate used by the relevant research instit u tion in its c lin i c a l t ri a ls;

d e lays in or fa i lure to re a c h an agre e m e nt on a c c e ptab l e ter m s w i th prosp e ct i ve CROs and c l i nic a l tri a l s i tes, the t e rms of which can be subject to extensive negotiation and may vary significantly among different CROs and c linical trial sites;

i mposition of a temporary or permanent clinical hold, such as the clinical hold on the P hase II /III clinical trial for our hAd5 COVID ‑ 19 vaccine candidate pending modific a tions to the protocol and FDA’s review of additional informatio n , i n cluding of immunogenicity and safety data from the P hase I portion of the study, or the temporary hold previously experienc e d in our 2014 clinical study rel a ting to aldoxorubicin;

although this temporary clinical hold inv o lved a single death of a c o mpassionate use patient, since that time, a ldoxorubicin has been administered in mul t iple P hase II clinical trials and a Phase III c linical trial with no f u rther clinical holds;

suspensions or terminations by regulatory agencies, I RBs, or us for various reasons, incl u ding noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks, undesirable side effects or ot h er unexpected characteristics of the product candidate, or due to findings of undesirable effects c a used by a biologically or mechanistically si m il a r therapeutic or th e rap e utic c a ndid a t e ;

delays in adding new investigators or c l ini c al tr i a l s i t e s, or w i thdr a w a l of c l ini c al tr i a l sit e s from a tr i a l;

f a ilure by our CROs, cl i ni c al tr i a l s i t e s or patients, or other third parties, or us t o a dhere to c l ini c al tr i a l requ i re m e nts, including regulatory, contractual or pro t ocol requirements;

failure to perform in accordance with the GCP requiremen t s, or applicable regulatory guidelines in other countries;

occurrence of adverse events associated with the product can d idate that a r e viewed to outweigh its potential benefits;

c hanges in regulatory requireme n t s and guid a nce that r e quire amending or submitting n e w clinical protocols to regulatory auth o ri t ies and IRBs, and which may cause delays in our development programs, or chan g e s to regulatory review times;

t here may be regulatory qu e stions or disagreements regarding interpretations of data and resul t s, or new information may emerge regarding our p r o duct candidates;

c hanges in the standard of care on which a clinical development plan was based, which may require new or additional trials;

t he cost of clinical trials of our produ c t candidates being greater than we anticipate, or we may have insufficient funds for a c lin i c a l t ri a l or to pay the substantial user fees requir e d by the FDA upon the filing of a BLA or NDA;

c linical trials of our product candidates p r oduci n g negative or inconclusive results m a y fail to provide sufficient data and informati o n to support product approval, or our trials may fail to r each the necessa r y l e vel of statistical or clinical significance, which may result in our deciding, or regulators requiring us, to conduct additional clinical trials, or preclin i cal studies, or abandon product develo p ment programs;

i nterruption of, or delays in receiving, supplies of our product candidates or other drugs or components of our therapies due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems;

e arly results from our clinical trials of our product candidates may be negatively affected by changes in e fficacy measures such as overall response rate and duration of re s ponse as more patients are enrolled in our clinical trials or as new cohorts of our clinical t ria l s are t e sted, and overall response rate and duration of response may be negat i vely a f fected by the inclusion of unconfirmed res p onses in pre l iminary results that we report if such r e sponses are not later confirmed;

we may not be able to demonst r ate that a product candidate provides an a d vantage over current standards of care or current or future competitive therapies in developme n t;

t here may be changes to the therapeutics or their regulatory s t atus which we are administering in combination with our product candidates;

t he FDA or comparable foreign regulatory authorities may fail to approve or subsequently find fau l t with the manufacturing proc e s s es or our manufacturing fac i li t i e s for c lin i c a l a nd fu t ure com m erc i al suppli e s;

t he FDA or comparable regulatory autho r ities may take longer than we anticipate when making a decision on our product candidates;

transfer of our manufacturing processes to our CMOs or other larger-scale facilities operated by a CMO or by us and delays or failure by our CMOs or us to make any necessary changes to such manufacturing process;

our use of different manufactur i ng processes within our clinical tri a l s , and any eff e cts that may result from the use of diff e rent processes on the c l ini c al d a ta th a t we have r e ported and will report in the future;

delays in manufacturing, testing, releasing, validatin g , or importing/exporting sufficient sta b le quantities of our product c a ndidates for use in clini ca l tri a ls or the in a bili t y to do any of the foregoing, including as a result of any qua l ity issu e s associ a t e d wi t h the contract manufacturer;

delays and additional costs associated with business disruption s , new regulatory requirements, social distancing and other re s tri c tions imposed b y governmental or regulatory agenc i es and clinical trial sites due to the C OVID ‑ 19 pandemic, which may include enroll m ent d e lays or f a ilur e s to follow tri a l protoco l s;

obtaining sufficient supply of therapies that may be used in combinati o n with our mol e cular a g ents or as comparative age n ts in c l ini c al tr i a l s .

We are conducting our P hase II trial of Anktiva in combination with BCG in BCG unresponsive patients with non-muscle invasive bladder cancer, (“NMIBC”) in both carcinoma in s i tu (“CIS”) and papillary forms.

Due to BCG shortages, delays were encountered in p a tient enro l lm e nt.

As of December 2020, we com p leted o ur planned enrollment in the BCG unresponsive C I S cohort.

We have en r olled patients who have rec e iv e d a lower dos a ge of BCG t herapy before e nroll m ent in its tri a l as a result of BCG shortages.

During the p e riod of shortages, we have also enrolled patients who have received a lower dosage of BCG th e rapy before enro l lm e nt in t he tri a l due to the global shortage of BCG;

for e x ample, some p a ti e nts r e c e ived the recommended number of doses, but the amount per dose was one-third of recommended stre n g th.

All patients, with o ut exception, r e ceived the number of BCG doses consistent with F D A guidance, and no less than app r oximately 90% of patients enrolled i n the tr i a l a s o f D e c e mb e r 2020 have received the am o unt of BCG recommended by t h e A m eri c an Uro l ogic a l A s soci a t i on befo r e e nrol l ing i n the t ri a l.

The FDA agreed with our modification of t h e study design to allow enrollment of patients who have received a reduced dose o f BCG as first line therapy.

These patients received the full dose of BCG + A nktiva during the trial;

however, such patients should not be considered BCG u n r e sponsive.

The disposition of such patients in the assessment of our trial r e sults to support approval of Anktiva in BCG un r esponsive CIS NMIBC pat i ents w i ll be det e rmin e d by the FDA dur i ng t heir rev i ew.

We m a y consider enro l ling additional patients b e fore BLA submissio n , and the labeling will reflect the enrol l ed patient population and will also be determined by the FDA d u r ing their review.

We also may conduct clinical and preclinical research in collaboration with other acade m ic, pharmaceutical, biotechnolo g y and b io l o g i cs e nti t i e s in which we combine our technologies with those of our collaborators.

Such c o llaborations may be subject to additional delays bec a use of the management of the trials, contract negotiations, the need to obtain agreement from multiple par t ies and the necessity of obtaining additional approvals for ther a peut i cs used in the co m bina t ion tri a ls.

Th e s e c o m bin a tion ther a pi e s w i ll requ i re additional testing and clinical trials will require additional FDA regulatory approval and will increase o ur future cost s .

Any inab i li t y t o suc c essfu l ly c omp l e te pr e c l i ni c a l and cl i ni c al development could result in addit i onal costs to us or impair o u r ability to generate revenues.

In addition, if we m a ke manufacturing changes to our product candidates, we m a y be required to, or we may elect to, conduct additional trials to bridge our modified product candidates to earlier versions.

These changes may require FDA approval or no t ification and may not have their desired effect.

The FDA may also not acc e pt data from prior versions of the product to support an application, delaying our clinical t r ials or programs or nec e ssi t a t ing a ddit i onal c l ini c al tr i a l s or pr e c l i ni c a l s t udi e s .

We may find that this change has unintended con s equences that necessitates additional development and manufacturing work, additional clinical and precl i nical studies, or that results in refusal to file or non-app r oval of a BLA and/or NDA.

Clinical trial delays could shorten any p e riods during which our product candidates have patent protecti o n and may allow our c o mpetitors to bring products to market before we do, which c ould impair our ability to successfully commercialize our product candidates and may h a rm our business and results of operati o ns.

Regulatory authorities have sub s tantial discretion in the approv a l process and may refuse to accept any application or may dec i de that our data are ins u f ficient for approval and r e quire additional preclini c a l studi e s , c lin i c a l t ri a ls or o t her research.

The number and types of preclinical stu d ies and clinical trials that will be required for regulatory approval also v a ry depen d ing on the product c a ndidate, the disease or condition that the product candidate is designed to addre s s and the regulations applicable to any particular product candidate.

Approval policies, regula t ions or the type and amount of clinical data necessary to gain approval may change du r ing the course of a product candidate’s clinical development and may vary among jurisdictions.

It is possible t h at any produ c t candidates we may seek to develop in the future will never o b tain the appropriate regulatory approvals necessary for us or any futu r e collaborators to commence p r o du c t s a l e s.

Any d e l a y in co m ple t ing development or obtaining, or f a iling to obtain, required approvals could also materially adversely affect our ability or that of any of our collaborators to generate revenues from any such product candidate, which likely would result in significant harm to our f i nancial position and adverse l y impact our stock price.

We use Immuno-Oncology Clinic, I n c., a related party, in some of our clinical trials which may expose us to significant regula t ory risks.

If our data for this site i s not suff i c i e n tly rob u st or if there are any data integrity iss u e s , we may be r e quir e d to r e p e at s u ch st u di e s o r r e q u i r ed to c ontra c t with other clinical trial sites, and our clinical deve l opment plans will be sig n ificantly delayed, and we will incur additional cos t s.

Many of our P hase I and II clinical trials for our haNK, PD-L1.t-haNK and other t-haNK products as well as Anktiva have been co n ducted by Immuno-Oncology Clinic, Inc., which is a related party.

Relying on a relat e d party clinical site to develop data t h at is used as the basis to support regulatory approval can expose us to significant regulatory risks.

For example, a study u s ed to support regulatory approval that is condu c ted at a related party site can be rejected by the FDA if there are data integrity issue s , or if there are significant GCP violations at the site.

If any data integrity, or regulatory non-compliance issues occur during the study, we may not be able to use the data for our regulatory approval.

Furth e rmore, if the operations of the clinical site are disrupted or if the site experiences disruptio n s in its cli n ical supplies or resources, such as potent i al disruptions due to COVID ‑ 19, then we may be required to suspend or terminate the study at this site, and we may need to contract with other clinical sites for the study, which will delay our clinical development and regulatory approval for the product candidate.

Failure of this site to comply with the regulations or to recruit a sufficient number of patients may require us to delay submission for regulatory approval or repeat clinical trials, which would delay the regulatory approval process.

Moreover, our business may be implicated if the site violates federal or state fraud and abuse or false claims laws and regulations or healt h care privacy and security laws.

If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities and receipt of necessary marketing approvals could be delayed or otherwise adversely affected.

The timely completion of c linical trials in accordance w i th their protocols depends, among o t her things, on our ability to enr o ll a sufficient number of pat i ents, who r e ma i n i n the t rial un t il its c onclusion.

We may experience difficulties or del a ys in patient enrollment in our c linical trials for a va r iety of reasons, including:

t he size and nature of the patient po p ulation;

t he severity of the d i sease under investigation;

t he pat i ent e l igib i li t y c rit e ria defined in the protocol;

t he size of the study population required for analysis o f the trial’s primary endpoints;

t he proxim i ty of pa t ien t s to tri a l s i tes;

our ab i li t y to re c ruit c l ini c al tr i a l inv e s t iga t o r s with the a ppropria t e comp e t e n c i e s a n d e xp e r i e n c e ;

t he efforts to facilitate timely enr o llment in clinical t r ials and the effective n ess of recruiting publicity;

t he patient referral p r actices of physicians;

t he number of patients required for clinical trials of our product candidat e s may be larger than we a n ticipate or enrollment i n t hese cl i nic a l trials may be slower than we antic i pate, potentially affecting our timelines for approval of our product candidates;

patients that enroll in our studies may m i sr e present th e ir el i gibi l ity or m a y otherwise not co m ply wi t h t he c l i nic a l tri a l pr o toco l , result i ng in the need to d r o p such patients from the study or clinical t r ial, increase the needed enroll m ent size for the study or clini c al trial or extend the study’s or clinical trial’s duration;

c ompeting clinical trials for similar therapies or other new therapeutics not involving cell-ba s ed immunotherapy;

c linicians’ and patients’ percept i ons as to the potential advantages and side effects of the product c a ndidate being studied i n relation to o t her ava i lab l e the r api e s, i nclud i ng any new drugs or treatments that may be approved for the indications we are investigating;

c lin i c a l i nvestig a tors e nrol l ing p a ti e nts who do not meet the enrollment criteria, requiring the inclusion of additional pati e nts in t he cl i nic a l tr i a l;

a pproval of new indications for existing therapi e s or ap p r o v al of new therapies in general;

our ability to obtain and m a in t a in p a t i e nt con s en ts;

t he impact of the current COVID ‑ 1 9 pandemic or other material adverse events, which may affect the conduct of a clinical tria l , including by slowing potential enrol l ment or reducing the number of eligible p a ti e nts for c l ini c al tr i a l s ;

t he risk th a t pat i ents enrol l ed in c l i nic a l tri a ls wi l l not c ompl e te a c l ini c al tr i a l, r e turn for post- t rea t m e nt fo l low-up, or follow t h e required study procedures.

For instance, patients, i n cluding patients in any control groups, may withdraw from the clinical trial if th e y are not experiencing improvement in their underlying disease or c ondition.

Withdrawal of patients fr o m our clinical trials may comprom i s e t he quality of our data.

In addition, we expect that our clinical trials will c o mpete with other clinical trials for product candidates that are in the s a me th e rap e utic a reas as our prod u ct candidates, and this competition w i ll reduce the number and types of patients available to u s , because some patients w h o might have opted to enroll in our trials may instead opt to enroll in a trial being c o nducted by one of our competitors.

Bec a use the number of qua l if i e d c l in i c a l investigators is limited, we may need to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will r e duce the n u mber of patients who are available for o u r clinical trials at such clinical tri a l sites.

Moreover, because our product candi d ates represent a departure from more commonly u sed methods for cancer and/or viral disease treatm e nt, potential patients and their doctors may be inclined to use conventional therapies, such as chemotherapy and approved immunotherapies, rather than enroll patients in a ny future clinical trial.

Amendments to our clinical protocols may a f fect e nroll m ent in, or results of, our t r i a ls, including amendments we have made to further define the patient population to be studied.

Even if we a re able t o e nroll a suff i ci e nt number of p a t i ents i n our c l ini c al tr i a ls, de l a ys i n p a ti e nt e nrol l ment or small population size may result in increased costs or may af f ect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and ad v e rsely affect our ability to advance the develop m ent of our product candidates.

Our product candidates may cause undesirable side effects or h a ve other properties that c ould halt their cl i n ical devel o pment, pre v e n t th e ir regulatory approval, limit t h eir commercial pote n tial or result in si g n ificant negative consequences.

Results of our trials could reveal a high a nd unacceptable severity and p r ev a len c e of s i de e ff e cts, adverse events or unexpect e d char a c t e rist i c s.

Undesirable side effects caused by our product candidates cou l d cause us, IRBs, Drug Safety Monitoring Boards (“DSMBs”) or regu l a tory au t horit i es t o int e rrupt, de l a y or h a lt cl i ni c al tr i a ls a nd could result in a more restrictive label or t h e delay or denial of regulatory ap p r oval by the FDA or other comparable foreign regulatory authorities.

Even if we were to receive product approv a l, such approval could be contingent on inclusion of unfavorable information in our product labeling, such as limitations on the indicated uses for whi c h the products may be marketed or distribu t ed, a l a bel with sig n ificant safety warnings, including boxed warnin g s, contraindicati o ns, and precautions, a lab e l without statements necessary or desirable for successful commercialization, or requirements for costly post marketing testing and surveillance, or other requirements, including a Risk Evaluation and Mitigation St r a tegy (“REMS”) to monitor the safety or efficacy of the p r oducts, and in turn prevent us from commercializing and generating r e venues from the sale of our current or future product candidates.

If unacceptable toxicities or side effects arise in the development of our product candidates, we, an IRB, DSMB or the FDA or c omparable foreign regulatory authorities could order us t o c e ase c l ini c al tr i a ls, ord e r our cl i nic a l trials to be placed on clinical hold, or de n y approval of our product candidates for any or all targe t ed indications.

The FDA or comparable foreign regulatory authorities may also requi r e additional d a t a , clini ca l , or preclinical studies should unacceptable toxicities a r ise.

We may need to abandon development or limit development of that product c a ndid a te to ce r ta i n uses or subpopulations in which t h e undesirable side effects or other characteristics are less prevalent, less severe or more ac c ept a ble from a risk/b e nefit perspective.

Toxicities a s sociated with our trials and produ c t candidates may also n e gatively impact our ability to conduct cl i n i c a l t ri a ls using tumor-infiltrating lymphocyte (“TIL”) therapy in lar g er patient p opulations, such as in patients that have not yet b e en treated with other therapies or have not yet progressed on other therapies.

Tr e a tment-em e rgent a dv e r s e e v ents could a lso a ff e ct p a t i e nt r e crui t ment or the ab i li t y of enrol l ed sub j ec t s to co m ple t e our tr i a l s or r e su l t i n po t ent i al prod u ct liability claims.

We h a ve observed that certain events associated w i th our product candidates may include, for example, injection site pain and reacti o n, fatigue, nau s ea, vomiting, diarrhea, muc o sitis, abdominal pain, anorexi a , chills, pyrexia, arthr a lgia, limb edema, myelosuppression (neutropenia , thromboc y t openia, and ane m ia) and hypoalbuminemia.

Combination immunotherapy that includes our current product candidates may be associated with more frequent a dverse events or additional adver s e events, such as esophagitis, s t omatitis, epist a xis, weight loss, head a c h e , alop e c i a, night sweats, peripheral neuropa t hy, and death.

In addition, t h ese serious adverse e ffects may not be app r opriately recognized or managed by the treating medical staff, as toxicities res u lting from our product candidate are not norm a lly encountered in the general patient population and by medical personnel.

Any of these occurrences may materially harm our business, financial c o ndition and p r os p e cts.

The manufacture of our product candidates is compl e x, a n d we may e n co u n t e r diffic u lties in p roduction, part i cularly wi t h r e spe c t to pro c e s s development, quality control, or scaling-up of our manufacturing capabilities.

If we or our related partie s , or any of our thi r d-party manufacturers encoun t e r su c h diff i cult i es, our abil i ty to provide supply of our product candidates for clinical t r ials or our products for p a tients, if approved, could be delayed or stopped, or we m a y be unable to maintain a comme r cially viable cost structure.

Our current product can d idates include predominately biologics, v e ctors, small molecules and decentralize d , advanced cell ther a pies.

The manufacture of these product candidates involves complex processes, es p ecially for our biologics, vecto r s and cell therapy product candidates, which are complex, highly regulated and subject to m u lt i ple risks.

As a r e sult of t he c omp l e xi t ies, t h e co s t to m a nuf a c ture biol o gics, vectors and c e ll th e rap i e s i s gen e ral l y higher than traditional small molecule che m ical compounds, and the manufacturing process is less reliable a nd is more difficult to rep r o duce.

Even minor deviatio n s from n o r mal manufacturing processes could result in reduced production yields, produ c t defects, and other supply disruptions.

If microbial, viral, environmental or other contaminations are d i scovered in our product candidates or in the manufacturing facilities in which our product candidates are made, such manufa c turing fa c il i ti e s m a y n e ed to be closed for an extended period of time to investigate and rem e dy the contamination.

Currently, our product candidates are manufact u red using processes developed or modified by us, our affiliates or by our third-party research institution collaborators that we may not include for more advanced cli n i ca l tri a ls or comm e r c i a l i z a tion.

As a r e sult of the s e ch a ll e ng e s, we may experience delays in our clinical development and/or comme r cialization plans.

We may ultimately be unable to redu c e the cost of goods for our p ro d uct candidates to levels that will allow for an attractive return on investme n t if and when those product candidates are commercialized.

Currently we ma n u f acture our product candi d a t e s or use CMOs.

We may use t h ird-party CMOs or some of our related parties to man u facture our prod u ct candidates.

Our p r oduct candidates may compete with other products and product candidates for access to ma n u f acturing f ac i li t i e s.

T here are a limited number of manufac t urers that operate under cGMP regu l ations and that are both capable of manufacturing for us and will i ng to do so.

If our CMOs should cease manufacturing for us, we would experience delays in obtaining sufficient qua n tities of our product candidates for c l ini c al tr i a l s and, if approved, commercial supp l y.

Further, our CMOs may breach, terminate, or not renew these agreements.

If we were to need to f ind a l tern a t i ve manuf a c tur i ng f a c i li t ies i t would significantly impact our ability to develop, obtain regu l atory approval for or market our product candidates, if approved.

The commercial terms of any new arrangement could be less f a vorable than our existing arr a ngements and the expenses r el a t ing to the transfer of necessary technology and processes could be significant .

Reliance on third-party manufacturers entails exposure to risks to which we wou l d not be subject if we manufactured the product candidate ourselves, including:

i nability to negotiate manu f acturing and quality agreements with third parties under commercially reaso n able terms;

reduced day-to-day control over the manufacturing process for our product candidates as a result of using third-party manufac t urers for all aspects of manufact u r i ng a c t i vit i es;

reduced control over the protection of our t r ade secrets, kno w -how and other proprietary inf o rmation from misappropriation or i n advertent disclosure or from being used in such a w a y as to expose us to potential litigation;

t ermination or nonrenewal of manufacturing agreements with third p a rties in a manner or at a time that may be costly or damag i ng to us or result in delays in the development or commercialization of our product candidates;

disruptions to the operations of our third-party manufacturers or suppliers caused by conditions unrelated to our business or operations, including t h e bankruptcy of the manufacturer or supplier.

The manufacture of cell therapy products r e quires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls.

Manufactur e rs of cell therapy products often encounter difficulties in p r oduction, particular l y in s c a l ing up in i ti a l prod u ction.

These problems include dif f icu l ties with production costs and yields, quality control, including stability o f the p roduct candidate and quality assurance testing, shortages of qualified personnel and compl i ance with strictly enforced fed e ral, state, local and foreign re g ulations.

Moreover, any problems or delays we or our CMOs ex p e rience in preparing for c o mmercial scale manufa c turing of a product candid a t e may result in a delay in the FDA approval of the product candidate or may impair our ability to manufacture commercial quan t ities or such quanti t ies at an a c cep t a ble cost, which could result in the delay, prevention, or impairment of clinical deve l opment and commerciali z ation of our product c andidates and could adversely affect our business.

Furthermore, if we or our commercial manufacturers fail to del i ver the required commercial quantities of our product candidates on a timely basis and at reasonable costs, we would likely be unable to meet demand for our products and we would l o se po t ent i al revenues.

In addition, the manufacturing process and f a cilities for any products that we may d e velop are su b j ect to FDA and foreign regu l atory authority approval processes, and we or our CMOs will need to m e et a ll appl i c a ble FDA a nd foreign regulatory authority r e quirements, incl u ding cG M P, on an ongoing basis.

The cGMP requi r e ments include quality control, quality ass u rance and the maintenance of records and documentation.

The F DA and other regulatory authorities enforce t h ese requirements through facility inspections.

Manufacturing fac i lities must sub m it to pre-ap p roval inspections by the FDA that will be conducted after we submit our ma r k eting appli c ations, including our BLAs and N DAs, to the FDA.

Manufacturers a re a l so sub j e c t t o continuing FDA and other regulato r y authority inspections following marketing ap p r o v al.

Further, we and our third-party CMOs must supply all nece s sary chemi s try, manufacturing and quality c o ntrol documentation in support of a B L A or NDA on a timely basis.

There is no guarantee that we or our CMOs w i ll be able t o suc c e s sfully pass all aspects of a pre-approval inspection by the FDA or other foreign regulatory aut h or i ti e s.

As product candidates progress through preclinic a l and clinical trials to marketing app r oval and comme r cializa t ion, it is common that various aspects of the development program, such as manufactur i ng methods and formulation, are altered along the way in an effort to optimize yie l d and manufacturing batch size, minimize costs and achieve consistent quality and re s ults.

S uch ch a nges c a rry the risk that they will not achieve t hese intended objectives.

Any of these changes could cause o u r product candidates to perform differen t ly and affect the results of planned clinical trials or other future clinical trials conducted with the altered materials.

This could d e lay completion of clinical trials, require the conduct of bridging c l in i c a l t ri a ls or the rep e ti t ion of one or more clinical trials, increase clinical trial cos t s, delay approval of our product candidates and jeopardize our ability to com m er c ia l ize our prod u ct candidates, if approv e d, and generate revenues.

Our or our CMOs’ manufacturing fac i lities may be unable to com p ly with our speci f ications, cGMP, and with other FDA, state, and foreign regulatory requirements.

Poor control of production processes can lead to the introdu c tion of adventitious agents or other contaminants, or to inadv e rt e nt changes in the properties or stability of product c a ndidates that may not be detectable in f i nal product testing.

If we or our CMOs are unable to reliably produce produ c ts t o spe c ifi c a t ions a cc e pt a ble to t h e FDA or other regulatory authorities, or in a c c ordance wi t h t he str i ct r e gu l a t ory r equirements, we may not o b tain or maintain the approvals we need to commercialize such products.

Even if we obtain r e gulatory approval for any of our p roduct candidates, there is no assurance that either we or our CMOs will be able to manufacture the approved product to specificatio n s acceptable to the FDA or other regulatory authorities, to produce it in s u fficient quantities to meet the requirements for the potential launch of the product, or to me e t potential future demand.

Deviations from manufactur i ng requirements may further require remedial m e a s ures that m a y be costly and/or time-consuming for u s or a third party to implement and may include the temporary or p e rman e nt s uspe n sion of a clini c al tri a l or c omm e rcial s a l e s o r the t e mporary or p e r manent closure of a facility.

Any such remedial measures imposed upon us or third parties with whom we contract could materi a lly harm our business.

To the extent we use CMOs, we are ultimately responsible for the manufacture of our products, if approved, and product ca n didates.

A failure to comply with these requirements may result i n regu l a t ory enfo r ce m ent a c tions aga i nst our manufacturers or u s , inclu d ing fines and civil and criminal penalties, which could result in imprisonment, suspension or restrictions of production, injunctions, delay or denial of produ c t approval or supplements to approved products, clinical holds or termination of clinical trials, warning or untitled letters, r e gulatory authority communications warning the public about safety issues with the biologic, r e fusal to permit the import or export of the products, product seizure, detention, or r ecall, operating restrictions, suits under the federal civ i l False Claims Act (“FCA”) corporate integrity agr e ements, consent decrees, or withdrawal of produ c t approval.

Any of these challenges could delay completion of clinical trials, require bridging clinical trials or the repetition of one or mo r e c l i nic a l tri a ls, incr e a se clinical trial costs, delay approval of our product candidate, impair commercialization efforts, increase o u r cost of goods, and have a material adverse effect on o u r business, financial cond i tion, results of operations and growth prospects.

Cell-based therapies and b i ologics rely on the availability of reagents, specialized equip m ent and other special t y mat e r i als, w hich may not be available to us on acceptable terms or at all.

For some of t h e s e r e age n t s , eq ui pment and materials, we rely or may r e ly on sole source vendors or a limited num b er of vendors, which c o uld impair our ability to manufacture and supply our products, if appro v ed.

Manufacturing our product candidates will require many reagents, which are substances used in our manufacturing processes to bring about chemical or biological reactions, and other specialty materials and equipment, some of which are manufactured or supplied by small companies with limited resources and experience to support commercial biologics production.

We currently depend on a limited number of vendors for certain materials and equipment used in the manufacture of our product candidates.

Some of these suppliers may not have the capacity to support clinical trials and commercial products manufactured under cGMP by biopharmaceutical firms or may otherwise be ill-equipped to support our needs.

We also do not have supply contracts with many of these suppliers and may not be able to obtain supply contracts with them on acceptable terms or at all.

Accordingly, we may experience delays in receiving key materials and equipment to support clinical or commercial manufacturing.

For some of these reagents, equipment and materials, we rely, and we may in the future rely, on sole source vendors or a limited number of vendors.

An inability to continue to source product from any of these suppliers, which could be due to a number of issues, including regulatory actions or requirements affecting the supplier, adverse financial or other strategic developments experienced by a supplier, labor disputes or shortages, unexpected demands or quality issues, could adversely affect our ability to satisfy demand for our product candidates, which could adversely and materially affect our product sales and operating results or our ability to conduct clinical trials, either of which could significantly harm our business.

As we seek to develop and sca l e our manufactu r ing process, we ex p e ct t h at we will need to obtain rights to and supplies of cer t ain materials and equipment to be used as part of that p r ocess.

We may not be able to obtain rights to such materials on co m me r ci a lly re a s on a ble terms, or at all, and if we are unable to alter our process in a commercially viable manner to avoid the use of such materials o r find a suitable substitu t e, it would have a material adverse effect on our business.

Even if we are able to alter our process so as to use other m a ter i a l s or e quipm e nt, such a cha n ge may lead to a delay in o u r clinical deve l opment and/or commerci a lization plans.

If such a change occurs for a product candidate that is already in clinical testing, the change may require us to perform both ex vivo comparability studies and to collect additional d a ta from patients prior to undertaking more a d van c ed clini ca l tri a ls.

We wi l l be u n able to co m merc ia lize our product candidat e s if our trials a r e not s u c ce ssf u l .

Our research and development programs are each at an early stage.

We must demonstra t e our product candidates’ safety and ef f ic a cy in humans through ext e ns i ve cl i nic a l test i ng.

We may experience nu m erous unforeseen events during, or as a r e su l t o f , th e t e s t ing process that could delay or prevent commercialization of our product candidates, includi n g but not limited to the following:

s a fety a nd e ffic a cy re s ults in various human clinical trials reported in scientific and medic a l literature may not be indicat i ve of res u lts we obtain in our clinical trials;

a fter re v i ewing test res u lts, we or our collaborators may a b andon projects that we might previously have believed to be promising;

we, our collaborators or regulators may sus p e nd or t e r m ina t e cl i nic a l tri a ls i f t he p a rticipating subjects or patients are be i ng exposed to unacceptable health risks;

t he standard of care may change as the result of new tech n ology or therapies in our target clinical i ndicatio n s, precluding r e gulatory approval or limited commercial use if approved;

t he effects our potential products have may not be the desired effects or may include undesirab l e side effects or other chara c teristi c s that precl u de regulatory approval or limit their commercial use if approved;

m anufacturers may not meet the necessary standa r ds for the production of the p r oduct candidates or may not be able to supply t he product candidates in a sufficient quantity;

regulatory authorities may find that our clinical trial design or conduct does not meet the applicable approval requirements.

Clin i cal t e sting is v e ry expensive, can take many years and the outcome is uncertain.

It could t a ke as much as 12 months or more before we learn the results f r om any clinical trial using Anktiva, a ldoxorubicin, Ad and yeast technologies or other therapy.

The data collected f r om our c l i nic a l tri a ls m a y n o t be sufficient to support approval by the F D A of our Anktiva product candidate for the treatment of bladder cancer or of ot h er th e rapi e s, including o u r hAd5 COVID ‑ 19 vaccine candidate.

The cli n ical trials for our product candidates und e r development may not be completed on s ch e dule and the FDA may not ultimately approve any of our product candidates for commercial sale.

If we fail to ad e quately demonstrate the saf e ty and efficacy of any prod u ct candidate under development, we may n ot receive regulatory approval for those product candidates, which would prevent us from generating revenues or achieving profitability.

Even if one of our leading product candidates, A n ktiva, is approved and commercialized, we may not become profitable.

One of our leading product candid a tes, Anktiva, is initi a lly targeting a small population o f p a tients that suffer from bladder c ance r , lung cancer and me t a sta t ic pan c re a tic c a n c er, when us e d a s a comb i nat i on t her a py.

Even if the FDA approves this candidate for these indication s , and e ven if we obtain significant market share for it, because the potential target population may be small, we may never achieve p r ofitability without obta i ning regulatory approval for additional indications.

The FDA often approves new therapies initially only for use in patients with relapsed or refractory metastatic disease, which may l i mit our patient population.

Additionally, in connection with the merger with ImmunityBio, we assum e d the obligation to issue CVRs to the former stockholde r s of Al t or BioScience Corporation (succeeded by Altor B i oScience LLC) (“Altor”) in connection with the acquisit i on of Altor.

These CVRs b e come payable u p on the attainment of certa i n regulatory and sales milestones related to Anktiva.

The former Altor stockholders have t h e ability to choose to receive these payments either in cas h , in an equivalent value of our common stock or in a combination of both cash and stock at t h e time such payments are due, except that Dr.

S o on-Shiong and his related party, as prior stockholders of Altor, have irrevocably elected to receive all pay m ents in re s pe c t of th e ir CVRs in the form of our common stock.

Such CVR payments to Dr.

Soon-Shiong and his related party aggregate to approximately $2 7 9 .

We may, however, still be requi r e d to pay the other prior Altor stockholders up to $164.2 million for the CVRs r e lating to the regulatory milestone and up to $164.2 million for the CVRs relating to the sales milestone should they cho o se to have the s e CVRs paid in c ash instead of common stock.

If this were to occur, we may need to seek additional sources of capital, and we may not be able to a c hieve profitability or p o sitive cash flow.

We plan to collaborate with governmen t al, academic and corporate pa r tners, including affili a tes, to improve and develop Anktiva, hAd5 and other therapies for new indications for use in combinat i on with other therapies and to imp r o v e and develop other prod u ct candidates, which may e xpose us to additional risks, or we may not realize the benefits of such collaborations.

Because some of our collaborations are conducted at outside labo r atories, and we do not have c o mplete control over how the studies are conducted or reported or over the manufacturing methods used to manufacture our Anktiva product candidate, the results of such studies, whi c h we may use as the basis for our conclusions, projections or d e cisions with respect to our current or future product candidates, may be incorrect or u n r e liable, or may h a ve a negative impact on us if the results of such studies are imputed to our product candidates or proposed in d i cations, even if su c h imputation is improper.

Additionally, we may use third-par t y data t o a naly z e, r e ach conclusions or make predictions or decisions with respect to our product candidates that may be in c ompl e t e , ina c cur a te or otherwise unreliable.

Further, collaborations involving our product candidates will b e subject to numerous risks, w h ich may include the followin g :

c ollaborators, including their related or affiliated companies, may be entitled to receive exclusive rights f o r or involving our products;

c ollaborators have signif i cant discretion in deter m ining the efforts and resources t h at they will apply to a collaboration;

c ollaborators may not pursue devel o pment and commercialization of our product candidates or m a y elect not to c ontinue or renew development or commercialization of our product candidates b a sed on clinical t r ial results, changes in their strategic focus due t o the acquisition of competitive prod u cts, availability of fundi n g or o t her external factors, such as a business combination that d i v er t s resourc e s or cr e a t e s co m pe t ing pr i orit i es;

c ollaborators may delay clinical trials, provide insufficient f u nding for a clini c al trial, stop a clinical trial, abandon a product ca n didate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

c ollaborators could independe n t ly develop, or develop with third parties, products that compete d i rectly or ind i rectly with our product candidates;

a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to their ma r keting and distribution;

c ollaborators may not properly m a intain, defend or enfo r ce our intellectual p r operty rights or may use our intellectual prope r ty or proprietary information in a way that gives r i se t o a c tu a l or th r ea t en e d l i tig a tion th a t c ould jeop a rdi z e or inv a lid a te our in t e ll e c t ual property or proprietary in f o r mation or expose us to potential liability;

disputes may arise between us and a collaborator that cause the delay or termination of the r e search, development or commerci a lization of our product candidates, or that result in costly litigation or arbitra t ion that diverts management attention and resources (see “ — If conflicts arise between us and our collaborators or strat e gic partners, these parties may act in a manner adverse to us and could limit our ab i li t y t o i m p l ement our strat e gie s .

c ollaborations may be terminated a nd, if ter m ina t ed, m a y r e su l t in a n e ed for a ddit i onal c a pit a l to pu r sue further devel o pment or commercialization of the app l icable product candidates;

i f an ag r eement with any collaborator terminates, our access to technology and intel l ectual property licensed to us by that c o llaborator may be restricted or terminate entirely, whi c h may delay our continued d e velopment of our product cand i dates utilizing the collabo r ator’s technology or intellec t ual property or requi r e us to stop development of those product candidates completely;

c ollaborators may own or co-own intelle c tual property covering our product candidat e s or technology that results from our col l aborating with t h em, and in su c h c a s e s, we m a y not have the exclusive right to comm e rc i a l i ze such int e ll e c t ual proper t y.

As a result, if we enter into collaboration agreements and str a tegic partnerships or license our product candidates, we may not be able t o re a l i ze the benefit of such transactions if we are un a ble to su cc e s s fully int e g r a te th e m w i th our existing operations and company culture, which could delay our timelines or otherwise a d versely affect our b usiness.

Add i tionally, exclusive rights that we may grant in connection with coll a boration agreements may li m it our a bil i ty t o e nter in t o n e w or a ddit i onal co l labor a tion agr e e m ents or stra t e g i c partnerships if we e xperi e nce i s sues with existing collaborations.

We also cannot be certain that, following a strategic transa c tion or license, we will achieve the revenues or specific net inc o me th a t j us t ifi e s such transaction.

Any delays in entering into new collaborations or strat e gic partnership agreements r e lated to our product candidates could delay the development and commercialization of our product candidates in certain geograph i es for certain indications, which would harm o u r business prospects, financial condition and results of o perations.

Our efforts to develop, manufacture a n d market COVID ‑ 19 therapeutics will require additional personnel who w i ll require training, which may cause some of our employees to reallocate t h e i r t i me from other duties which could in turn cause delays in clinical supply of our other product candidates or trials.

We have been planning for the development of COVID ‑ 19-related p r oduct candidates.

We have repurposed some of our personnel overseeing q u ality, clinical operations and manufacturing of their oncology product cand i dates to support our COVID ‑ 19 e fforts and we plan to hire a ddit i onal s t aff to support the COVID ‑ 19 efforts, which will increase our expenses.

If our personnel fail to remain focused on our o n cology or oth e r infectious disease drug candidates or, if the services of employees that may have shifted to the COV I D ‑ 19 efforts are not adequately covered by o t her em p l oyees, or if new personnel that we plan to hire to support the COVID ‑ 19 effor t s require extensive training, our current oncology ope r a tions may be adversely impacted.

If conflicts arise betwe e n us and our collaborators or strat e gic partners, these parties may act in a manner adverse to us and could limit our ability to i mpl e m e n t o u r s t ra t e gi e s.

If c o n f licts arise between our corporate or academic collaborators or strategic pa r tners and us, the other party may act in a m anner adverse to us and could limit our ability to implement our strategies.

Some of our e xist i ng a c ad e mic c oll a bora t o r s and strategic partners are co n ducting multiple product development efforts.

Such collaborato r s or strategic partners may develop, either alone or with others, p r oducts that are comp e titive with the product candidates that are the subject of these collaborations.

Competing p r oduct candidates, either dev e loped by the collaborators or strategic partners or to which the collaborators or strategic partners have rights, may result in the withdrawal of our collaborator’s or partner’s sup p o r t for our product candidates.

Some of our future collaborators or strategic partners could also become our competitors in the future.

Our collaborators or s t rategic partners could develop competing products, prec l ude us from entering into collaborations with their competitors, fail to obtain timely regula t ory approvals, terminate the i r a gree m ents w i th us prem a tur e ly or f a il to devote sufficient resou r ces to the development and c o mmercialization of our product candidates.

For example, in May 2019, Sorrento Therapeutics, Inc.

(“Sor r ento”) with which we jointly established a new entity called Immunothe r apy NANTibody, LLC (“NANTibody”) as a stand-alone biotechnology company, commenced li t igation against us and certa i n of our officers and directors, alleging that w e improperly caused NANTibody to acquire Ig D raSol, Inc.

(“Ig D raSol”) and in January 2020 and A pril 2020, Sorrento sent letters purporting to terminate an exclusive li c ense agreement with us and an excl u sive license agreement with NANTibody.

Additionally, in July 2020, we r ec e iv e d a Request for Arbitration before the International Chamber of Commerce, International Court of Arbitration, served by Shenzhen B e ike Biotechnology Co.

(“Beike”) asserting breach of c ontract under our subsidiary Alt o r ’s license agreement with them.

For more information regarding these dis p u t es, see Note 8 , Commitments and Contingencie s—Contingencies , of the “Notes to Unaudited Condensed Combined Consolidated Financial Statements” that appear in Item 1.

“Financial Statements” of this Quarterly Report on Form 10‑Q.

Any of these developments could harm our produ c t development efforts.

Our ability to use net operating losses and research and development credits to offset future t axable income may be subject to c e rtain l im i tat i ons

In general, under Sections 382 and 383 of the Internal Revenue Code, or Code, a corporation that undergoes an “ow n ership change” is subject to limitatio n s on its a bi l ity to utilize its pre-change net operating losses or tax credits, or NOLs or cr e dits, to offset future t a xab l e inco m e or t a xes.

For th e s e pu r poses, an ownership change generally occurs where the aggregate stock ownership of one or mo r e s t ockholders or groups of stockho l ders who owns at least 5% of a corporation’s stock increases its ownership by mo r e than 50 percentage points over its l o west ownership percentage with i n a spe c ifi e d t e sting period.

We have not conducted a complete study to assess whether a change of control has occurred or whether there h a ve been multiple chan g e s of control since inception d u e to the significant complexity and cost associated with such a study.

If we have e xperienced a change of control, as defined by Section 382, at any time since inception (inc l udi n g as a result of the merger), utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an a nnual limitation under Section 382.

Any limitation may r e sult in expiration of a portion o f the net operating loss carryforwards or research and development tax credit carryforwards before utilization.

I n addition, our NOLs or credits may also be impaired under state law.

Acc o rdingly, we m a y not be able to utilize a material portion of our NOLs or credits.

Since we will need to raise s ubstantial ad d i ti o nal funding to finance our operations, we may e xperience further ownership chan g e s in the futur e , some of which may be outside of our contr o l.

L i mi t s on our abi l ity to use our pre-change NOLs or credits to offset U.S.

federal taxable income could potentially result in increased future tax liability to us if we earn net taxable income in t h e future.

In addition, under the legislation commonly referred to as the Tax Cuts and Jobs Act of 2017, or TCJA, as modified by the Co r o n a virus Aid, Relief, and E c onomic Security Act, or the CARES Act, t h e amount of NOLs generated in taxable periods beginning after December 31, 2017, that we are permitted to deduct in any taxable year beginning after December 31, 2020 is limited to 80% of our taxable income in such year, where t a xable income is determined wi t hout regard to the NOL deduction it s e lf.

The TCJA a llo w s p o st-2017 unused NOLs to be car r ied forward indefi n itely.

Similar rul e s may apply under state tax laws.

Changes in tax law could adv e r s e ly affe c t o u r b u sin e ss and financial co n dition.

The rules dealing with U .

federal, sta t e, and local income taxation are constantly under review by persons involved in the l e gislative process and by the IRS and the U.S.

Treasury Department.

Changes to tax laws (which changes may have ret r oac t ive app l ic a tion) could adversely affect us and our stockholders.

In recent years, many such changes have been made and changes are likely to continue to occur in t h e future.

For e xamp l e, t he TCJA was enacted in 2017 and significantly reformed the Code.

The TCJA, among other things, contained signifi c ant ch a nges t o corporate taxation, including reduction of the co r p o r ate t a x r a te from a top ma r g i nal r a te of 35% to a flat rate of 21%, a limitation of the tax deduction for net interest expense to 30% of adjus t ed earnings (except for certain small businesses), a limitation of the deduction for n et operating losses to 80% of current year taxable income and an eli m ination of net operating loss carrybacks (though any net operating los s es generated in t axable years beginning after December 31, 2017 may be carried for w ard indefinitely), and the modification or repeal of many business deductions and c r edits.

Additionally, on March 2 7 , 2020, the Coronavirus Aid, Relief, and Economic Security Act was enacted, w h ich, among other things, suspends the 80% l imitation on the deduction f o r net operating losses in taxab l e years beginning before January 1, 2021, p e rmits a 5-year carryback of net operating losses arising in taxable years beginning after December 31, 2017 and before January 1, 2021, and gen e rally caps the limitation on the deduction for net interest expense at 50% of adjusted taxable income for t a xable years beginning in 2019 and 2020.

It cannot be predicted whether, when, in what form, or with what effective dates, new t a x laws may be enacted, or regulat i ons and rulings may be enacted, promu l gated or issued u n der existing o r new tax law s , which could result in an inc r ease in our t a x liability or require changes in t h e m a nner in whi c h we operate in order to m i nimize or mitigate a ny adverse effects of changes in t a x l a w or in the int e rpre t a t i on t hereo f .

Our transfer pricing poli c ies may be subject to challenge by the IRS or other taxing a u thorities.

Our intercompany relationships are subject to complex trans f er pricing regulations administered by taxing authorities in vario u s juri s di c tions.

The relevant taxing authorities may disa g r ee with our deter m ina t ions a s to the va l ue of a s se t s sold or acquired or income and expe n ses a ttr i butab l e to sp e c if i c jurisdictions.

If such a disagreement were to occur, and our position were not sustain e d, we could b e required to pay additional taxes, interest and penalties, which could result in one-time tax charges, high e r effective tax rates, reduced cash flows, and lower overall profitability of our operations.

We bel i eve th a t our fin a nc i a l s t a t em e nts r e fle c t ad e quate r e s e rves to cover such a contingency, but there can be no assurances in that regard.

We may b e come subje c t to examinations of our tax returns by t h e IRS and other domestic a n d foreign tax authorities.

An adverse out c ome of any such audit or examination by the IRS or other tax authority cou l d have a material adver s e eff e ct on o u r op e rating results and finan c ial condit i on.

We may become subject to regular review and audit by the IRS a nd other tax authorities in various domestic and foreign jurisdi c tions.

As a resul t , we may in the future r e ce i ve ass e ssm e nts i n m u l t i ple jurisdi c t i ons on various tax-related assert i ons.

Taxing authorities may in t h e future challenge our tax p o sitions and methodologies on var i ous matters, including our posit i ons r e garding the collection of sales and use taxes, the d e termination and payment of value added taxes and the jurisdictions in which we are subject to t a xes, which could e xpose us to additional taxes.

We regularly assess the likelihood of adverse outcomes result i ng from future tax e x aminations to determine the a d equacy of our provision for income taxes.

These assessments can require considerable estimates and judgments.

The calculation of our tax liabilities involv e s dealing with uncertainties in the applic a tion of complex tax laws and regulations in a variety of jurisdictions.

There can be no assurance that our tax positions and m e thodologies or calculati o n of our tax liabilities are accurate or that the outcomes f r o m ongoing and future tax examinations will not have an adverse eff e ct on our operati n g results and financial condition.

We wi l l be subj e c t to ext e nsi v e r e gu l ation, which c an be cost l y, time consuming and can subject us to unanticipated delays;

even if we obtain regulatory approval for some of our product candidates, those products may still face r e gulatory d i fficulties.

Our potential products, cell processing and m a nufacturing activities will be subject to comprehensive regulation by the FDA in the Uni t e d States a nd by comparable authorities in other countries.

The process of ob t aining FDA and other required regulatory approvals, including foreign approvals, is expensive and often takes many years and c a n vary substantially based upon the type, c o mplexity and novelty of the products in v olved.

In addition, regulatory agencies may lack e xperience with our te c hnologies and products, which may lengthen the regulatory review process, i ncrease our development costs and delay or prev e nt t he i r c omm e rci a li z a t ion.

No fusion protein or cell thera p y using Anktiva has been approved for marketing by the FDA.

Consequently, there is no precedent for the suc ce ssful commercialization of produ c ts based our technolog i es.

In addition, we have only limited experience in filing a n d pursuing appl i cations necessary to gain regulatory approvals, which may impede our ability to obtain time l y FDA approvals, if at all.

We have not yet sought FDA appro v al for any adaptive cell therapy product.

We will not be able to commerciali z e any of our potential products until we obtain FDA approval, and so a ny delay in obtaining, or inability to obtain, FDA app r oval would harm our business.

If we violate regulatory re q uirements at a ny stage, whether before or after marketing approval is obtained, we may face a numb e r of regulatory consequences, including refusal to approve pending application s , license suspension or revocation, withdrawal of an approval, imposition of a clinical hold or t e rm i nat i on of c l ini c al tr i a ls, warn i ng l e tt e rs, unti t led l e tt e rs, m odifi c a t ion of p romot i onal m a t e ria l s or labeling, provision of corrective information, imposit i on of post-market requiremen t s, including the need for additional testing, imposi t ion of distribution or other restrictions under a REMS, product recalls, product seizures or det e ntions, refusal to allow imports or exports, total or part i al suspension of production or distribution, FDA debarment, injunctions, fines, consent decrees, corporate integrity agreements, debarment from receiving government contracts, exclusion from participation in federal and state healt h care programs, restituti o n, disgorgement, or civ i l or cr i min a l pena l ti e s, including fines and imprisonment, and adverse publicity, among other adverse cons e quences.

Additionally, we may not be able to obtain the labeling claims necessary or desirable for the promotion of our product candidates.

We may also be required to undertake post-m a rketing trials.

In a d dition, if we or others identify side effects after any of our therapies are on the market, or if manufacturing proble m s occur, regulatory approval may be withdrawn, a n d reformulation of our product candidates may be required.

Our projections regarding the market opportu n ities for our product candidates may not be accurate, and the actual market for o u r products, if a p proved, may be small e r t h a n w e e s t ima t e .

We do not have verifia b le internal marketing data regarding the potential size of the commercial market for our product candidates, nor have we o b tained current independent marketing sur v eys to verify the potential size of the commercial ma r kets for our current product c andidates or any future prod u ct candidates.

Since our c u rrent product candidates and any future product candidates will represent novel approaches to t reating various conditions, it may be difficult, in any eve n t, to accurately estimate the potential revenues from these product candidates.

Ac c ordingly, we may spend sig n ificant capital trying to obtain approval for product candidates that have an uncertain commercial market.

Our projections of both the number of people who have the cancers or viral dis e a s e s we are t a rget i ng, as we l l as t he subset of p e ople wi t h th e s e d i s e ases who are in a position to receive second- o r third-line therapy, and who have the potential to benefit from treatme n t with our product cand i dates, are based on our beliefs and estimates.

These estimates have been derived from a v a riety of sources, including scientific lite r ature, surve y s of clinics, patient foun d ations, or mar k et r e s e ar c h by third parties, and may prove to be incorrec t .

Further, new studies or a pprovals of new therapeutics m a y change t he e sti m at e d in cidence or prevalence of these diseases.

The number of patients may turn out to be lower than expected.

Add i tionally, the potentia l ly addressable patie n t population for our prod u ct candidates may be limited or may not be amenable to treatment with our p r o d uct candidates and may also be limited by t h e cost of our tre a tm e nts a nd t he r e i m burs e ment of those tre a t m ent costs by thi r d-party payors.

For instance, we exp ec t Anktiva to init i a lly t arget a sm a ll pat i ent p o pulation that suffers from bladder cance r .

Even if we obtain significant market share for our product candidat e s, because the p o t e nt i a l t a rg e t p o pulations may be s m all, we may never achie v e profitability without obtaining regulatory approval f o r additional indications.

Because our current product candidates r e present, and o u r other potential product candidates w i ll represent novel approaches to the treat m ent of dis e ase, t h ere are many un certa i n t ies r e gard i ng t h e dev e lop m e n t, market acceptance, third-party reimbursement coverage and t h e co m merc i al p o tential of our product candidates.

Human immunotherapy products are a new category of therapeutics.

B e cause this is a relatively new and expanding area of novel therapeutic int e rv e nt i on s , th e re a re m a ny un ce rt a inti e s r e l a ted to de v e lopment, marke t ing, reimbursement and the co m me r ci a l poten t ial for o ur product candidates.

There can be no assurance as to the length of the trial period, the number of patients t h e FDA will requ i re to be e nrol l ed i n t he tri a ls i n order to est a blish the safety, efficacy, purity and potency of immunotherapy p r o ducts, or that the data g e nerated in these trials will be accepta b le to the FDA to support marketing approval.

The FDA may t a ke longer than usual to come to a decision on any BLA and/ o r NDA that we submit and may ultimately det e rmine that there is not en o ugh data, information, or exper i ence with our product candidates to support an approval decision.

The FDA may also require that we conduct additional post-marketing studies or implement risk management programs, such as REMS, until more experience with our p roduct candidates is obtained.

Finall y , after i n creased usage, we may find that our product candidates do not have the i n tended effect, do not w o rk with other combinati o n therapies or have unanticipated side eff e c t s, pot e nt i al l y j e opard i z ing in i ti a l or continuing regulatory approval and commercial prospects.

We may also find that the manufacture of our product candidates is more d i fficult than anticipated, resulting in an inability to produce a sufficient amount of our product candidates for our clini c al trials or, if approved, commercial s upply.

Moreover, because of the complexity and novelty of our manufacturing process, there are o nly a limited number of manufactu r e rs who have the capability of produ c ing our product candidates.

Should any of o u r CMOs no l onger produce our product candidates, it may take us significant t i me to find a r e placement, if we a re ab l e t o f i nd a r e pla c em e nt at all.

There is no assurance that the approaches offered by our product candidates will gain broad acceptance among docto r s or patients or that governmental agencies or third-party medical insurers will be willing to provide reimbursement coverage for our p r oposed product candidates.

The ma r ket for any prod u cts that we successfully develop will also depend on the cost of the product.

We d o not yet have sufficient information to r e l i ably est i ma t e wh a t it will cost to commercially manu f acture our current produ c t candidates, and the actual cost to manufacture these products could materially and adversely affect the commercial viability of the s e products.

Our goal is to reduce the cost of manufacturing and providing our therapies.

However, u n less we can reduce those costs to an acceptable amount, we may never be able to develop a commercial l y viable product.

If we do not succes s fully develop and commercialize products based upon our approach or find suit a ble and economical sources for materials used in the production of our potential products, we will not become profitable, which would materially and adver s ely affect the value of our com m on stock.

Our Anktiva therapies and our o t her therapies may be provided to pat i ents in combination with other agents provided by third parties or our affiliates.

The cost of such co m bina t ion t her a py may inc r ease the ov e rall c ost of therapy and may result in issues regarding t h e allocation of reimbursements between our thera p y and the other agents, all of which may affect our ability to o b tain reimbursement coverage for the combi n ation therapy from governmental or private t hird-party medical insu r e rs.

If product liability law s uits are brought against u s , we may incur substanti a l liabilities and may be r e quired to limit commer c ialization of our product candidates.

We face an inherent risk of product liability as a result of the clinical testing of o ur product candidates and will face an e v en gre a ter risk i f we commercialize any products.

For example, we may be sued if our product candidates cause or are perceived to cause injury or are found to be otherwise u n suitable during clinical tes t i n g, manufacturing, marketing or sale.

Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dange r s inherent in the product, negligence, strict lia b ility or a brea c h of warranties.

Claims could also be asse r ted under state consumer pro t ection acts.

Large judgements have also been awarded in c l ass action lawsuits based o n ther a peu t ics that h a d u n anticipated side effec t s.

If we cannot successfu l ly defend ourselves against product lia b ility claims, we may incur substant i al l i ab i li t ies or be required to limit commercia l ization of our product candidates.

Even successful defense w ould require significant financial and management resources.

Regardless of the merits or eventual ou t com e , li a bil i ty cl a ims may result in:

decreased demand for our products, if approved;

i njury to our reputation;

wi t hdrawal of cl i nic a l tri a l part i c i pants or sit e s and poten t i a l t e r m ina t ion of c l ini c al tr i a l sit e s or e nt i re c l i nic a l progr a ms;

i nitiation of investigations by r e gulators, refusal to approve market i ng applications or supplement s , and withdrawal or limit a tion of product approvals;

c osts to defend litigation;

a diversion of managemen t ’s time and our resources;

substan t ial m onet a ry a w a rds to tr i a l par t ic i pants or pa t i e nts;

product recalls, wi t hdrawals or labeling, marketing or promotional restrictions;

l oss of revenues;

significant negative media attention;

decrease in the price of our stock and overall value of our company;

e xhaustion of our available insurance coverage and our cap i tal resources;

t he inability to commerc i alize our produ c t candidates.

Our inability to obtain sufficient product l i ability insurance at an acceptable cost to protect again s t potential product liab i lity claims could prevent or inhibit the commercialization of products we may develop, alone or with corporate c o llaborators.

Our insurance policies may also have various exclusions, and we may be subject to product liability claims for which we have no cove r a ge.

While we have obta i ned clinical t rial insurance for our cl i ni c al tr i a ls, we may have to pay am o unts awarded by a court or negotiated in a set t l e ment th a t exceed our coverage li m it a tions or th a t are not covered by our insurance, and we may not have, or be able to ob t ain, sufficient c a pital to pay such amounts.

Even if our agreem e nts w i th a ny future corporate collaborators entitle us to indem n ifi c a t ion a ga i nst losses, such i ndemn i fi c a t ion may not be a v ail a ble or adequate should any claim arise.

Due to the signif i c ant r e so u rces r e qu i r e d for t h e development of our product candidates, and dependi n g on o u r ability to access c apita l , we must pri o ritize among many d i fferent opportunit i es.

Moreover, we may expend our limited resources on programs that do not yield suc c essful product candidates as opposed to indications that may be more profi t able or for which there is a greater likelihood of success.

We do not have sufficient resources to pursue development of all or even a substantial portion of the potential opportunities that we believe will be afforded to us by our product candidates.

Because we have limited resources and access to capital to fund our operations, our management must make signific a nt prioritization decisions as to which product candidates and i ndications to pursue and how much of o u r resources to allocate to each.

Our m a nag e ment must a l so ev a lua t e the ben e fits of developing in-licensed or jointly owned tech n ologies, which in some c i r c umstan c e s we may be contractually obligated to purs u e, relative to dev e loping o t her product candidates, i ndications or programs.

Our man a gement has broad discretion to suspend, scale down, or discontinue any or all of these developme n t efforts, or to initia t e new programs to treat other diseases.

I f we select and commit resources to opportunities that we are unable to successfully develop, or we forego more pro m ising opportunities, o u r business, financial condition and results of operations will be adversely affected.

We wi l l face signifi c ant c ompe t it i on from other biotech n ology and pharmaceutical companies and from non-prof i t ins t itut i ons.

Competition in the field of cancer and viral infectious disease therapy is intense and is acce n tuated by the rapid pace of tec h nological development.

Research and discoveries by others may result in breakthroughs which may render our product candidates obsolete e v en before th e y generate any revenues.

There are products that are app r oved and currently under d e velopment by others that could compete with the product c a ndidates that we are developing.

Many of our potential competitors have substantially gre a t e r re s e a rch and development capabilities and approval, ma n u f acturing, marketing, f i nancial and managerial resourc e s and experience than we do.

Our competitors may:

develop safe r , more convenient or more effective immunothe r a pies and other therapeutic products;

develop therapies that are less expensive or have better reimbursement from private or public payors;

reach the market more rapid l y, reducing the potential sales of our product candidates;

e stablish superior proprietary positions.

We will focus our efforts on onco l ogical and infectious d i s e ase indi c a t ions th a t are diff i cult to treat and with large unmet n e eds, and we believe our platforms will be broadly app li cab l e ac r oss m ult i ple tu m or typ e s and infections.

Based on the b r eadth and depth of our platforms, we believe our competitors will ran g e from lar g e pharmaceutical companies to e m erging novel biote c hnology companies.

From an oncology perspective, we have diff e rent competitors bas e d on modality.

In the NK and T c e lls activation modality, we pri m ari l y c ompe t e w i th large pharmaceutical companies marketing checkpoi n t inhibitors including AstraZeneca PLC, or AstraZeneca, Bristol-Myers Squibb Company, or BMS, GlaxoSmithKline plc, or GSK, Merck & Co., Inc., or Merck, Pfizer Inc., or Pfizer, and Roche Holding AG, or Roche.

The pot e nti a l e xi s ts for some of these large pharmaceutical companies to seek collaboration for combinat i on of Anktiva with their marketed checkpoint inhibitors .

A lso, in the NK and T c ell activation modality, we will compete with immunotherapy fusion p r otein c o mpanies d e veloping similar approaches including N ekt a r Ther a peuti c s , Neoleukin Therapeutics, Inc.

Nov a rtis International AG, R o che, Sanofi S.A., and in the context of NMIBC, FerGene, Inc., Merck a nd Sesen Bio, Inc.

In the tumoricidal macrophage activation modality, we will compete with various che m otherapeutic agents, including Abraxane, d o xorubicin and paclitaxel/Taxol, as well as an antibody drug conjugate produced by I mmunomedics, Inc., or Immunomedics.

In the T c e ll m e mory moda l ity, we a l so co m pete wi t h c e ll t her a py and chimeric antigen receptor T cell, or CAR-T c ell, based companies including A l logene T herap e ut i cs In c .

, CRI S P R Th e rapeu t i c s AG, F a te T her a p eut i cs, Inc .

, Gilead Sciences, Inc., or Gilead, I n tellia Therapeutics, Inc., Iovance Biotherapeutics, Inc.

and Legend Biotech Corporation.

From an infectious disease per s pective, we will compe t e with Abbott Laboratories Inc., or Abbott Laborato r ies, BMS, Gilead, and GSK, in the field of human immunodeficiency virus, or HIV.

Compe t itor co m p a ni e s focused on COVID ‑ 19 c e ll th e rapy curren t ly i n clude Altimmune, Inc., AstraZeneca, Athe r s y s , Inc .

/He a lios K .

, CanSioBio Biologics Inc., Capr i c or Ther a peu t ics, Inc .

, CAR-T (Shanghai) Biotechnology, C e llavita Pesquisa Científica L t da, Cellenkos, Inc., Cellular Bio m edicine Group, Inc., Celularity, Inc., Sorrento Therapeutics, Inc., Chinese Academy of Sciences, Chongqing Sidemu Biotechnology Technology/ImmunCyte Life Science, I nc., Enli ve x T her a peut i cs Ltd, Green Cross LabCell Co r p ., Hope Biosciences, Johnson & Johnson, Merck, Me s oblast Limited, Moderna, Inc., Novavax, Inc., Orbsen T h e rapeu t i c s Limited, Pfize r /BioNTech SE, Pluristem Therapeutics, Inc .

, Rigshospitalet, Tianhe Stem Cell Biotechno l ogies Inc., University of Minnesota/Fate Ther a peut i cs, Inc .

, Vaxart, Inc., X i nji a ng Med i c a l Univ e rsity, and many other new competitors that are emerging frequently.

A large number of compa n ies, government agenc i es and academic centers around t h e world are developing COVID ‑ 1 9 vaccines, and many of t hese ent i ti e s are i n more advanced stages of development than we are, including some that have started P hase II and/or III clinical trials or have already obtained emergency regulato r y approval in the United States and internationally .

Even if our COVID ‑ 19 vaccine candidate is ultimately approved for m arketing, the value of our op p o r tunity will be adversely impacted by other COVID ‑ 19 vaccines that have obtained emergency regulatory approval, obtain full regulatory approval, or demonstrate better efficacy or sa f e ty than our COVID ‑ 19 vaccine candidate.

Many of these companies and our other current and potential competitors h a ve subst a nti a lly gre a ter r e search and development cap a bil i ti e s and fin a nci a l, scientific, regulatory, manufacturing, marketing, sales, human resources, a nd experience than we do.

Many of our competitors h a ve s e veral t her a peut i c prod u cts that have already been developed, approved and successfully commercialized, or are in the process of obtaining regula t ory approval for their therapeutic products in the United States and internationally.

Our c o mpetitors may obtain regulatory approval for their produc t s more rapidly than we may obtain approval for ou r s, whi c h could result in competitors establishing a strong m a rket position before we are able to en t er the m a rke t .

Universities and public and priva t e research instit u t ions in the United States and Europe a r e also potential competitors.

While these universities and p u blic and private research institutions primarily have educ a tional objectives, they may develop proprietary technologies that lead to other FDA approved therapies or that secure patent protection that we may need for the development of o ur technologies and product candi d ates and that can be licensed or sold to other parties, including our competitors.

One of our product candidates, Anktiva, is a potential therapy for the treatment of bladder cancer and (1) when used in combin a tion with checkpoi n t inhibitors, lung cancer, and (2) when used in combination with natural killer cells, metastatic pancreatic c a ncer and triple negative brea s t can c e r, or TNBC.

Currently, there are numerous companies that are developing v a rious a l t e rna t e tre a t m ents for bl a dd e r, pancreatic and breast ca n cer, including patients that ha v e progressed after prior treatment with checkpoint inhibitors and chemotherapy.

For e x ample, Nektar T h erapeutics is cu r rently developing an imm u notherapy t r eatment for muscle-invasive bladder cancer u sing an IL-2 agonist and is in Pha s e III clinical trials.

Accordi n g ly, A nktiva f a c e s sig n ificant competition in the bladder, lung, pancreatic and brea s t cancer treatment space from multiple companies.

Even if we obtain regulatory approval for Anktiva, the avail a bility and price of our competitors’ products c ould limit the demand and the price we are able to charge for our therapies.

We may not be able to imple m ent our business plan if the acceptance of our product candidates is inhibited by price competition or the reluctance of physicians to switch from oth e r methods of treatment to our product, or if physicians switch to other new therap i es, drugs or biologic prod u cts or choose to reserve our product cand i dates for use in limited circumstances.

In addition, we could face litigation or other proceedings with respect to the scope , ownership, validity and/or enforceability of our patents or other intellectual property relating to our competitors' products, and our competitors may allege that our product candidates infringe, misappropriate or otherwise violate their intellectual property.

See “ Risks Related to Intellectual Property.”

Mergers and acquisitions in the pharmaceutical and biotechnology indu s tries may result in even more resources being co n c entrat e d among a smaller n u mber of our competitors.

Early stage companies may also prove to be significant c o mpetitors, par t icularly through collaborat i ve arrangements with large and established compani e s.

Th e se third parti e s c omp e te with us in re c ruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient regist r a tion for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Pu b l ic opinion and s c rutiny of immunotherapy app r oaches may impact public per c eption of us and our product candi d ates, or may ad v e rsely aff e ct our abil i ty to condu c t our business and our business plans.

We use r e latively novel technologies in v olving the Anktiva, a ldoxorubicin, hAd5 and yeast technologies and cell-based therapies and o ur natural killer cell platform utilizes a relatively novel technology involv i ng the genetic modification of human cells and util i zation of those modified cells in other individuals.

Public pe r ception may be influ e nced by claims, such as claims that our technologies are unsafe, unethical or immo r al and, consequently, our approach may not gain the acceptance of the public or the medical community.

Negative public react i on to cell-based immunotherapy in general could result in greater government regulation a nd stricter labeling requirem e nts of immunotherapy products, including any of our product candidates, and could cause a decrease in t h e demand for any products we may develop.

Adverse public attitudes may adversely impact our ability to enro l l c lin i c a l trials.

Moreover, our success will depend upon physicians specializing in the treatment of those dis e ases that our p r o duct can d ida t es t a rget pr e s c ribing, and their patients being willing to receive treatments that involve the use of our product candidates in lieu of, or in addit i on to, ex i s t ing tre a tm e nts t hey are already familiar with and f or which greater clinical data may be available.

More restrictive gove r n ment reg u lations or negative public o p inion could have an adverse effect on our business or financial condition and may del a y or impair the de v e lopme n t and commercialization of our product candidates or demand for any products we may develop.

Adverse events in our clinical trial s , even if not ultimately attributable to our p r oduct candidates, and the resulting publicity could result in increas e d governmental regulation, unfavorable pub l ic perception, potential regulatory del a ys in the testing or approval of our potential product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.

Development of a product candidate intended for use in combinati o n with an already approved product may present more or different challenges than development of a product can d idate for use as a single agent.

We are currently developing Anktiva for use along with our natural killer cell platfor m .

We are also studying Anktiva thera p y along with other product candidates, such as a ldoxorubicin and hAd5 product candidates.

The development of produ c t candidates for use in combination wi t h another product may present c hal l e nges.

F or e xamp l e, the F DA may re q uire us to use more comp l e x cl i nic a l tri a l designs in order to ev a lua t e the contribution of each prod u ct and product candidate to any observed effects.

It is possible that the results of these trials could show that any pos i tive r e su l ts a re at t ribut a ble to the already approved product.

Moreover, fol l owing product approval, the FDA may require that products used in conjunction with each other be cross labeled for combined use.

To the extent t h at we do not have rights to already ap p r o v ed products, this may require us to work w i th another company to satisfy such a requirement.

Moreov e r, developments related to the already approved products may i m pact our clinical trials for t he c omb i nat i on as w e ll as our commercial prospects should we receive marketing approval.

Such developments may include changes to the approved produc t ’s safety of efficacy profile, changes to the a v ailability of the approv e d product, and c h anges to the standard of care.

A Fast Track designation, Breakthrough Therapy designation or other designation to facilitate product candidate development may not lead to faster development or a f aster regulatory review or approval process, and it does not increase the likelihood that our product ca n didat e s will r e c e i ve marketing approval.

We have received, and may seek in the f u ture, Fast Track or Breakthrough Therapy designation for current or future product can di dat e s.

Rec e ipt of a designation to facilitate product cand i date development is within t h e discretion of the FDA.

Accordi n gly, even if we believe o n e of our product cand i dat e s m e e t s the cr i te r ia for a d e s i gnat i on, the FDA may disagree.

In any event, t h e receipt of such a desig n ation for a prod u ct candidate may not result in a faster development process, review or approval compa r ed to product c a ndidates considered for approval under conventional FDA procedures and does not ass u r e ultimate mar k eting approval by the FDA.

In addition, the FDA may later decide that the product candidates no longer meet the designation conditions.

As a condition of approval, the FDA m a y re q u ire that we implement var i ous post-marketing requirements and conduct post-marketi n g studies, any of which would require a substantial investment of time, effort, and money, and which may l im i t our c omm e rcial prospects.

As a condition of biologic licens i ng, the FDA is authorized to r e quire that s ponsors of approved BLAs implement various post-m a rket requirements, including REMS and P hase IV trials.

For e x ample, when the FDA approved Novartis’ Kymriah in August 2017, a CAR-T cell therapy for the t r eatment of patients up to 25 years of age with B - cell precursor acute lymphoblastic leukemia (“ALL”) that is refractory or in second or l a ter re l a pse, t he FDA required significant post-marketing commitments, including a Phase IV trial, revalidation of a t e st method, and a substantial R EMS program that included, among other requirements, the certification of hospitals and their associated cli n ics that dis p ense Kym r iah, which certification includes a n u mber of requirements, the implementation o f a Kymriah training program and l i mited distribution only to c e r t ifi e d hospit a ls a nd t heir associ a t e d clinics.

If we receive a pproval of our product candidates, t h e FDA may determine that similar or additional or more burdensome post-ap p r o v al requirements are necessary to ensure that our product ca n didates are safe, pure and potent.

To the extent that we are required to e s tablish and implement any post-approval requirements, we w ill likely need to invest a signif i cant amount of time, effort and mon e y.

Such post-approv a l requirements may a l so l i mit the commercial prospects of our product candidates.

We may be unable to establish e ffective marketing and sales capabilities or enter into agreements with third parties or related parties to market and sell our product candida t es, if they are approved, and as a result, we may be unable to generate product revenues.

We currently do not have a comme r cial infrastructure for the marketing, sale and dis t ribution of our products.

If approved, i n order to commercialize o u r product candidates, we must build our m a rketing, sales and distribution capabilities or a rrange with third parties to perform these s e rvic e s , whi c h wi l l take t ime and req u ire significant f i n a ncial expenditures and we may not b e successful in doing so.

There a re risks involved with establishing our own marketing and sales capabilities.

For example, recruiting and tra i ning a sales force is expensive and time-cons u m ing and could delay any product launch.

If the commercial l a u nch of a product candidate for which we recruit a sales force and establish marketing capab i li t i e s is delayed or does not occur for any reason, we would have incurred these commercialization expenses prematurely or unnecessarily.

These effor t s m a y be costly, and our investment would be lost if we cannot retain or reposi t ion our sales and marketing p e rsonnel.

Even if we are ab l e to e ffe c t i v e ly est a blish a sales force and develop a marketing and s a l e s infr a structure, o ur s a les force and marketing teams m a y n ot be successful in c o mmercializing our current or future product candidates.

To t h e extent we rely on third parties to comm e rcialize any products for which we obtain regulatory approval, we would have less control over their sales ef f o r ts and could be held liable if they fai l ed to comp l y with app l ic a ble l e gal or re g ulatory requirements.

We have little to no prior experience in the ma r k eting, sale, and distribution of biopharmaceutical products, and there a r e significant risks involved in the building and managing of a commercial infra s t ru c ture.

The e s t a bli s hment and development of co m m e r c i a l c a pab il i ti e s , in c l uding a comprehensive healthcare compliance progra m , to market any products we may develop will be expensive and time consuming and c ould delay any product launch, and we may not be able to successf u lly dev e lop this c a p a bil i ty.

W e , or our collaborators, will have to compete with other pharmace u tical and biotechnology companies to recruit, hire, train, manage and retain medical affairs, marketing, sales and commer c ial support personnel.

In the e vent we a re unable to develop a commercial infras t ructure, we may not be able to commercialize our current or fut u re product candidates, which would l i mit our abi l ity to generate product revenues.

Facto r s t h at may inhibit our efforts to commercialize our current or future product candidates and g enerate product revenues inc l ude:

i f t h e COVID ‑ 19 pandemic continues or reocc u rs it may negatively impact our ability to establish commercial operations, educa t e and interact with healthcare pro f essionals, and successfully laun c h our product on a timely basis;

t he inability of sales personnel to obtain access to physicians or persuade adequ a te numbers of physicians to prescribe our c u rrent or future product candidates;

our inability to effectively oversee a geogr a phically dispersed sales and marketing team;

t he costs and time associated with t h e i n itial and ongoing training of sales and m a r k eting pe r s onnel on legal and regulatory compliance matters and monitoring their actions;

a n inability to secure adequate coverage and reimbursement by government and private health plans;

t he clinical indications for which the products are approved and the claims that we may make for the products;

l imitations or warnings, including distribution o r use restrictio n s, conta i ned in the products’ approved labeling;

a ny distribution and use r e strictions imposed by the FDA or to which we agr e e as part of a mandatory REMS or voluntary risk management plan;

l iability for sales or marketing personnel who fail to comply with the applicable legal and r e gulatory requirements;

t he lack of complementary products to be offered by sales personnel, which may put us at a com p etitive disadvantage relative t o companies with more extensive product lines;

unforeseen costs and expenses a s sociated with creating an independent sales a nd marketing organization or engaging a contract s a l e s organization.

If our product candidates do not achieve b r oad market acceptance, the rev e nues that we generate from their sales will be limit e d.

We have not commercialized a p r oduct candidate for any indication.

Even if our product candidates are approved by the appropri a te regulatory authorities for marketing and sale, they m a y not gain acceptance among physicians, patients, t h ird-party payors and others in t he medical community.

If any product candidate for which we obtain regulatory approval does not gain an adequate level of market acceptance, we may not generate significant prod u ct revenues or bec o me pro f itable.

Market acceptance of our product candidates by the medic a l community, patients and third-party payors will depend on a number of factors, s o me of which are b e yond our control.

For example, physicians are often reluctant to switch the i r patients, and patients may be relu c t a nt t o swit c h fro m , exist i ng th e rap i e s e ven wh e n n e w and poten t ia l ly more eff e c t ive or s a f e r t re a tm e nts e nter the m a rke t .

Efforts to educate the medical community and third-party payors on the benefits of our product cand i dates may require signific a nt resources and may n o t be success f u l .

If any of our product cand i dates is approved but does not achieve an adequate level of market acceptance, we may not generate sig n ificant revenues and we may not become p r ofitable.

The degree of market acceptance of any of our p r o duct candidates will d e pend on a number of factors, including:

t he continued safety and efficacy of our product candidates;

t he prevalence and severity of adverse events associated with such product candidates;

t he clinical indications for which the products are approved and the approv e d claims that we may make for the prod u cts;

l imitations or warnings contained in the product’s FDA-approv e d labeling, including po t ential limitations or warnings for such p r o ducts that may be more r e strictive than other competitive products;

c hanges in the standard of care for the tar g eted indications for s u ch product candidates;

t he relative diffic u lty of adminis t ration of such product candidates;

c ost of treatment versus economic a nd clinical benefit in relation to a l ternative treatments or therapies;

t he availability of adequ a te coverage or reimbursement by third parties, such as insurance companies and other healthcare payors, and by government healthcare programs, including Medicare and Medicai d ;

t he extent and strength of our marketing and distribution of such product candidates;

t he safety, efficacy and other potential advantages over, and a v ai l a bi l ity of, a l te r nat i ve tre a tm e nts a lr e ady used or t hat m a y later be approved for any of our intended indications;

distribution and use restricti o ns imposed by the FDA with respect to such produ c t candidates or to which we agree as part of a mandatory REMS or voluntary risk management plan;

t he timing of market introduction of such product candidates, as well as competitive products;

our ability to offer such product cand i dates for sale at competitive prices;

t he willingness of the target patient population to try new therapies and of ph y sicians to prescribe these therapies;

t he extent and strength of our third - party manufacturer and supplier support;

t he approval of other new produ c ts for the same indications;

a dverse publicity about t h e product or favora b le publicity about com p etitive products;

potential product liability claims.

Our efforts to educate the medic a l community and third-party pa y o r s as to the benefits of our product candidates may require s i gnificant resources and may never be successful.

Even if the med i cal community accepts that our product candidates are safe and effective for their approved indications, p h ysicians and patients may not immediately be receptive to such product candidates and may be slow to adopt them as an accept e d t re a tm e nt of the approved indications.

If our current or fut u re product candidates are app r oved but do not achieve an a d equate level of accepta n ce among physicians, patients, and third-party payors, we may not generate meaningful revenues from our product candidat e s, in which case we would n ot expect to become profitable.

Our product candidates may face c o mpetition sooner than anticipated.

The enactment of the Biologics Price Competition and Innovation A c t of 2009 (“BPCIA”) created an abbre v iated p a thway for the a p proval of biosimilar and inte r c hangeable biological products.

The abbreviated regulatory pathway establi s hes legal authority for the FDA to review and approve biosimilar biologics, including the possible d e signation of a biosimilar as “in t erchangeable” based on its sim i lar i ty to a n e xisting brand product.

Under the BPCIA, the FDA cannot make an approval of an a pplication for a biosimilar product effective until 12 years after t h e original branded product was approved under a BLA.

Certain changes, ho w ever, and supplements to an app r oved BLA, and subsequent applications fil e d by the same spons o r, manufacturer, li c ensor, pred e cessor i n in t e r e st or other related entity do not qualify for the 12-year exclusivity period.

Our product candidates may qualify for the BPCIA’s 12-year period of exclusivity.

Howev e r, the r e is a risk that the FDA will n o t consider our p r od u ct candidates to be reference products for competing products, p o ten t ially creating the opport u nity f o r bi o similar competition sooner th a n a nti c ipa t ed.

Additionally, this pe r iod of regulatory exclusivity does not b l ock companies pursu i ng regulatory approval via their own tradit i onal BLA, rather than via the abbreviated pathway.

Changes may also b e made to this exclusivity period as a result of future legis l ation as there have b e en ongoing efforts to reduce the period of exclusivity.

Even if we receive a period of BPCIA exclusivity for our first licensed product, if subse q ue n t products do not include a modification to the structure of the produ c t that impacts safety, purity, or potency, we may not receive a dditional periods of exclusivity for those prod u cts.

Moreover, the extent to which a biosimilar, once approv e d, will be substituted for a ny one of our refere n c e product candidates in a way that is similar to traditional generic substitution for non-biological products is not y e t clear, and will dep e nd on a number of marke t place and regulatory factors that are still developing.

Medicare Part B encourages use of biosimilars by paying the provider the sa m e perc e nt a ge of the r e f e rence product average sale price as a mark-up, regardless of whi c h product is reimbursed.

It is also possible that payors w ill give rei m bursement pr e feren c e to biosim i lars even o v er reference biologics abs e nt a de t e rm i na t ion of interchangeability.

For our small molecular product candidates, if qualified, the regulatory exclusivity period is less than for our biologic product candidates.

The Federal Food, Drug, and Cosmetic Act (“FDCA”) provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity.

A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion respons i ble for the action of the drug substance.

During the e x clusivity period, the FDA may not a c cept for rev i ew a n abbr e vi a ted new drug application or a 505(b)(2) NDA submitted by another company for a generic version of such drug where the applica n t does not own or have a legal right of refe re n c e to a ll th e da ta required for approval.

However, an application may be submitted after four years if it c ontains a certification of patent inva l idity or non-infringement.

The FDCA also provides three years of mar k eting exclu s ivity for an NDA, 505(b ) (2) N D A or supplement to an exi s ting NDA if new c l in i c al investigations, other than bioav a ilability studies, that were c onducted or sponsored by the appli c ant a r e deemed b y the FDA to be e ss e nti a l to t he approval of the applicatio n , f or example, n e w indications, dosages or strengths of an existing drug.

As su c h, we m a y f a ce c omp e tition from gene r ic versions of our small molecule product c a ndidates, which will negative l y impact our long-term busi n ess prospects and marketing opportunities.

We will need to obtain FDA approval of a n y proposed branded product names, and any f a ilure or delay associated with such approval may adversely affect o u r b u s i n e s s .

Any name we intend to use for our product c a ndidates in the United States will require approval from the FDA regardless of whether we have secured a formal t r ademark registration from the U.S.

Patent and Trademark Office (“USPTO”).

The FDA typically conducts a review of prop o sed product names, including an e v aluation of the pote n tial for confusion with other product names.

The FDA may also object to a product n a me if it beli e v e s the name i n appropriately implies medical claims or contributes to an overstatement of e fficacy.

If the FDA objects to any of our proposed product names, we may be required to adopt alternative names for our product candidates.

If we adopt alternative names, we would lose the benefit of any existing tradema r k applications for such product cand i date and may be required to expend significant a dditional resources in an effort t o iden t ify a sui t ab l e prod u ct name that would qualify under applicable trademark laws, not infringe or other w ise violate the existing ri g hts of third parties, and be ac c ep t a ble to the FDA.

We may be unable to build a successful brand identity for a new product name in a timely manner or at all, which w o uld li m it our a bil i ty to commercialize our product candidates.

We will be d e pendent on informa t i o n te c h n olog y , s y s t e m s, i n fras t ructure and data.

Our i n te r n al c omputer s y s t ems, or those used by our CROs, C M Os, c li n i c al s i t e s or other contractors or consultants, m a y fail or suffer s e c u rity b r ea c h e s.

We will be dependent upon inform a tion technology systems, infrastruc t ure and data.

In the ordinary course of our business, we will directly or indirectly col l ec t , s t ore and transm i t s e ns i tive d a ta, including intellectual property, confidential i nforma t ion, pre c l i nic a l and c l i nic a l tri a l dat a , proprie t a ry bus i ness information, personal data and personally identifiable health information of our cl i nic a l tri a l sub j ec t s and employees, in our data centers and on our networks, or on those of third parties.

T h e secure processing, ma i nten a nce a nd tr a ns m iss i on of this inform a tion is c rit i c a l to our operations.

The multitude a n d complexity of our computer systems and those of our CROs, CMOs, clinical sites or other con t ractors or consultan t s make them inherently vulnerable to service interruption or destruction, mal i cious intrusion and r a ndom attack.

Data privacy or security b reaches by third parties, employees, contractors or others may pose a risk that sensiti v e data, including our intellectual property, trade secrets or personal information of our employees, patients, or other business partn e rs may be exposed to unaut h o r ized persons or to the public.

Despite the implement a tion of security measures, our internal computer systems and those of our CROs, C M Os, c l ini c al sit e s and oth e r c ontractors and consultants are vulnerable to failure or damage from computer viruses and other mal w are, employee error, unauthorized a n d authori z ed a c c e ss or oth e r cybe r s ecurity attacks, natural disasters, terrorism, war, fire and telecommunication and electrical failures.

Cyberattacks are increasing in their f r equency, sophistica t ion and intensity.

The techniques used by cyber crimina l s change frequently, may not be recognized until launched and can originate from a wide variety of sources, including o u tside groups such as external service p r oviders, organized crime aff i liates, terrorist organizations or ho s tile foreign gove r nments or a gen c ie s .

Cy b e rattacks could include the deployment of h a rmful m a lwar e , deni a l-of-serv i ce, soc i al engineering and other means to affect s ervice reliability and thre a ten da t a confid e nti a l i ty, in t e gri t y a nd av a i l a bi l ity.

W hile we and our shared services partner, NantWorks, have invested, and continue to invest, in the protection of our data and information technolo g y infrastruc t ure, there can be no assurance that our efforts, or the e f forts of our partners, vendors, CROs, CMOs, clinical sites and other c o ntractors and co n sultants will prevent service inte r ruptions, or identify brea c hes in our or their systems, that could adversely a ffect our business and operations and/or result in the loss of cr i ti c al or s e nsi t ive infor m a t io n , which could result in financial, legal, business or reputational harm to us.

In addit i on, our liability insurance may not be suf f icient in type or a m ount to cover us against claims rel a t e d to s e cur i ty b r ea c hes, cyb e r a ttacks and other related breaches.

If a n y such event were to occur and cause interruptions in our operations, it could r e sult in a dis r u ption of our drug develop m ent progra m s.

F or e xa m p l e, the loss of clinical trial data from completed or ongoing clinical trials for a product candidate could r e sult in delays in our regulatory approval efforts and significantly increase our costs to r e cover or r e produce the data, or may limit our ability to effec t ively execute a product recall, if required.

To the extent that a n y disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of personal, confid e nti a l or propri e t a ry i nforma t ion, we could in c ur l i abi l ity and the further development of any p r od u ct candidates could b e dela y e d.

Any such event could also result in legal claims or proceedings, liability under laws that p r otect t h e privacy of personal information and si g nificant regulatory penalties, and damage to our reputation and a loss of confidence in us and our ability to conduct clinical trials, which could delay the c linical development of our prod u ct candidates.

O u r b u s i n e ss c ou l d be adversely affected by t h e eff e c t s of h ea l th ep i de m i c s, pandemics or contagious diseases, including the r e cent pandemic of the disease caused by t h e novel coronav i r u s SARS-CoV-2 or COVID‑19, including its currently known and unknown variants, in regio n s w h e re w e o r t h i rd parties on which we rely have signif i cant man u fa c tu r i n g faci l it i es, co n c e n t ra t ions of c lini c al t r i al s i t e s or other business operations.

Outbreaks of epidemic, pandemic or contagious diseases, such as the COVID ‑ 19 pandemic, may significantly disrupt our operations and adversely affect our business, financial condition and results of operations.

In March 2020, the World Health Organization (“W H O”) declared the outbreak of the COVID ‑ 19 pandemic as the novel coronavirus continues to spread throughout the world.

The spread of this pandemic has caused significant volatility and uncertainty in the U.S.

and international markets and has resulted in increased risks to our operations.

We are monitoring a number of risks related to this pandemic, including the following:

While to date, the financial impact to our business has not been material, we anticipate that the pandemic could have an adverse financial impact in the short-term and potentially beyond.

The COVI D ‑ 19 pandemic, including currently known and unknown variants of COVID ‑ 19, could materially affect our operations, including at our headquarters and at our manufacturing facilities, whi c h are currently subje c t to state executive orders and shelter-in-place orders, a nd a t our c l ini c al tr i a l sit e s, a s well a s t h e business or operations of our other manufacturers, CR O s, CM O s, c l inic a l sit e s or other third parties with whom we condu c t business.

Executive orders have been iss u ed by state and local gove r nments in California a nd elsewhere, and states of emergency have been d e cl a red at the st a te and local level in most juris d ictions throughout the United Sta t es.

Quarantines, shelter-in-place and similar gov e rnment orders, or the perception that such orde r s , shutdowns or other restrictions on the conduct of business operations could occur, related to the COVID ‑ 19 pandem i c or other infectious diseases could impact our personnel or personnel at third-party manufacturing faciliti e s in the United States and other countries, or t he ava i l a bil i ty or cost of materials, whi c h would disrupt our supply chain.

We are monitoring a number of risks related to this pandemic, includi n g the following:

We anticipate that the pandemic could have an adverse financial impact in the short-term and potentially beyond.

As a result of slower patient enrollment, we may not be able to complete our clinical trials as planned or in a timely manner.

We expect to continue spending on research and development during the fourth quarter of 2020 and beyond, and we could also have unexpected expenses related to the pandemic.

We expect to continue spending on research and development during the ye a r-ended December 31, 2021 and beyond, and we could also have unexpected expenses related to the pandemic.

The short-term continued expenses, as well as the overall uncertainty and disruption caused by the pandemic, will likely cause a delay in our ability to commercialize a product and adversely impact our financial results.

Supply Chain :

While to date we have not experienced significant disruptions in our supply chain and distribution, an extended duration of this pandemic could result in disruptions in the future.

An extended duration of this pandemic could result in significant disruptions in our respective supply chains and distribution channels in the future.

For example, quarantines, shelter-in-place and similar government orders, travel restrictions and health impacts of the COVID ‑ 19 pandemic, could impact the availability or productivity of personnel at third-party laboratory supply manufacturers, distributors, freight carriers and other necessary components of our supply chain.

In addition, there may be unfavorable changes in the availability or cost of raw materials, intermediates and other materials necessary for production, which may result in disruptions in our supply chain and adversely affect our ability to manufacture and distribute certain product candidates for clinical supply.

In addition, there may be unfavorable changes in the availability or cost of raw materials, intermediates and other materials necessary for production, which may result in disruptions in our supply chain and adversely affect our ability to have manufactured certain product candidates for clinical supply.

Clinical Trials :

This pandemic has not significantly impacted our business or financial results during the nine months ended September 30, 2020, however, it is likely to adversely affect certain of our clinical trials, including our ability to initiate and complete our clinical trials within the anticipated timelines.

Due to site and participant availability during the pandemic, new subject enrollment is expected to slow in the short-term for most of our clinical trials.

This pandemic may adversely affect certain of our clinical trials, including our ability to initiate and complete our clinical trials within the anticipated timelines.

Due to site and participant availability during the pandemic, new subject enrollment is expected to slow, a t l e ast in the short-term, for most of our clinical trials.

For ongoing trials, we have seen an increasing number of clinical trial sites imposing restrictions on patient visits to limit risks of possible COVID ‑ 19 exposure, and we may experience issues with participant compliance with clinical trial protocols as a result of quarantines, travel restrictions and interruptions to healthcare services.

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As a result, our anticipated filing and marketing timelines may be adversely impacted.

Overall economic and capital markets decline:

The impact of the COVID‑19 pandemic could result in a prolonged recession or depression in the U.S.

or globally that could harm the banking system, limit demand for all products and services and cause other seen and unforeseen events and circumstances, all of which could negatively impact us.

The continued spread of COVID‑19 has led to and could continue to lead to severe disruption and volatility in the U.S.

and global capital markets, which could result in a decline in stock price, increase our cost of capital and adversely affect our ability to access the capital markets in the future.

In addition, trading prices on the public stock market, including our common stock, have been highly volatile as a result of the COVID‑19 pandemic.

Overall Economic and Capital Markets Environmen t :

The impact of the COVID ‑ 19 pandemic could result in a prolonged recession or depression in the United States or globally that could harm the banking system, limit demand for all products and services and cause other seen and unforeseen events and circumstances, all of which could negatively impact us.

The continued spread of COVID ‑ 19 has led to and could continue to lead to severe disruption and volatility in the United States and global capital markets, which could result in a decline in stock price, increase our cost of capital and adversely affect our ability to access the capital markets in the future.

In addition, trading prices on the public stock market have been highly volatile as a result of the COVID ‑ 19 pandemic.

Regulatory Reviews :

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These government actions can impact us, our members and our suppliers.

There is also the possibility that we may experience delays with obtaining approvals for our Investigational New Drug, or IND, applications.

The foregoing and other risks may have an adverse effect on our overall business, financial condition and results of operations.

Additionally, the ongoing COVID‑19 pandemic may also affect our operating and financial results in a manner that is not presently known to us or that we currently have not considered as significant risks to our operations.

This pandemic may also amplify many of the other risks described throughout the “Risk Factors” section of this Quarterly Report.

Any resulting financial impact cannot be reasonably estimated at this time.

The extent to which the COVID‑19 pandemic impacts our business and results will depend on future developments, which are uncertain and cannot be predicted with confidence, including the duration and scope of the outbreak, any potential future waves of the pandemic, new information which may emerge concerning the severity of COVID‑19 and the ongoing and future actions to contain it or treat its impact, among others.

* We may use our financial and human resources to pursue a particular type of treatment, or treatment for a particular type of cancer, and fail to capitalize on programs or treatment of other types of cancer that may be more profitable or for which there is a greater likelihood of success.

Because we have limited resources, we must choose to pursue and fund the development of specific types of treatment, or treatment for a specific type of cancer or viral infectious diseases, and may forego or delay pursuit of opportunities with other programs, investigational medicines, or treatment for other types of cancer or viral infectious diseases, which could later prove to have greater commercial potential.

Moreover, given the rapidly evolving competitive landscape and the time it takes to advance a product through clinical development, an incorrect decision to pursue a particular type of treatment or cancer may have a material adverse effect on our results of operation and negatively impact our future clinical strategies.

Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.

Our spending on current and future research and development programs for investigational medicines or clinical trials may not yield any commercially viable products.

If we do not accurately evaluate and anticipate the commercial potential or target market for a particular type of treatment or cancer or viral infectious disease, we may choose to spend our limited resources on a particular treatment, or treatment for a particular type of cancer or viral infectious disease, and then later learn that another type of treatment or cancer that we previously decided not to pursue would have been more advantageous.

*We invest our cash on hand in various financial instruments which are subject to risks that could adversely affect our business, results of operations, liquidity and financial condition.

We invest our cash in a variety of financial instruments, principally commercial paper, corporate debt securities and foreign government bonds.

All of these investments are subject to credit, liquidity, market and interest rate risk.

Such risks, including the failure or severe financial distress of the financial institutions that hold our cash, cash equivalents and investments, may result in a loss of liquidity, impairment to our investments, realization of substantial future losses, or a complete loss of the investments in the long-term, which may have a material adverse effect on our business, results of operations, liquidity and financial condition.

In order to manage the risk to our investments, we maintain an investment policy that, among other things, limits the amount that we may invest in any one issue or any single issuer and requires us to only invest in high credit quality securities to preserve liquidity.

Risks Relating to Our Business and Industry

*The foundation of our business is based upon the success of our aNK cells as a technology platform.

Our aNK platform and product candidates derived thereof, including genetically modified haNK, taNK, t ‑ haNK, ceNK and MSC product candidates, will require significant additional clinical testing before we can potentially seek regulatory approval and launch commercial sales.

Our business and future success depend on our ability to utilize our aNK cells as a technology platform, and to obtain regulatory approval for one or more product candidates derived from it, and then successfully commercialize our product candidates addressing numerous therapeutic areas.

Our aNK platform and our haNK, taNK, t‑haNK, ceNK and MSC product candidates are in varying stages of development and may never become commercialized.

All of our product candidates developed from our technology platform will require additional clinical and non-clinical development, regulatory review and approval in multiple jurisdictions, substantial investment, access to sufficient commercial manufacturing capacity and significant marketing efforts before they can be successfully commercialized.

Because all of our product candidates are based on the same core aNK technology, if any of our product candidates encounter safety or efficacy problems, developmental delays or regulatory issues or other problems, these could impact the development plans for our other product candidates.

*Utilizing haNK, taNK, t ‑ haNK and ceNK cells represents a novel approach to immunotherapy, including cancer treatment, and we must overcome significant challenges in order to successfully develop, commercialize and manufacture our product candidates.

We have concentrated our research and development efforts on utilizing aNK cells as an immunotherapy platform and genetically modified aNK cells as product candidates based on this platform.

We believe that our product candidates represent a novel approach to immunotherapy, including cancer treatment.

Advancing this novel immunotherapy creates significant challenges for us, including:

educating medical personnel regarding the potential side effect profile of our cells;

training a sufficient number of medical personnel how to properly administer our cells;

enrolling sufficient numbers of patients in clinical trials;

developing a reliable, safe and effective means of genetically modifying our cells;

manufacturing our cells on a large scale and in a cost-effective manner;

submitting applications for and obtaining regulatory approval, as the FDA and other regulatory authorities have limited experience with commercial development of immunotherapies for cancer and viral associated infectious diseases;

establishing sales and marketing capabilities, as well as developing a manufacturing process and distribution network to support the commercialization of any approved products.

We must be able to overcome these challenges in order for us to successfully develop, commercialize and manufacture our product candidates utilizing haNK, taNK, t‑haNK and ceNK cells.

*Even if we successfully develop and commercialize our haNK product candidate for Merkel cell carcinoma, we may not be successful in developing and commercializing our other product candidates, and our commercial opportunities may be limited.

We believe that our ability to realize the full value of our aNK platform will depend on our ability to successfully develop and commercialize haNK and our other product candidates in a wider range of indications.

We are simultaneously pursuing preclinical and clinical development of a number of product candidates spanning several types of cancers.

For example, we are devoting substantial resources toward the development of haNK and t‑haNK product candidates as combination therapies with commercially approved monoclonal antibodies and late-stage product candidates for solid tumors such as breast, pancreatic, lung, head and neck and hematologic malignancies such as diffuse large B‑cell lymphoma, or DLBCL, and serious viral diseases such as COVID‑19.

Even if we are successful in continuing to build our pipeline of product candidates based on our technology platform, obtaining regulatory approvals and commercializing any approved product candidates will require substantial additional funding beyond our existing cash and cash equivalents and marketable debt securities, and are prone to numerous risks of failure.

Investment in biopharmaceutical product development involves significant risks that any product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile to the satisfaction of regulatory authorities, gain regulatory approval or become commercially viable.

We cannot assure you that we will be able to successfully advance any product candidates through the development process.

Our research programs may initially show promise in identifying product candidates, but ultimately fail to yield product candidates for clinical development or commercialization for many reasons, including the following:

our product candidates may not succeed in preclinical or clinical testing due to failing to generate enough data to support the initiation or continuation of clinical trials or due to lack of patient enrollment in clinical trials;

a product candidate may be shown to have harmful side effects or other characteristics in larger scale clinical studies that indicate it is unlikely to meet applicable regulatory criteria;

competitors may develop alternatives that render our product candidates obsolete or less attractive;

we may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates from our technology platform;

product candidates we develop may nevertheless be covered by third parties’ patents or other exclusive rights;

the market for a product candidate may change during our program so that the continued development of that product candidate is no longer reasonable;

a product candidate may not be capable of being manufactured in commercial quantities at an acceptable cost, or at all;

a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.

If any of these events occur, we may be forced to abandon our development efforts for a product candidate or the entire platform, or we may not be able to identify, discover, develop or commercialize additional product candidates, which would have a material adverse effect on our business and could potentially cause us to cease operations.

*We may not be able to file INDs to commence additional clinical trials on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed in a timely manner, or at all.

Prior to commencing clinical trials in the U.S.

for any of our product candidates, we may be required to have an allowed IND for each product candidate.

As of the date of this filing, we have numerous INDs for clinical trials that have been authorized in the U.S.

We are required to file additional INDs prior to initiating our planned clinical trials.

Submission of an IND may not result in the FDA allowing further clinical trials to begin and, once begun, issues may arise that will require us to suspend or terminate such clinical trials.

Additionally, even if relevant regulatory authorities agree with the design and implementation of the clinical trials set forth in an IND or clinical trial application, these regulatory authorities may change their requirements in the future.

The fact that we are pursuing novel technologies may also exacerbate these risks with respect to our product candidates, and as a result, we may not meet our anticipated clinical development timelines.

* Our plans to support the Joint COVID ‑ 19 Collaboration by moving some of our current manufacturing facilities or repurposing personnel may cause delays in our oncology trials.

We have prepared one of our GMP manufacturing facilities previously used to manufacture product for our oncology trials to manufacture and produce a COVID‑19 vaccine candidate and we are in the process of readying a new, well-equipped location to manufacture and produce clinical products for our oncology trials.

We cannot assure you that we will be able to achieve GMP qualifications for this new manufacturing facility, or the extent of costs or delays in timing to do so.

Failure to achieve GMP status could adversely impact our ability to successfully develop our oncology product candidates.

In addition, we have repurposed some of our manufacturing facility in Culver City, California, and personnel to support the Joint COVD‑19 Collaboration Agreement.

While we believe we have sufficient product in our inventory to not incur any disruptions in our current or planned oncology trials, we cannot be certain that we will not experience any unforeseen circumstances that may cause delays in our ability to manufacture sufficient product for our current or planned trials.

If this occurs, such trials could be significantly delayed which would have an adverse effect on our business, financial condition, results of operations and prospects.

*Our efforts regarding the Joint COVID‑19 Collaboration may be difficult to integrate into our current operations and will require additional personnel who will require training which may cause some of our employees to reallocate their time from our current operations or manufacturing duties which could in turn cause delays in clinical supply of our products or trials.

After signing the binding term sheet regarding the Joint COVID‑19 Collaboration in May 2020, we have made significant investments related to the development and manufacture of our COVID‑19 product candidates.

We have repurposed some of our personnel to support our QUILT‑COVID‑19‑MSC program and have repurposed some of our personnel overseeing quality of our oncology products to support the Joint COVID‑19 Collaboration.

We also plan to hire additional staff to support the Joint COVID‑19 Collaboration, which will increase our expenses.

Although we do not believe the Joint COVID‑19 collaboration will have a material impact on our current oncology trials in the near term, if our current personnel fail to remain focused on our oncology drug candidates, or new personnel that we plan to hire to support the Joint COVID‑19 Collaboration require extensive training, our current oncology operations may be adversely impacted.

*We face significant competition in the biopharmaceutical industry, and many of our competitors have substantially greater experience and resources than we have.

Even if our aNK platform products prove successful, we might not be able to remain competitive because of the rapid pace of technological development in the biopharmaceutical field.

Our haNK, taNK, t‑haNK and ceNK product candidates compete with other cell and molecule-based immunotherapy approaches using or targeting natural killer cells, T‑cells and dendritic cells.

Competitors focused on CAR‑T related treatment approaches include AbbVie Inc., Atara Biotherapeutics, Inc., Precigen Corporation, Inc., Allogene Therapeutics, Inc., Bristol‑Myers Squibb Company, Beijing Immunochina Pharmaceuticals Co., Ltd., Cellular Biomedicine Group, Inc., iCell Gene Therapeutics LLC, JW Therapeutics Co., Ltd., Amgen, Inc., Leucid Bio Ltd., Bellicum Pharmaceuticals, Inc., Medisix Therapeutics Pte Ltd., Bluebird Bio, Inc., Mesoblast Ltd., Calibr/Scripps Research, Mustang Bio, Inc., Carina Biotech, Inc., CARsgen Therapeutics, CRISPR Therapeutics, Inc., GEMoaB Monoclonals GmbH, Nanjing Legend Biotechnology Co., Ltd, Cartherics Pty Ltd, Novartis AG, Pfizer, Inc., Cellectis SA, Poseida Therapeutics, Inc., Prepromene Bio, Inc., Celularity, Inc., Servier Laboratories, Sorrento Therapeutics, Inc., Celyad SA, Takeda Pharmaceutical Company Limited, Fortress Biotech, Inc., TC BioPharm Ltd., Tessa Therapeutics Pte Ltd, Gilead Sciences, Inc., Tmunity Therapeutics, Inc., Transposagen Biopharmaceuticals, Inc., Humanigen, Inc., Unum Therapeutics, Inc., Immune Therapeutics, Inc., and Xyphos, Inc.

Competitor companies focused on other T‑cell based approaches include Adaptimmune Ltd., Adicet Bio, Inc., Autolus Therapeutics, plc, Cell Medica Limited, Eureka Therapeutics, Inc., Formula Pharmaceuticals, Inc., GlaxoSmithKline plc., Green Cross LabCell Corp., Immatics Biotechnologies GmbH, Immunocore Limited, Iovance Biotherapeutics, Inc., Kiadis Pharma Netherlands B.V., Lion TCR Pte Ltd., MolMed, S.p.A., Precision Biosciences, Inc., Janssen Pharmaceuticals, Inc., Noile‑Immune Biotech, Inc., Anixa Biosciences, Inc., Beam Therapeutics Inc., BioNTech SE, Cartesian Therapeutics, Inc., Marker Therapeutics, Inc., Refuge Biotechnologies, Inc., Repertoire Immune Medicines, Inc., Sensei Biotherapeutics, Inc., Senti Biosciences, Inc., TCR² Therapeutics Inc., TScan Therapeutics, Inc., and Takara Bio, Inc.

Competitor companies focused on dendritic cell based approaches include Argos Therapeutics, Inc., Biovest International, Inc., ImmunoCellular Therapeutics, Ltd., Merck & Co, Inc./Immune Design, Inc., Inovio Pharmaceuticals, Inc., Precigen Corporation, Inc., Medigene AG, and Northwest Biotherapeutics, Inc.

Competitor companies focused on natural killer cell based approaches include Celularity, Inc., Kiadis Pharma Netherlands B.V./CytoSen Therapeutics, Inc., Dragonfly Therapeutics, Inc., Fate Therapeutics, Inc., Gamida Cell, Ltd., Nkarta Therapeutics, Inc., Onkimmune Ltd., NKMax America, Artiva Biotherapeutics, HebeCell Corp., Vycellix, Inc., oNKo ‑innate Pty Ltd., Takeda Pharmaceutical Company Limited, and Ziopharm Oncology, Inc.

Competitor companies focused on large molecule immunotherapy approaches include Cytomx Therapeutics, Inc., Innate Pharma SA, and Sorrento Therapeutics, Inc.

Other potential immunotherapy competitors include Affimed GmbH, Agios Pharmaceuticals, Inc., Codiak Biosciences, Glycostem Therapeutics BV, Triumvira Immunologics, Century Therapeutics, Incysus Therapeutics, Inc., GammaDelta Therapeutics Ltd., Lyell Immunopharma, Inc., and GT Biopharma, Inc.

There are currently two approved T‑cell based treatments which are marketed by Novartis AG and Gilead Sciences/Kite Pharma.

There is currently one approved dendritic cell-based cancer vaccine which is marketed by Dendron Pharmaceuticals, LLC for the treatment of metastatic castration resistant prostate cancer.

Competitor companies focused on COVID‑19 cell therapy currently include Athersys, Inc./Healios K.K., Capricor Therapeutics, Inc., CAR‑T (Shanghai) Biotechnology, Cellavita Pesquisa Científica Ltda, Cellenkos, Inc., Cellular Biomedicine Group, Inc., Celularity, Inc., Sorrento Therapeutics, Inc., Chinese Academy of Sciences, Chongqing Sidemu Biotechnology Technology/ImmunCyte Life Sciences, Inc., Enlivex Therapeutics Ltd, Green Cross LabCell Corp., Hope Biosciences, Mesoblast Limited, Orbsen Therapeutics Limited, Pluristem Therapeutics, Inc., Rigshospitalet, Tianhe Stem Cell Biotechnologies Inc., University of Minnesota/Fate Therapeutics, Inc., and Xinjiang Medical University.

In addition, a very large number of companies, government agencies and academic centers around the world are developing COVID‑19 vaccines, and many of these entities are in more advanced stages of development than ImmunityBio, including some that have started Phase II and/or III clinical trials.

Even if ImmunityBio’s COVID‑19 vaccine candidate is ultimately approved for marketing, the value of our profit-sharing opportunity would be adversely impacted if other COVID‑19 vaccines are approved earlier or show better efficacy or safety than ImmunityBio’s COVID‑19 vaccine candidate.

Many of our current or potential competitors have greater financial and other resources, larger research and development staffs, and more experienced capabilities in researching, developing and testing products than we do.

Many of these companies also have more experience in conducting clinical trials, obtaining FDA and other regulatory approvals, and manufacturing, marketing and distributing therapeutic products.

Smaller or clinical-stage companies like us may successfully compete by establishing collaborative relationships with larger pharmaceutical companies or academic institutions.

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

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

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, or are less expensive than any products that we may develop.

Furthermore, currently approved products could be discovered to have application for treatment of cancer and other diseases, which could give such products significant regulatory and market timing advantages over any of our product candidates.

In addition, large pharmaceutical companies or other companies with greater resources or experience than us may choose to forgo therapy opportunities that would have otherwise been complementary to our product development and collaboration plans.

Our competitors may succeed in developing, obtaining patent protection for, or commercializing their products more rapidly than us, which could result in our competitors establishing a strong market position before we are able to enter the market.

A competing company developing or acquiring rights to a more effective therapeutic product for the same diseases targeted by us, or one that offers significantly lower costs of treatment could render our products noncompetitive or obsolete.

We may not be successful in marketing against competitors any product candidates we may develop.

Our business plan involves the creation of a complex integrated ecosystem capable of addressing a wide range of indications.

As a result, our future success depends on our ability to prioritize among many different opportunities.

We do not have sufficient resources to pursue development of all or even a substantial portion of the potential opportunities that we believe will be afforded to us by our planned integrated ecosystem.

Because we have limited resources and access to capital to fund our operations, our management must make significant prioritization decisions as to which product candidates to pursue and how much of our resources to allocate to each.

Our management has broad discretion to suspend, scale down, or discontinue any or all of these development efforts, or to initiate new programs to treat other diseases.

If we select and commit resources to opportunities that we are unable to successfully develop, or we forego more promising opportunities, our business, financial condition and results of operations will be adversely affected.

* We plan to develop our product candidates and potentially other programs in combination with other commercially available therapies or therapies we , or an affiliate of ours, have in development, which exposes us to additional risks.

We do not know whether our attempts to use our product candidates in combination will be safe or effective .

We intend to develop cryopreserved PD‑L1.t‑haNK, haNK, and potentially other programs in combination with one or more currently approved cancer therapies or therapies in development.

For Merkel cell carcinoma, we plan to evaluate haNK in combination with N‑803 and avelumab.

For pancreatic cancer, TNBC, and breast cancer indications, we plan to evaluate PD‑L1.t‑haNK in combination with N‑803 and aldoxorubicin.

For NSCLC indications, we plan to evaluate PD‑L1.t‑haNK in combination with N‑803 and a checkpoint inhibitor.

Patients may not be able to tolerate any of our other product candidates in combination with any other therapies or dosing of our product candidates in combination with other therapies may have serious or unexpected adverse events.

Furthermore, we will be required to show with substantial evidence that the combination of drugs when used together are more effective than each of the individual drugs used separately.

We can provide no assurance that we can establish that any of our product candidates, when used in combination with other drugs, will be more effective than each individual drug when used alone.

We may also evaluate our product candidates in combination with one or more other cancer therapies that have not yet been approved for marketing by the FDA, the European Medicines Agency, or EMA, or comparable foreign regulatory authorities.

We will not be able to market and sell any product candidate in combination with any such unapproved cancer therapies that do not ultimately obtain marketing approval.

If the FDA, EMA or other comparable foreign regulatory authorities do not approve or revoke their approval of these other therapies, or if safety, efficacy, purity, potency, commercial adoption, manufacturing or supply issues arise with the therapies we choose to evaluate in combination with any of our product candidates, we may be unable to obtain approval of or successfully market any one or all of the product candidates we develop.

Additionally, if the third-party providers of therapies or therapies in development used in combination with our product candidates are unable to produce sufficient quantities for clinical trials or for commercialization of our product candidates, or if the cost of combination therapies are prohibitive, our development and commercialization efforts would be impaired, which would have an adverse effect on our business, financial condition, results of operations and growth prospects.

If clinical trial collaboration and supply agreement terminates or if we cannot negotiate favorable terms for combination therapies, our combination therapy development plans could be delayed or terminated, and the cost to us to conduct such trials may significantly increase.

*Clinical development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future clinical trial results.

We may encounter substantial delays in clinical trials, or may not be able to conduct or complete clinical trials on the expected timelines, if at all.

If our preclinical studies and clinical trials are not sufficient to support regulatory approval of any of our product candidates, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development of such product candidate.

It is impossible to predict when or if any of our product candidates and therapies will prove safe, effective, or potent in humans or will receive regulatory approval.

Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete extensive preclinical studies and clinical trials to demonstrate the safety, efficacy or potency of our product candidates in humans.

A failure of one or more clinical trials can occur at any stage of testing.

The outcome of early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results.

Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their product candidates.

Our pre-clinical studies and future clinical trials may not be successful.

We cannot be certain that our planned clinical trials will be sufficient to support regulatory approval of our product candidates.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain.

Human clinical trials are expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements.

Failure or delay can occur at any time during the clinical trial process.

We may experience delays in obtaining the FDA’s authorization to initiate clinical trials under future INDs, completing ongoing preclinical and clinical studies of our other future product candidates, and initiating our planned preclinical studies and clinical trials.

Additionally, we cannot be certain that preclinical studies or clinical trials for our product candidates will begin on time, not require redesign, enroll an adequate number of research subjects or patients on time, or be completed on schedule, if at all.

Clinical trials can be delayed or terminated for a variety of reasons, including delays or failures related to:

the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical trials;

the FDA or comparable foreign regulatory authorities disagreeing with our tissue-agnostic anti-tumor development strategy;

delays in obtaining regulatory approval to commence a clinical trial;

reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;

obtaining institutional review board, or IRB, approval at each clinical trial site;

recruiting an adequate number of suitable patients to participate in a clinical trial;

the number of patients required for clinical trials of our product candidates may be larger than we anticipate;

having subjects complete a clinical trial or return for post-treatment follow-up;

clinical trial sites deviating from clinical trial protocol or dropping out of a clinical trial;

addressing subject safety concerns that arise during the course of a clinical trial;

adding a sufficient number of clinical trial sites;

obtaining sufficient product supply of product candidates for use in preclinical studies or clinical trials from third-party suppliers.

We may experience numerous adverse or unforeseen events during, or as a result of, preclinical studies and clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including:

we may receive feedback from regulatory authorities that requires us to modify the design of our clinical trials, including additional procedures and contingency measures in response to the COVID‑19 pandemic or as required by clinical sites, IRB, or FDA;

clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon our research efforts for our other future product candidates;

clinical trials of our product candidates may not produce differentiated or clinically significant results across tumor types or indications;

the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of our clinical trials at a higher rate than we anticipate;

our third-party contractors may fail to comply with regulatory requirements, fail to maintain adequate quality controls or be unable to provide us with sufficient product supply to conduct and complete preclinical studies or clinical trials of our product candidates in a timely manner, or at all;

We or our investigators might have to suspend or terminate clinical trials of our product candidates for various reasons, including:

non-compliance with regulatory requirements, a finding that our product candidates have undesirable side effects or other unexpected characteristics or a finding that the participants are being exposed to unacceptable health risks;

the cost of clinical trials of our product candidates may be greater than we anticipate, for example, if we experience delays or challenges in identifying patients with the mutations required for our clinical trials, we may have to reimburse sites for genetic sequencing costs in order to encourage sequencing of additional patients;

the quality of our product candidates or other materials necessary to conduct preclinical studies or clinical trials of our product candidates may be insufficient or inadequate, and any transfer of manufacturing activities may require unforeseen manufacturing or formulation changes;

regulators may revise the requirements for approving our product candidates, or such requirements may not be as we anticipate;

future collaborators may conduct clinical trials in ways they view as advantageous to them but that are suboptimal for us.

We have commenced studies that may provide the basis for regulatory approval, but we have not sought or obtained FDA input on the trial design, number of patients that will be enrolled in the studies, or statistical analysis plan.

FDA may not accept the data generated from these studies and my reject any regulatory applications we submit with this data.

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only moderately positive or if there are safety concerns, our business and results of operations may be adversely affected and we may incur significant additional costs.

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

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

If we experience delays in the completion, or termination, of any preclinical study or clinical trial of our product candidates, the commercial prospects of our product candidates may be harmed, and our ability to generate revenues from any of these product candidates will be delayed or not realized at all.

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

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

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.

If one or more of our product candidates generally prove to be ineffective, unsafe or commercially unviable, our entire pipeline and platform would have little, if any, value, which would have a material and adverse effect on our business, financial condition, results of operations and prospects.

*Clinical drug development involves a lengthy and expensive process with an uncertain outcome, results of earlier studies and clinical trials may not be predictive of future clinical trial results, we may not be able to rely on the aNK and haNK phase I and II clinical trials data for our other product candidates, and our clinical trials may fail to adequately demonstrate substantial evidence of safety and efficacy of our product candidates.

The results of our clinical trials may not satisfy the requirements of the FDA or other comparable foreign regulatory authorities, and we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidate.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain.

A failure of one or more of our clinical trials can occur at any time during the clinical trial process.

The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials.

There is a high failure rate for product candidates proceeding through clinical trials, and product candidates in later stages of clinical trials may fail to show the required safety and efficacy despite having progressed through preclinical studies and initial clinical trials.

A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier clinical trials, and we cannot be certain that we will not face similar setbacks.

Even if our clinical trials are completed, the results may not be sufficient to support obtaining regulatory approval for our product candidates.

In addition, our strategy and anticipated timelines are predicated upon our ability to utilize the phase I and II clinical trial data for aNK, haNK, and t‑haNK observed to date to support our planned clinical trials for all of our product candidates, including our haNK and t‑haNK product candidates.

To date, we have several INDs for our haNK and t‑haNK product candidates, and we cannot offer assurances that the FDA will allow us to utilize the phase I and II aNK and haNK data to support other planned clinical trials or allow our anticipated INDs for (i) planned phase I or phase Ib/IIa clinical trials for our other product candidates, (ii) planned phase IIb/III clinical trials for our haNK and t‑haNK product candidates as potential combination therapies, or (iii) any other planned clinical trials, including registration studies.

We have in the past experienced delays in our ongoing clinical trials and we may experience additional delays in the future.

We do not know whether future clinical trials, if any, will begin on time, need to be redesigned, enroll an adequate number of patients on time or be completed on schedule, if at all.

Clinical trials can be delayed, suspended or terminated by us, regulatory authorities, clinical trial investigators, and ethics committees for a variety of reasons, including failure to:

generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation or continuation of clinical trials;

obtain regulatory authorization, or feedback on clinical trial design, to commence a clinical trial;

identify, recruit and train suitable clinical investigators;

reach agreement on acceptable terms with prospective Contract Research Organizations, or CROs, and clinical trial sites;

obtain and maintain IRB approval at each clinical trial site;

identify, recruit and enroll suitable patients to participate in a clinical trial;

have a sufficient number of patients complete a clinical trial or return for post-treatment follow-up;

ensure that our third-party contractors and clinical investigators comply with clinical trial protocols, comply with regulatory requirements, or meet their obligations to us in a timely manner;

address any patient safety concerns that arise during the course of a clinical trial;

address any conflicts with new or existing laws or regulations;

add a sufficient number of clinical trial sites;

timely manufacture sufficient quantities of product candidate for use in clinical trials;

raise sufficient capital to fund a clinical trial.

Patient enrollment is a significant factor in the timing of clinical trials and is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the clinical trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ or caregivers’ perceptions as to the potential advantages of the drug candidate being studied in relation to other available therapies, including any new drugs or treatments that may be approved for the indications we are investigating.

We could also encounter delays if a clinical trial is suspended or terminated by us, by the data safety monitoring board for such clinical trial or by the FDA or any other regulatory authority, or if the IRBs of the institutions in which such clinical trials are being conducted suspend or terminate the participation of their clinical investigators and sites subject to their review.

Such authorities may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements, including Good Clinical Practices, or GCPs, or our clinical protocols, inspection of the clinical trial operations or clinical trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

In addition, even if such clinical trials are successfully completed, we cannot guarantee that the FDA or foreign regulatory authorities will interpret the results as we do, and more trials could be required before we submit our product candidates for approval.

To the extent that the results of the trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, we may be required to expend significant resources, which may not be available to us, to conduct additional trials in support of potential approval of our product candidates.

Even if regulatory approval is secured for any of our product candidates, the terms of such approval may limit the scope and use of our product candidate, which may also limit its commercial potential.

If we experience delays in the completion of, or termination of, any clinical trial of our product candidates for any reason, the commercial prospects of our product candidates may 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.

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

* We use Immuno-Oncology Clinic, Inc., a related party, in some of our clinical trials which may expose us to significant regulatory risks.

If our data for this site is not sufficiently robust or if there are any data integrity issues, we may be required to repeat such studies or required to contract with other clinical trial sites, and our clinical development plans will be significantly delayed, and we will incur additional costs.

Many of our Phase I and II clinical trials for our haNK, PD‑L1.t‑haNK and other t‑haNK products have been conducted by Immuno-Oncology Clinic, Inc., which is a related party.

Relying on a related party clinical site to develop data that is used as the basis to support regulatory approval can expose us to significant regulatory risks.

For example, a study used to support regulatory approval that is conducted at a related party site can be rejected by the FDA if there are data integrity issues, or if there are significant good clinical practice violations at the site.

If any data integrity, or regulatory non-compliance issues occur during the study, we may not be able to use the data for our regulatory approval.

Furthermore, if the operations of the clinical site is disrupted or if the site experiences disruptions in its clinical supplies or resources, such as potential disruptions due to COVID‑19, then we may be required to suspend or terminate the study at this site, and we may need to contract with other clinical sites for the study, which will delay our clinical development and regulatory approval for the product candidate.

Moreover, our business may be implicated if the site violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.

There is also the possibility that we may experience delays with obtaining approvals for our IND applications, BLA s , and/or NDA s .

We have formed, and may in the future form or seek, strategic alliances or enter into additional licensing arrangements in the future, and we may not real i z e t h e b e n e fits of such alliances or li c e n s i ng ar r a n gem e n t s .

We have formed, and may in the future fo r m or seek, str a t e gic a l li a nces, c rea t e joint v e ntures or co l l a bo r at i ons or e nter in t o additio n al licensing arrangements with third a n d relat e d parties that we believe will complement or augment our dev e lopm e nt and com m erc i a l iz a tion effor t s with respe c t to o u r product candidates and any future product candidates that we may develop.

For example, we have entered into an agreement w h er e by Vir a cta granted to us exclusive world-wide rights to Viracta’s Phase II drug candidate, VRx-3996, for use in combination with our plat f orm of NK cell therapies.

However, i f Vir a cta f a i l s to raise suffic i ent c a pit a l to comp l e te t heir pivo t al P hase II t ria l , if the i r t rial i s u n s uc c e s sful, or if our future clini c al trial of NK cell therapy in combination with VRx-3996 fails, the value of the Vi r acta license would be a d ver s ely affected.

Any of these relationships may require us to incur non-recurring and other charg e s, increase our near and long-term expenditur e s, issue s e curi t ies that dilute our existing stockholders or disrupt our management and business.

In addition, we face signif i cant competition in seeki n g appropriate st r a tegic partners and the negotiation process is time-consuming and complex.

Moreover, we may not be suc c essful in our efforts to estab l ish a strategic partnership or other alternative arrangements for our product candi d a t e s because they may be deemed to be at too early of a stage of development f or collaborative ef f ort and third parties may not view our product candidates as having t h e requisite po t ential to demonstrate safety a nd e ffic a cy.

If we license products o r acquire busine s ses, we may not be able to r e alize the benefit of such t r ansactions if we are unable to suc c essfully in t e gra t e them wi t h o u r existing operations and company culture.

We cannot be certain that, following a strategic transaction or l i cense, we will a chieve the revenue or sp e c if i c net in c ome th a t j us t ifi e s such transa c t i on.

Any del a ys in en t e ring into new s t rat e gic partnership agreements related to o u r product candidates could delay the development and commercialization of our product c a ndidates in certain geographies for certain indications, which would h a rm our b u siness prospects, financial condition and results of operations.

O u r ma nu facturi n g fac i li t i e s may be n e gat i ve l y impacted by the ongoing COVID-19 pa n demic.

The COVID ‑ 19 pandemic, including any actions we have taken in response, may disrupt our internal operations, including by heightening the risk that a sig n ificant portion of our workforce could suffer illness or othe r w ise not be permitted or be unable to work, a n d required that certain of our employees work remotely, which has heightened certain risks, including those relat e d to cybersecurity and int e rnal controls.

Additionally the COVID ‑ 19 pandemic has impacted, and may conti n ue to impact, our office and manufa c turing lo c a t i ons, a s w e ll as our analytica l , process developme n t, a nd tr a nsit i on a l resea r ch teams, including through the effects of facility closures, reductions in o pe r ating h ours and other social distancing e fforts.

For example, if even a small number of our employees in our working clusters related to manufacturing, analytical, process development, or translational r e s e ar c h, t e s t e d p o sitive for COVID ‑ 19, it would require us to temporarily close a number of our offic e s or manufacturing fa c il i t i es a n d t e mpora r ily suspend operations in order to con d uct a deep cle a n of the facilities in order to ensure the safety of our employees.

Additionall y , we cannot predi c t wh e th e r th e s e c ondit i ons and concerns will continue or whether we will experience more significant or frequent disruptions i n the fu t ure, in c lud i ng the complete closure of one or more of our facilities.

Our fai l ure to comp l y with sta t e, nation a l and/or international data p r otection laws and regulatio n s could lead to government enfo r c e ment actions and significant penalties against us, and adve r sely impact our operating results.

There are numerous laws and legislative and regu l a t ory in i ti a tiv e s at th e federal and state levels addressing privacy and security concerns, and some state privacy laws apply more broadly than the Health Insuran c e Portability and Accountability Act (“HIPAA ” ) a n d associated re g ulations.

For example, California recently enacted legislation—the Cali f ornia Consumer Privacy Act (“CCPA”)—which went into effect on January 1, 2020.

The CCPA, among other things, creates new data privacy and secur i ty obligations for covered companies and provides new privacy rights to California con s umers, including the right to opt out of certain disclosures of their informatio n .

The CCPA also provides for c i vil pen a lt i es a s well a s a priv a te right of action with statuto r y damages for certain data br e a c hes, ther e by po t ent i al l y i ncre a sing r i sks asso c ia t ed with a data breach.

Although the law includ e s limited exceptions, including for certain information collected as part of clinic a l tri a ls a s spec i fi e d in the law, it may regulate or impact our proce s sing of personal information depending on the context.

Additionally, a new privacy law, the California Privacy Rights Act (“CPRA”), was approved by California voters in November 2020.

The CPRA significantly modified the CCPA, which may require us to modify our practices and policies and may further increase our compliance costs and potential liability.

To the extent these state laws as well as other federal and state privacy laws, including new laws and changes in existing laws, apply to our business and operations, our compliance costs and potential liability with respect to personal information we collect could expose us to great liability and increase compliance costs.

There are also various laws and regulations in other jurisdictions rel a ting to privacy and security.

For example, European Uni o n (“ E U”) member states and other foreign jurisdictions, including Switzerland, have ado p ted data protection laws and r e gulations which impose signific a nt comp l i a nce o b ligations on us.

Moreover, the EU Data Protection Directive, which formerly governed the coll e ction, process i ng and other use of personal health or other data in the EU, was replaced with t h e EU General Data Protection Regulation ( “ GDPR”) in May 2018.

The GDPR, which is wid e -ranging in scope and applies extraterritorially, imposes sev e ral requirements relating to the consent of the individuals to whom the personal d a ta r e la t e s, the infor m a t ion provided to such individuals, the security and confidentiality of the personal data, data breach n o tification, the adopti o n of appropriate privacy g o vernance, including policies, p r ocedures, training and audits, and the use of t h ird-party processors in connection with the processing of personal data.

The GDPR also imposes strict rules on the transfer of personal data out of the EU, including to the United States, provides an enforcement authority and imposes large pe n a lties for noncompliance, including the potential for fines of up to €20 million or 4% of the ann u al global r e venues of the n o ncompliant entity, whichever is greater.

The GDPR requirements apply not only to third-party transactions, but also to transfers of information between us and our subsidiarie s , including employee infor m at i on.

Complying with these numerous, complex and o f ten changing regulations is expensi v e and difficult, and f a ilure to c omply with any pri v acy laws or data security laws or any security incident or breach involving the misapp r opriation, loss or other unauthorized processing, use or disclosure o f sensitive or confid e nti a l pat i ent, c onsumer or other personal i n formation, whether by us, one of our CROs or business associates or another third party, could adversely affect our business, financial condition and r e sults of operations, including but not l im i ted to:

inv e s t iga t ion cost s ;

material fines and penalties;

compensatory, special, punitive and statutory damages;

litigati o n;

consent orders regarding our pri v a c y and secur i ty pra c ti c es;

requireme n t s that we provide notices, credit monitoring s e rvices and/or credit restorat i on services or other relevant services to impacted i n dividu a ls;

adverse actions against o u r licenses to do business;

repu t ational damage;

a n d injunctive rel i ef.

T he r e c e nt imp l em e nta t ion of the CCPA and GDPR has incr e a s ed our responsibility and liability in r e lation to personal data that we process, including in clinical trials, and we may in the future be r e quired to put in place a ddition a l m e c hanisms to e nsure c ompli a n c e with the CCPA, G DPR and other applicable laws and r e gulations, which could d i vert m a nagement’s attention and increase our cost of doing bu s iness.

In addition, new regulation or leg i slative actions regar d ing data privacy a n d security (together with applicable industry standards) may inc r ease our costs of d o ing business.

In this regard, we expect that there will continue to be new proposed laws, regulations and industry s t andards relating to privacy and data protection in the United States, the EU and other jurisdiction s , and we cannot determine the imp a ct such future l a ws, regu l a t ions and standards may have on our business.

We cannot assure you that our CROs or other third-party service providers with access to our or our customers’, suppliers’, tr i al patients’ and employees’ personally identifiable and other sensitive o r confide n tial information in relation to which we are responsible will not breach contractual o b ligations imposed by us, or that they w ill not experience data security breache s , which could have a corresponding effect on our business, including p u tti n g us in breach of our obligations under privacy laws and r e gulatio n s and/or which could in turn adve r s ely affect our bus i ness, results of operations and financial condition.

We cannot assure you that our contractual measures a nd our own privacy and security-related safeguards will p r otect us from the risks associ a t e d with the t hird-par t y processing, use, storage and tr a ns m iss i on of su c h i nforma t ion.

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

We will be heavily dependent on our senior management, particularly Dr.

Soon-Shiong, our E xecutive C hairman, and a loss of a member of our senior manageme n t t e a m in t h e fu t u r e , e ven if only temporary, c ould harm o u r busines s .

If we lose members of our senior manageme n t for a short or an extended time, we may not be able to find appropriate r e placemen t s on a t i m e ly b a s i s, and our business co u l d be adversely affec t ed.

Our existing operations and our future development depend to a significant extent upon the performance and active participation of certain key individuals, particularly Dr.

Soon-Shiong, our Executive Chairman.

Soon-Shiong focuses heavily on our matters and is highly active in our management, he do e s devote a si g nificant amount of his time to a number of different endeavors and companies, including NantHealth, Inc., Nan t Media Holdings, LLC (which operates t h e Los Angeles Times and the San Diego Union-Tribune) and NantWorks, which is a collection o f multiple companies in the healthcare and technology space.

The r i sks related to our dependence upon Dr.

Soon-Shiong are particularly acute g i ven his ownership percentage, the commerc i al and other relationships t h at we have with entities aff i li a t e d with hi m , h i s role in our company and his pub l ic reputati o n.

We may also be dependent on additional funding from Dr.

Soon-Shiong and his aff i liates, which may not be available when needed and which he is under no obligation to p r o vide.

If we were to lose the services of Dr.

Soon-Shiong for a short or an extended time, for any reason, including, for example, due to the contraction of COVID ‑ 19, we may not be able to find appropriate replace m ents on a t i me l y b a s i s and our financial condition and results of operations could be materially adversely affected.

Competition for qualified personnel in the biotechnology and pharmaceuticals industry is intense due to the limited number of i ndividuals who possess the skills and experience required.

To induce valuable emp l oyees to remain at our company, in addition to salary and cash incentives, we have provided, and plan to contin u e providing, e quity in c e ntive a w ards that v e st o ver tim e .

The value to employees of equity incentive awards that vest over time may be significantly affected by movements in our stock price that are beyond our control, and may at any time be insufficient to counteract more luc r ative offers from other companies.

Despite our e ffor t s to ret a in valu a ble e m ploye e s, me m be r s of our manageme n t , scientific and d e vel o pment t ea m s m a y ter m ina t e the i r e mploy m ent with us on short notice.

We face sign i ficant competition for employee s , particularly scientific per s onnel, from other biopharmaceutical companies, which include both publicly traded and privately held companies, and we may not b e able to hire n e w em p l oyees quickly enough to meet our nee d s.

We do not have employment agreements with our key employees and all of o u r employees a r e hired on an “ a t-wi l l” basis, which means that any of our employees could leave our employment at any time, with or without notice.

We do not maintain “key m an ” in s u r a n c e p o l i c i e s o n the l i v e s o f th e s e individuals or the lives of any of our other employees.

We may not be able t o a ttr a c t and re t a in quality personnel on ac c ep t a ble t e rms, or a t a l l, which may cause our business a n d operating results to suffer.

We will need to grow the size and capabili t ies of our organization, and we may experie n ce difficulties in managing this growth.

Our operations will be dependent u p on the s e rv i ces of our exe c ut i ves a nd our employees who are en g a g e d in research and develop m en t .

The loss of the services of our executive officers or s e nior research personnel could delay our product development programs a n d our r e search a nd development efforts.

In order to develop our business in accordance with our business p l an, we will have to hire a dditional qualified personnel, including in the areas of resea r ch, m a nufa c turing, c lin i cal t ria l s m a nagement, regulatory affairs, and sales and marketing.

We are continuing our efforts to r e cruit and hire the necessary employees to support our planned operations in the near term.

However, competition for quali f ied em p l oyees among com p ani e s in the biotechnology and biopharmaceutical i ndustry is intense, and no assur a nce can be given that we will be able att r act, hire, retain and motivate the highly skilled employees that we need.

Future growth will impose significant added responsibilities on members of management, includi n g:

i dentifying, recruiting, integrating, mai n t a in i ng, and m otiv a ting additional employees;

m anaging our internal develop m ent efforts effectively, including the clinical and FDA rev i ew process for our product candidat e s , wh i l e complying with our contractual obligations to contractors and other third parties;

i mproving our operational, financial and management controls, re p o r ting systems, and procedures.

Our future financial performance and our ability to commercialize our product c a ndidates will depend, in part, on our ability t o effectively manage any future growth, and our management may also have to divert a disproportionate amount of our atte n t ion away from day-to-day activit i es i n ord e r to devote a substan t ial amount of time to manag i ng these growth activities.

We currently rely, and for the foreseeable future we exp e ct to re l y, in substan t i a l part on certain independent organizations, advisors and c onsultants to provide certain services.

There can be no a s surance that the services of these indep e ndent organizations, a dvisors and consult a nts will continue to b e ava i lab l e to us on a t i me l y b a s i s when n e e d ed, or that we can find q ualified replacemen t s.

In addition, if we are unable to ef f ectively manage our o u tsourced activities or if the quality, compliance or accuracy of the services provided by c o nsultants is compromised for any reason, our cl i nic a l tri a ls may be extended, delayed, or terminated, and we may not be able to obtain regulato r y approval of o ur product candidates or otherwise advance our b u siness.

There can be no assurance th a t we wi l l be a ble to m a nage our e xist i ng consultants or find oth e r competent outside contra c tors a nd consultants on economically reasonab l e terms, if at all.

If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to su cc e s sfully implem e nt the t a sks necessary to further develop and commercialize our p r oduct candidates and, accordi n gl y , may not achieve our res e arch, d e ve l opmen t , and c om m erc i a l iz a tion goals on a timely b a s i s, or at a ll.

If we engage in future acquis i tions or strate g i c partne r ships, this may increase our capital requirements, dilute our stockhol de r s , c a u s e u s t o i n c u r debt or assume contingent liabilities, and subject us to oth e r risk s .

We may evaluate various acqui s itions and strategic par t nerships, including licensing or acqu i ring complementary products, inte l lectual property rights, technologies, or business e s.

Any potential acquisition or strategic partnership may ent a il numerous risks, including:

i ncreased operating expenses and cash requirements;

t he assumption of additional indebtedness or c o ntingent l iab i li t i e s;

t he issuance of our equity securities;

a ssimilati o n of operation s , intellectual property a n d products of an acquired compa n y or p r oduct, including d i fficulties associ a ted with integrating new personnel;

t he diversion of our managem e nt’s attention from our existing product programs a nd initiatives in pursuing such a strategic m e rger or acquisition;

retention of key employees, the loss of k e y personnel, and uncert a inties in our ability to mai n tain key business relationship s ;

r i s ks a nd un c er t a in t ies asso c ia t ed w i th t h e other pa r ty to such a transaction, inc l uding the prospects of that party and their existing products or product candidates and regulatory approvals;

our inability to generate revenues from acquired technology and/or products sufficient to meet our objectives in undertaking t he acquisition or even to offset the associated acquisition and maintenance costs.

Depending on the size and nat u r e of future strategic acquisitions, we may acquire assets or busine s ses that require us to raise a ddit i onal c a pit a l or to o p erate or manage businesses in which we have limited experience.

Mak i ng larger acquisitions that require us to raise additional capital to fund the acquisition will expo s e us to the risks associated with capital raising activities.

Acquiring and t h ere a fter operating larger new busin e s s e s w i ll a l so increase our management, operat i ng and reporting costs and burdens.

In addition, if we undertake acquisitions, we may issue di l utive s e curiti e s, a ssume or incur debt o b ligations, incur large one- t ime expenses and acquire int a ngible assets that co u l d res u lt in significant future a m ort i za t ion expense.

Moreover, we may not be able to locate suitable acquisition opportunities and this inability could impair our ability to grow o r ob t ain a c c e ss t o technology or products that m a y be important to the development of our business.

We may seek orphan drug status or B reakthrough T herapy designation for one or more of our product candidates, but even if either is granted, we may be unable to maintain any b e nefits associated with B reakthrough T h erapy designation or orphan drug status, including market exc l u s i v i t y.

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a ra r e disease or cond i tion or for which there is no r easonable expectation that the cost of developi n g and making ava i lable in the U.S.

a drug or biologic for a disease or c ondition will be recovered from sales in the U.S.

for that drug or biologic.

If a product that has orphan drug designation s ubsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan produ c t exclusivity, which means that the FDA may not a p p r o ve any other applications, including a full BLA to market the same drug or biologic for the same indication for seven y e ar s , ex c e pt in lim i ted c i rcumst a nc e s, such as a showing of clinical s uperiority to the product with orphan drug exclusivi t y.

In 2012, the FDA est a blished a Breakthrough The r apy d esignation, which is intended to expedite the development and review of products that treat serious or life-threatening conditions.

We may seek orphan drug status for one or more of our product cand i dates, but exclusive marketing rights in the U.S.

may be lo s t if we seek approval for an indication broader than the orphan d e signated indicat i on and m a y be lost if the FDA l a t e r d e t e rmin e s th a t the requ e st f o r designation was materially defective or if we are unable to assure suffi c i e nt qu a nti t i e s of the p r o duct to meet the needs of patients with the rare disease or condition.

In addition, we may seek B reakthrough T herapy d e signati o n for o n e or more of our product candidates, but there can be no assurance th a t we wi l l rec e ive such designation.

We may b e come i n v olv e d i n securit i es l it i gation or stockholder derivative l it i gation i n conn e c t ion wi t h the merger with Im m u ni t yBio, and this could divert the attention of our ma n agement and harm our bus i n e s s , and i n s u rance c ov e rage may not be s u ffi c ie n t to cov e r all r e l ated costs and damages.

Securities litigation o r stockho l der derivative litigation frequently follows the annou n cement of certain significant business t rans a c tions, such as the s a l e of a business division or announcement of a bu s iness combination transaction.

We are involved in this type of litigation in c o n nection with the merger with ImmunityBio, and we may become involved in this type of litigation in the future.

Litigation often is expensive and dive rt s management’s attention and reso u r ces, which could adversely affect our business and the combined company.

We e x pect to rely on third pa r ties to p e rfo r m many e ssential s e r v i c es for any products that we commerci al i z e , i n c l u d i n g s e r v i c es r e lat e d to distribution, gove r nme n t pri c e r e porti n g, c u stom e r s e r v i c e, a cc ounts r e c e ivable management, cash coll e ction and adverse event re por t i n g.

If t h ese third parties fail to perform as expected or to comply with legal and regulatory req u ire m ents, our abil i ty to com m erc i a l ize our c u r r e n t or f u ture product candidates w i ll be s i gn i ficant l y impa c ted and we may be subject t o regulatory san c tions.

We expect to retain third-party service prov i ders to perform a variety of functions rel a ted to the sale of our current or futu r e product candidates, key aspects of which will be out of our direct control.

T h ese service providers may provide key services related to distribution, c ustomer service, accounts receivable management, and cash c oll e c t ion.

If we r e ta i n a servi c e provider, we would substanti a lly re l y on it as w e ll as o t her third-party providers that perform services for us, including entrusting our inventories of products to their c a re and handling.

If these thi r d - party ser v i c e providers fail to co m ply w i th a ppli c ab l e laws a nd regulations, fail to m e et exp e c t ed d e ad l ines or otherwise do not carry out th e ir c ontr a ctu a l duti e s to us, or encounter physical or natural damage at their f aciliti e s, our ability to deliver product to meet commercial demand wou l d be significantly impaired and we may be subject to regulatory enforcement action.

In addition, we may engage in the future with t h ird parties to perform various other services for us r el a ting to adve r s e e v e nt reporting, safety database management, fulfillment of requ e sts for medical information regarding our produ c t candidates and relat e d services.

If the qual i ty or accuracy of the data m a int a in e d by the s e s e rvi c e providers is insufficient, or these third parties oth e rwise fail t o co m ply with regulatory requiremen t s re l a t e d t o a dverse event reporting, we could be subject to regulatory sanctions.

Add i tion a lly, we m a y c o n t ra c t in t he future with a third par t y to calculate and report pricing information mandated by various government programs.

If a third party fails to timely report or adj u st prices as required or errs in calculating government pric i ng information from t r ansac t ion a l d a ta in our financial records, it could impact our d i scount and rebate liability, and po t e n tially subject us to regula t ory sanctions or FCA lawsuits.

Obtaining and maintaining regulatory approval of our product can d idates in one jurisdiction does n o t mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.

In order to market and sell our product candidates outside the United States, we or our third-party collaborators may be requi r ed to obtain separate marketing approvals and comply with numerous and vary i ng regulatory r e quirements.

Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does n ot guarantee that we will be a ble to obta i n or ma i nt a in r e gulatory approval in any other j urisdiction, while a failure or delay in o btaining regulatory approval in one jurisdiction m a y have a negative effect on the regulatory approval process in others.

Approval policies and requirements may va r y among jurisdictions.

For example, e v en if the FDA grants marketing approval of a product candidate, comparable regulatory authorities in forei g n jurisdictions must also approve the manufacturing, marketing a nd promotion of the product candidate in t hose countries.

Approval procedures vary among jurisdict i ons and can inv o lve requirements and administ r a tive r e view periods different from, and greater t han, those in the United States, including additional preclinical studies o r clinical t r ials as c linical trials c o nducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdict i ons.

In many jurisdictions outside the United S t ates, a product candidate must be approved f o r r eimbursement before it can be approved for sale in that jurisdiction.

In some cases, the price that we intend to charge for our product candidates is also subject to approval.

We or o u r collaborators may not b e able to file for reg u latory a p p r o v al of our product candidates in international jurisdicti o ns or o btain approvals from regulatory authorities outside the United S t a t e s o n a t im e ly b a s i s , if a t a l l.

We may also submit m a rketing applications in o t her countries.

Regulatory authorities in j u risdictions outside of the United St a tes have requirements for approval of product candidat es with which we must comply prior to marketing in those jurisdictions.

O b taining foreign regulatory approvals and compliance with foreign regulatory requirements could r e sult in significant delays, d i fficulties and costs for us and could delay or prevent the introduction of our product candidates in cer t ain countries.

If we fail to comply with the regulatory requirements in internat i onal markets and/or receive applicable marketing approvals, our target market will be r e duced and our ability to re a li z e the full m a rket pot e nti a l of our p roduct candidates will be harmed.

A v ariety of r i s ks associat e d with ma r keti n g our product candidates internationally could materially adversely affect our busi n e ss.

We plan to seek regulatory approval of our product candidates outside of the United States and, accordingly, we expect that we will be subj e c t to additional risks related to operating in foreign countries if we ob t ain the necessary approvals, including:

differing regulato r y requirem e nts in foreign countries;

unexpected changes in tariffs, trade b a rriers, price and exchange controls and o t her regulatory requirements;

e conomic weakness, including inflation, or political instability in particular fore i gn economies and markets;

c ompliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

foreign taxes, including wi t hholding of payroll taxes;

foreign currency fluctuations, which could re s ult in in c re a s e d op e r a t i ng expenses and reduced revenues, and oth e r obligations incident to doing business in an o t her count r y;

difficulties sta f fing and managing foreign operations;

workforce uncertainty in countries where labor unrest is more common than in the United States;

differing payor reimbursement regimes, governm e ntal payors or patient self-pay systems, and price controls;

potential liability under the Foreign C o rrupt Practices Act of 1977, or the FCP A , or comparable foreign regulations;

c hallenges enforcing our contrac t ual and intellectual property rights, especially in those for e ign countries that do not resp e ct and protect i nte l le c tu a l p r op e rty rights to t he s a me ex t e nt as the Un i t e d S ta t es;

production s h o r tages resulting from any events affecting raw mat e rial supply or manufact u ring capabilities abroad;

t he impact of public health epidemics on the global economy, such as the coronavirus pandemic currently hav i ng an impact throughout the world;

business interruptions resulting from geo-po l itical actions, including war and terrorism.

These and oth e r risks a s soc i at e d wi t h i nter n ational operations may material l y adv e rsely aff e ct our a bi l ity to a t t a in or m a in t a i n profitable operations.

We have n ev e r co m m e r c ial i z e d a product candi d ate before, and we m ay l ack t h e n e cessary e xpertis e , personnel and r e so u r c e s t o s u c c e ssf u l ly commercialize any products on our own or together with s u itable collaborators.

We have never commercialized a product candidate, and we currently have no therapeutic sales for c e, marketing or distribution c a pabi l it i es.

To ach i e ve commercial success for t h e product candidates, which we may li c ense to others, we will rely on the assistance and guidance of those collaborators.

For prod u ct candidates for which we retain comm e rcialization rights and marketing approval, we will have to develop our own sales, marketing and sup p ly organization or outsource these a c tivities to a third party.

Factors t h at may affect our ability to commercialize our product c andidates, if approved, on o u r own include recruiting and retaining ad e quate numbers of effective sales and mar k eting personnel, deve l oping adequate educational and marketing programs to increase public acc e ptance of our approved product candidates, ensuring regulatory compliance of our compan y , empl o yees and third parties under applicable h e althcare laws and other unforeseen costs associated with creating an independent sales and marketing organization.

Developing a sales a n d marketing organization will be expensive and time-consuming and could delay the launch of o ur product c a ndidates upon approval.

We may not be able to build an effective sales and market i ng organization.

If we a r e unable to build our own distribution and marketing capabilities or to find suitable partners for the commercialization of our product candidates, we may not genera t e revenues from them or be able to reach or sustain profitability.

R i s k s R e lat e d to Government Regulation

The FDA regulatory ap p roval process is len g thy and time-consuming, and we m ay exp e r i e n ce sig n ifi c ant de l ays i n t h e cl i n i c al de v elopment and regulatory approval of our product candidates.

We have not previously sub m itted a BLA or NDA to the F DA, or similar approval filings to compa r ab l e fore i gn au t horit i es.

BLAs a nd N D As mu s t include extensive preclini c al and clinical d a ta and supporting information to establish t h e product candidate’s safety and efficacy for NDAs, or safety, p u r ity and potency for BLAs, for each des i red indication.

Additionally, the patient p o pulation is defined per the discussion wi t h the FDA as patients who have progressed following initial systemic therapy for recurrent or m e t a s t at i c disease, whi c h in clude many of the more advan c ed pat i en t s enrolled to date.

Our current bel i efs regarding the re g i stration pathway for our A n ktiva product candidate are based on our interpretat i on of our communications with the FDA to date and its efforts to address such communic a tions, which m a y be in c orre c t.

Fu r ther, e nroll m ent in our t ria l s may need to be further adjusted based on future feedback from the FDA or ot h e r regulatory agency inp u t.

The revised protocol whi c h further defines the patient population to include more advanced patients in the study, may ha v e an adverse effect on the results reported to date, c h anges to implement a n independent review committee and assay validat i on and implementation, and the data within this study may not ultimately be supportive of product a pproval, all of which could result in significant delays to our currently anticipated timeline for deve l opment and approval of our product candidates or prevent their approval ent i rely.

We may also experience delays, including delays ar i s i ng from the n e ed to i ncr e a se enrol l m e nt, in comp l e t i ng planned clinical t r ials for a va r iety of reasons, including delays related to:

t he availability of financial resourc e s to com m ence a nd c ompl e te the p l anned tr i a ls;

reaching agreement on acceptable contra c t terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

obtaining approval at each clinical trial site by an IRB or cen t ral IRB;

recruiting suitable patients to participate in a trial;

h a ving patients complete a trial or return for post-treatment follow-up;

clinical trial sites deviating from trial protocol or dropping out of a trial;

adding n e w clinical trial sites;

m anufacturing sufficient quantities of qual i fied materials under cGMP and appl y i ng them on a subje c t by subject basis for use in clinical trials;

t imely implementing or validating changes to our manufacturing or quality control processes and methods needed to address FDA feedback.

We could also encounter delays if physicians encounter unresolved e t hical issues associated with enrolling patients in clinical trials of our product candidates in lieu of prescrib i ng existing t r eatments that have e s tablished safety and efficacy profil e s.

Furth e r, a c l ini c al trial may be suspended or terminated by us, the IRBs for the institutions in which such trials are being conducted by the FDA or other regulatory authorities, or recommended for suspension or termination by DSMBs due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in g o vernmental regula t ions or administrative actions or l a ck of adequate funding to continue the clinical trial.

If we experience termination of, or delays in the completion of, any clinical trial of our product candidates, the commercial pro s pects for our product candidates will be h a rmed, and our ability to generate product revenues will be delayed.

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

Results for any patient who receives compassionate use access to our product candidates should not be viewed as representative of how the product candidate will perform in a well-controlled clinical trial, and cannot be used to establish safety or efficacy for regulatory approval.

We often receive requests for compassionate use access to our investigational drugs by patients that do not meet the entry criteria for enrollment into our clinical studies.

We often receive requests for compassionate use access to our investigational drugs by patients that do not meet the entry criteria for enrollment into our clinical tri a ls.

Generally, patients requesting compassionate use have no other treatment alternatives for life threatening conditions.

We evaluate each compassionate use request on an individual basis, and in some cases grant access to our investigational products outside of our sponsored clinical studies, and where a physician certifies the patient they are treating is critically ill and does not meet the entry criteria for one of our open clinical trials.

Individual patient results from compassionate use access may not be used to support submission of a regulatory application, nor support approval of a product candidate.

Although one patient with pancreatic cancer who was provided compassionate use access to our product candidates has experienced a six month complete remission after being treated, such results should not be considered to be indicative of results from any on-going or future well-controlled clinical trial.

We evaluate each compassionate use request on an individual basis, and in some cases grant access to our investigational product candidates outside of our sponsored clinical trials if a physician certifies that the patient receiving treatment is critically ill and does not meet the entry criteria for one of our open clinical trials.

Individual patient results from compassionate use access may not be used to support submission of a regulatory application, may n o t support approval of a product candidate and should not be considered to be indicative of results from any on-going or future well-controlled clinical trial.

Before we can seek regulatory approval for any of our product candidates, we must demonstrate in well-controlled clinical trials statistically significant evidence that the product candidate is both safe and effective for the indication we are seeking approval.

The results of our compassionate use program may not be used to establish safety or efficacy or regulatory approval.

We may be unable to obtain regulatory approval for our product candidates.

The denial or delay of any such approval would delay commercialization and have a material adverse effect on our potential to generate revenue, our business and our results of operations.

The research, development, testing, manufacturing, labeling, packaging, approval, promotion, advertising, storage, recordkeeping, marketing, distribution, post-approval monitoring and reporting, and export and import of biopharmaceutical products are subject to extensive regulation by the FDA, and by foreign regulatory authorities in other countries.

These regulations differ from country to country.

To gain approval to market our product candidates, we must provide regulatory authorities with substantial evidence of safety, purity and potency of the product for each indication we seek to commercialize.

We have not yet obtained regulatory approval to market any of our product candidates in the U.S.

or any other country.

Our business depends upon obtaining these regulatory approvals.

The FDA can delay, limit or deny approval of our product candidates for many reasons, including:

our inability to satisfactorily demonstrate with substantial clinical evidence that the product candidates are safe, pure and potent for the requested indication;

the FDA’s disagreement with our clinical trial protocol or the interpretation of data from preclinical studies or clinical trials;

the population studied in the clinical trial not being sufficiently broad or representative to assess safety in the full population for which we seek approval;

our inability to demonstrate that clinical or other benefits of our product candidates outweigh any safety or other perceived risks;

the FDA’s determination that additional preclinical or clinical trials are required;

the FDA’s non-approval of the labeling or the specifications of our product candidates;

the FDA’s failure to accept the manufacturing processes or facilities of third-party manufacturers with which we may contract;

for clinical trials conducted by the Immuno-Oncology Clinic, Inc., or the Clinic, a related party, the FDA or other regulatory authorities could view our study results as potentially biased even if we achieve such clinical trial endpoints;

the potential for approval policies or regulations of the FDA to significantly change in a manner rendering our clinical data insufficient for approval.

Even if we eventually successfully complete clinical testing and receive approval of any regulatory filing for our product candidates, the FDA may only grant approval contingent on the performance of costly additional post-approval clinical trials.

The FDA may also approve our product candidates for a more limited indication or a narrower patient population than we originally requested, and the FDA may not approve the labeling that we believe is necessary or desirable for the successful commercialization of our product candidates.

To the extent we seek regulatory approval in foreign countries, we may face challenges similar to those described above with regulatory authorities in applicable jurisdictions.

Any delay in obtaining, or our inability to obtain, applicable regulatory approval for any of our product candidates would delay or prevent commercialization of our product candidates and would materially adversely impact our business, results of operations, financial condition and prospects.

*Use of our product candidates could be associated with side effects or adverse events.

As with most biopharmaceutical products, use of our product candidates could be associated with side effects or adverse events, which can vary in severity and frequency.

Side effects or adverse events associated with the use of our product candidates may be observed at any time, including in clinical trials or once a product is commercialized, and any such side effects or adverse events may negatively affect our ability to obtain regulatory approval or market our product candidates.

Side effects such as toxicity or other safety issues associated with the use of our product candidates could require us to perform additional studies or halt development or sale of these product candidates or expose us to product liability lawsuits, which will harm our business.

We may be required by regulatory agencies to conduct additional preclinical or clinical trials regarding the safety and efficacy of our product candidates, which we have not planned or anticipated.

We cannot provide any assurance that we will resolve any issues related to any product-related adverse events to the satisfaction of the FDA or any regulatory agency in a timely manner or ever, which could harm our business, prospects and financial condition.

If we are successful in commercializing our product candidates, the FDA and other foreign regulatory agency regulations will require that we report certain information about adverse medical events if those products may have caused or contributed to those adverse events.

The timing of our obligation to report would be triggered by the date we become aware of the adverse event, as well as the nature of the event.

We may inadvertently fail to report adverse events we become aware of within the prescribed timeframe.

We may also fail to appreciate that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of our products.

If we fail to comply with our reporting obligations, the FDA or other foreign regulatory agencies could take action including criminal prosecution, the imposition of civil monetary penalties, seizure of our products, or delay in approval or clearance of future products.

*The clinical and commercial utility of our aNK, haNK, t‑haNK, ceNK and MSC platforms are uncertain and may never be realized.

Our NK platforms are in the early stages of development.

The company currently has multiple ongoing clinical trials to evaluate cryopreserved haNK and t‑haNK cells in company sponsored clinical trials.

The clinical and commercial utility of our product candidates are uncertain and may never be realized.

Our current product can d idates are in the early stages of development.

We currently have ongoing clinical trials to evaluate our r e spective product cand i dat e s.

Success in early clinical trials does not ensure that large-scale clinical trials will be successful, nor does it predict final results.

In addition, we will not be able to treat patients if we cannot manufacture a sufficient quantity of NK cells that meet our minimum specifications.

In addition, our haNK product candidate has only been tested in a small number of patients.

Results from these clinical trials may not necessarily be indicative of the safety and tolerability or efficacy of our products as we expand into larger clinical trials.

We may not ultimately be able to provide the FDA with substantial clinical evidence to support a claim of safety, purity and potency sufficient to enable the FDA to approve aNK platform product candidates for any indication.

In addition, we will not be able to treat patients if we cannot manufacture a sufficient quantity of Anktiva or therapies that meet our minimum specifications.

In addition, Anktiva and many of our other product candidates have only been tested in a small number of patients.

Results from these clinical trials may not necessarily be indicative of the safety and tolerability or efficacy of our product candidates as we expand into larger clinical trials.

We may not ultimately be able to provide the FDA with substantial clinical evidence to support a claim of safety, purity and potency sufficient to enable the FDA to approve our product candidate for any indication.

This may be because later clinical trials fail to reproduce favorable data obtained in earlier clinical trials, because the FDA disagrees with how we interpret the data from these clinical trials or because the FDA does not accept these therapeutic effects as valid endpoints in pivotal clinical trials necessary for market approval.

We will also need to demonstrate that aNK platform product candidates are safe.

We do not have data on possible harmful long-term effects of aNK platform product candidates and do not expect to have this data in the near future.

As a result, our ability to generate clinical safety and effectiveness data sufficient to support submission of a marketing application or commercialization of our aNK platform therapy is uncertain and is subject to significant risk.

* We have limited experience as a company conducting clinical trials and have relied and will rely on third parties and related parties to conduct many of our preclinical studies and clinical trials.

Any failure by a third party , related party, or by us to conduct the clinical trials according to Good Clinical Practices and in a timely manner may delay or prevent our ability to seek or obtain regulatory approval for or commercialize our product candidates.

To date, the only company sponsored studies to engage in patient enrollment have been for the following indications:

Merkel cell, pancreatic, squamous head and neck, non-small cell lung, triple negative breast, AML, colorectal and advanced solid tumor.

Our relative lack of experience conducting clinical trials may contribute to our planned clinical trials not beginning or completing on time, if at all.

In addition, we have entered into an agreement with the Clinic, a related party, to continue to conduct and oversee certain of our clinical trials.

Large-scale clinical trials will require significant additional resources and reliance on Contract Research Organizations, or CROs, clinical investigators, or consultants.

Consequently, our reliance on outside parties may introduce delays beyond our control.

Our CROs, the Clinic, and other third parties must communicate and coordinate with one another in order for our trials to be successful.

Additionally, our CROs, the Clinic, and other third parties may also have relationships with other commercial entities, some of which may compete with us.

If our CROs, the Clinic, or other third parties conducting our clinical trials do not perform their contractual duties or regulatory obligations, experience work stoppages, do not meet expected deadlines, terminate their agreements with us or need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical trial protocols, GCPs, or other regulatory requirements or for any other reason, we may need to conduct additional clinical trials or enter into new arrangements with alternative CROs, clinical investigators or other third parties.

We may be unable to enter into arrangements with alternative CROs on commercially reasonable terms, or at all.

We, the Clinic, and the third parties upon which we rely are required to comply with GCPs.

GCPs are regulations and guidelines enforced by regulatory authorities around the world, through periodic inspections, for products in clinical development.

If we or these third parties fail to comply with applicable GCP regulations, the clinical data generated in our clinical trials may be deemed unreliable and have to be repeated, and our submission of marketing applications may be delayed or the regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.

We are subject to the risk that, upon inspection, a regulatory authority will determine that any of our clinical trials fail to comply or failed to comply with applicable GCP regulations.

In addition, our clinical trials must be conducted with material produced under GMP and Good Tissue Practice, or GTP, regulations, which are enforced by regulatory authorities.

Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process.

Moreover, our business may be significantly impacted if our CROs, the Clinic, clinical investigators or other third parties violate federal or state healthcare fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.

We also anticipate that part of our strategy for pursuing the wide range of indications potentially addressed by our aNK, haNK, taNK, t‑haNK, ceNK and MSC platforms will involve further investigator-initiated clinical trials.

While these trials generally provide us with valuable clinical data that can inform our future development strategy in a cost-efficient manner, we generally have less control over not only the conduct but also the design of these clinical trials.

Third-party investigators may design clinical trials involving our product candidates with clinical endpoints that are more difficult to achieve or in other ways that increase the risk of negative clinical trial results compared to clinical trials we may design on our own.

Negative results in investigator-initiated clinical trials, regardless of how the clinical trial was designed or conducted, could have a material adverse effect on our prospects and the perception of our product candidates.

Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services.

In addition, some of our trials are being run by the Clinic, which is controlled by one of our employees.

Under certain circumstances, the company may be required to report some of these relationships to the FDA.

The FDA may conclude that a financial relationship between the company, the Clinic and/or a principal investigator has created a conflict of interest or otherwise affected interpretation of the study.

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

This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of regulatory approval of one or more of our product candidates.

*We and ImmunityBio may not be successful in jointly developing and obtaining regulatory approval for any collaborative COVID‑19 product candidates.

The risks described in this section regarding the development and regulatory approval of our product candidates in oncology are also applicable to the product candidates that we and ImmunityBio intend to jointly develop under the Joint COVID‑19 Collaboration, including ImmunityBio’s COVID‑19 vaccine candidate.

In particular, while the second generation adenovirus used in ImmunityBio’s COVID‑19 vaccine candidate has been tested in Phase I trials for oncology indications and has been generally well-tolerated in those studies, the COVID‑19 vaccine candidate uses a different construct directed towards the SARS‑CoV‑2 virus.

This vaccine candidate has never been tested in humans and very limited preclinical data has been generated to date.

In addition, the biology of the SARS‑CoV‑2 virus and pathology of COVID‑19 disease are not fully understood and new information is constantly emerging.

there remains substantial uncertainty about how ImmunityBio’s COVID ‑ 19 vaccine candidate will perform in clinical trials, the timelines to complete development of the vaccine candidate and whether the FDA or other regulatory agencies will approve the vaccine candidate for marketing.

If we and ImmunityBio are unable to successfully develop, obtain regulatory approval for, manufacture at scale and commercialize product candidates for COVID ‑ 19, or if the Joint COVID ‑19 Collaboration is terminated, we may not be able to realize any share of net sales of resulting products or recoup the substantial investments we expect to make in our joint development efforts.

*We are heavily dependent on our senior management, particularly Mr.

Richard Adcock, Dr.

Patrick Soon-Shiong and Dr.

Barry Simon, and a loss of a member of our senior management team in the future, even if only temporary, could harm our business.

If we lose members of our senior management for a short or an extended time, we may not be able to find appropriate replacements on a timely basis, and our business could be adversely affected.

Our existing operations and continued future development depend to a significant extent upon the performance and active participation of certain key individuals, including Mr.

Adcock, our CEO, Dr.

Soon-Shiong, our Chairman and our principal stockholder, and Dr.

Simon, our President and Chief Administrative Officer.

The risks related to our dependence upon Dr.

Soon-Shiong are particularly acute given his ownership percentage, the commercial and other relationships that we have with entities affiliated with him, his role in our company and reputation.

We may also be dependent on additional funding from Dr.

Soon‑Shiong and his affiliates, which may not be available when needed.

If we were to lose Mr.

Soon-Shiong or Dr.

Simon for a short or an extended time, for any reason, including the contraction of COVID‑19, we may not be able to find appropriate replacements on a timely basis and our financial condition and results of operations could be materially adversely affected.

Competition for qualified personnel in the biotechnology and pharmaceuticals industry is intense due to the limited number of individuals who possess the skills and experience required.

To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have provided stock options and restricted stock units that vest over time.

The value to employees of stock options and restricted stock units that vest over time may be significantly affected by movements in our stock price that are beyond our control, and may at any time be insufficient to counteract more lucrative offers from other companies.

Despite our efforts to retain valuable employees, members of our management, scientific and development teams may terminate their employment with us on short notice.

We face significant competition for employees, particularly scientific personnel, from other biopharmaceutical companies, which include both publicly traded and privately held companies, and we may not be able to hire new employees quickly enough to meet our needs.

Although we have employment agreements with our key employees, these employment agreements provide for at-will employment, which means that any of our employees could leave our employment at any time, with or without notice.

Except with respect to Dr.

Simon, we do not maintain “key man” insurance policies on the lives of these individuals or the lives of any of our other employees.

We may not be able to attract and retain quality personnel on acceptable terms, or at all, which may cause our business and operating results to suffer.

Patrick Soon-Shiong, our Chairman and our principal stockholder, has significant interests in other companies which may conflict with our interests.

Our Chairman, Dr.

Soon-Shiong, is the founder of NantWorks.

The various NantWorks companies are currently exploring opportunities in the immunotherapy, infectious disease and inflammatory disease fields.

In particular, we have agreements with a number of related parties that provide services, technology and equipment for use in our efforts to develop our product pipeline.

We will also need to demonstrate that our product candidates are safe.

We do not have data on possible harmful long-term effects of our product candidates and do not expect to have this data in the near future.

As a result, our ability to generate clinical safety and effectiveness data sufficient to support submission of a marketing application or commercialization of our prod u ct candidates is uncertain and is subject to significant risk.

We are, and if we recei v e regulatory a p proval of our product c andida t es, wi l l c on t i n ue t o be subject to ongoing regulatory obl i gations and continued r e g u latory re v iew, w h i c h m a y r e sult in significant additional expense and we may be sub j e c t t o p e na l ti e s if we fail to comp l y w ith regula t ory requirements or experience unanticipated problems with our product candidates.

Any regulatory approvals that we receive for our product candidates will requi r e surveillance to monitor the safety and efficacy of the product ca n didate.

The FDA may also require a REMS to app r ove our product candidates, which could entail requirements for a medication guide, phy s i c ian communication plans or addit i onal elements to ensure safe use, such as restricted distribution methods, patient regist r ies and other risk minimization tools.

The FDA may also requi r e post-approv a l P hase IV trials.

Moreover, the F DA and comp a rable foreign regulatory authorities will continue to closely monitor the safety profile of any product even after approval.

If the FDA or comparable foreign regulatory authorities b e come a w are of new safety information after approval of any of our product candidates, t h ey may withdraw approval, require lab e ling changes or es t a blishm e nt of a REMS or similar strategy, impo s e significant restrictions on a product’s indicated uses or m a rketing, or impose ongoing requirements for pot e nti a lly cost l y p o st - a pproval studies or post - market surveillance.

Any such restric t ions could limit s a les of the product.

In addition, we, o ur contractors, and o u r collab o r ators are and will remain responsible for FDA compliance, including requirem e nts related to product design, t e s t ing, clinical trials and preclinical studies approval, manufacturing processes and quality, lab e ling, packaging, d i stribution, adverse event and deviation reporting, storage, advertising, marketing, promotion, sale, imp o r t, export, sub m issions of safety and other post-ma r keting information and reports such as deviation reports, registration, product listing, annual user fees, and reco r dkeeping for our product candidat e s.

We and any of o u r collaborators, including our con t ract manufacturers, could be s ubject to periodic unannounced ins p ections by the FDA to monitor and ensure compliance with regulatory requ i rements.

Application holders must further notify the FDA, and depending on the nature of the c h ange, obtain FDA pre-approval for product and manufacturing changes.

The cost of compl i ance with post-approval regulat i ons may have a negative effe c t on our operating results and financial condition.

Later discovery of previously unknown problems with our product cand i dates, including adverse events of unanticipated severity or frequency, that the prod u ct is less effective than previously tho u ght, problems with our third-pa r ty manu f acturers or manufacturing processes, or fa i lure to co m ply wi t h regulatory requirements, may result in, among o t her things:

restrictions on the marketing, distribution, or manufacturing of our p r o duct candidates, withdrawal of the product f r o m the market, or voluntary or mandatory product recalls;

restrictions on the labeling of our produ c t candidates, including required additional warnings, s u ch as black box warnings, contraindications, pre c autions, and restrictions on t h e approved indication or use;

m odifications to p r omotional p i e c e s ;

c hanges to p r o d uct labeling or the way the product is administered;

l iability for harm c a used t o p a ti e nts or subjects;

fines, restitution, disgorg e m e nt, warning l e tt e rs, un t it l ed letters, or holds on or ter mi nat i on of cl i ni c al tr i a ls;

refusal by t h e FDA to approve pending appli c ations or supplements to approved applications filed by us or suspension or revoc a tion of license approvals;

product seizure or detention, or refusal to permit the import or export of our product candidates;

i njunctions or the imposition of civil or cri m in a l p e na l ti e s, including imprisonment;

F DA debarment, debarme n t from government contr a cts, and refusal of future orders und e r existing cont r acts, excl u sion from fed e ral healthcare programs, consent decrees, or corporate integrity agreements;

regulatory authority issuance of safety al e rts, D e ar H e a l thc a re Prov i der le t t e rs, press r e leases, or o t her communications con t aining warnings or other safety i n formation about the biologic;

reputational harm;

t he product becoming less competitive.

Any of these events could further have o t her material a n d adverse effects on our op e rations and business and could adversely impact our stock p r ice and could significantly harm our busi n ess, financial condit i on, results of operat i ons, and p r o spects.

The FDA’s and other regulatory authorities’ policies may change, and add i tional g overnment r e gulations may be enacted that cou l d prevent, limit or delay regulatory approval of our product candidates.

We cannot predict t h e likelihood, nature or extent of government regulati o n that may arise from future l e gisla t ion or ad m inistr a t i ve a c t ion, e i ther in the Unit e d S t a tes or ab r o a d.

If we a r e slow or un a ble to adapt t o ch a ng e s in existing requirements or the adoption of new requirements or policies, or if we are not a b le to maintain regulatory compl i ance, we may lose any marketi n g approval that we may have obtained, be subject to other regu l atory enfor c e m ent a c tion, and we may not achieve or sustain profitability.

Our GMP-in-a-Box will be regulated by the FDA as a medical device, and regulatory com p liance for medical devices is expensive, complex and uncertain, and a failure to com p ly could lead to enforcement actions against us and o t her negative consequen c es for our busine s s.

The FDA a nd si m il a r a genc i es r e gula t e med i c a l devices.

Complying with t h ese regulations is costly, time-consuming, complex and u ncertain.

For instance, be f ore a new medical device, or a new intended use for an existing dev i ce , c a n be m a rketed in the Unit e d State s , a c o mpany must f irst submit and receive either 510(k) clearance or pre-marketing approval from the F D A, unless an exe m ption applies.

FDA regulations and regulations of similar agencies are wide-ranging and include, among other things, oversight of:

product design, development, manufacture (including su p plie r s) and testing;

l aboratory and preclinical s t udi e s and cl i nic a l tri a ls;

product safety and effectiveness;

product labeling;

product storage and shipping;

record kee p ing;

pre-market clearance or approval;

m arketing, adverti s ing and promotion;

product sales and distribution;

product changes;

product recalls;

post-market surveillance and r e porting of deaths o r serious injuries and certain malfunctions.

Medical devices regulated by the FDA are subj e c t to gen e ral con t rols whi c h in c lud e:

r e gistr a tion w i th the FDA;

list i ng c omm e rc i ally distributed prod u cts with the FDA;

complying with cGMP under Quality Systems Regulations;

filing reports with t h e FDA of and keeping recor d s r e l a tive t o certain types of adverse events associated with devices under the medical device repo r ting regulation;

assuring that device la b eling complies with device labeling requirements;

reporting c e rtain device field removals and corrections to the FDA;

and obtaining pre-market notification 510(k) clearance for devices prior to marketing.

Some devices known as 510(k)-exempt d e vices can be m a rketed without prior marketing-clearance or a p proval from the FDA.

In addition to the general controls, some Class II medical devices a re also sub j ect t o spe c ial controls, including adherence to a particular guidance d o cument and compliance with the performa n ce standard.

Instead of obtaining 510(k) cle a rance, most Class I II devices are subje c t to pre-m a rket approval, or PMA.

The FDA can also refuse to clear or approve pre-market applications for any medical device we develop.

Any enforcement action by the FDA and other comparable non-U.S.

regulatory agencies c ould have a material adver s e effect on our business, f i nancial condit i on and results of operations.

Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA or state agencies, which may i n clude any of the following a c tions:

un t it l ed le t ters, warn i ng l e tt e rs, fines, in j unctions, consent dec r ees and civil penalties;

un a nti c ip a ted exp e nditur e s to address or defend such actions;

c ustomer notificatio n s for repair, replacement or refunds;

recall, detention or seizure of our products;

operating restrictions or partial suspension or total sh u t down of p r o duction;

refusing or delaying our requests for 510(k) clearance or PMA approval of new products or modified products;

operating r e s t ri c tions;

withdrawing 510(k) clearances or PMA approvals that h a ve already been granted;

refusal to grant export approval for our products;

c riminal prosecution.

If a n y of these events were to occur, it would have a material and adverse effect on our business, financial condition and res u lts of operatio n s.

We may n o t be able to obtain the neces s ary clearances or approvals or may be un d uly delayed in doing so, for any medical device products we develop, which could harm our business.

Further m ore, even if we are g r anted r e gulatory clearances or approvals for any medical device product s , they may include sig n ificant limitations on the i ndicated uses for the product, which may limit t h e market for the product.

The FDA also regula t es the a d verti s ing a n d promotion of medical devices to ensure that t he cl a ims are consist e nt w i th t he i r r e gu l atory clearances or approvals, that there are adequate and reasonable data to substantiate the c l ai m s and that t he promotional labeling and adv e rtising is n e i t her f alse nor misleading in any respect.

If the FDA determines that any of our adv e rtising or promotional claims a r e misleading, not subst a ntiated or not permi s sible, we may be subje c t to enforc e m e nt actions, including warning letters, and we may be required to r e vise o u r promotional claims and make other cor r ections or rest i tutions.

Any medical device products we develop will be subject to extensive regulation by the FDA and non-U.S.

regulatory agencies.

Further, all of our potential medical device products and material modifications will be subject to extensive regulation and clearance or approval from the FDA and non-U.S.

regulatory agencies prior to commercial sale a nd distribution as well as after clearance or approva l .

Fai l ure to c omp l y with applicable U.S.

r e quirements regarding, for example, promoting, manufacturing, or labeling our medical device products, may subject us to a variety of administrative or judicial actions and sanctions, such as F o rm 483 observations, warning lette r s, untitled lett e rs, product re c alls, product seiz u r es, total or partial suspension of production or dist r i bution, injunctions, fines, civil penalties and criminal prosecution.

If any of o u r me d i cal device products cause or contribute to a d e ath or a serious i n jury or malfunction in certain ways, we will be required to report under applica b le medical device reporting regulations, which can result in voluntary corr e c t ive a c tions or ag e ncy enfor c em e nt ac t ions.

We will be subject to governmental export and import controls that could impair our ability to compete in international markets du e to l i c e n s i n g requirements and subject u s to liability if we are n ot in c omplian c e with applicable laws.

Compliance wi t h these legal require m ents c ou l d l i mit our ab i l i ty to comp e te in for e ign marke t s and s u b j ect us to liab i li t y if we v io l ate the m .

Our product candidates will be subject to export control and import laws and regulations, including the U.S.

Export Administration Regulations, U.S.

Cust o m s regulations and v a rious economic and trade s a nctions regulations administered by the U.S.

Treasury Department’s Office of Foreign Assets Co n t rols.

Exports of our product candidates and solutions outside of the United States must be made in compliance with these laws and regulations.

If we f a il to comp l y with th e s e l a ws and regu l ations, we and certain of our employees could b e subject to substantial civil or criminal penalties, including the possible loss of export or import privi l eges;

fines, which may be i m posed on us and responsible employees or managers;

and, i n e x tre m e c a s e s , t he incarceration of responsible employees or managers.

In addition, changes in our product candidat e s or solutions or changes in applicable export or import laws and regulations may cr e a t e d e l a ys in the introduction, provision, or sale of our product candidates and solutions in international markets, prevent customers from using o u r product candidates and solutions or, in some cases, preve n t the export or import of our product candidates and solutions to certain countries, governments or persons altogether.

Any limitations on our ability to export, provide, or sell our produ c t candidates and solutions could adversely affect our business, financial condition and results of operations.

We are subject to U.S.

and for e ign anti-corruption and anti-money l aundering l aws with r e sp e c t to our o p erations and non-compl i an c e with such laws can subj e c t us to c riminal an d / or civil liabi l ity and harm our business.

We are subject to the FCPA, the U .

domestic bribery sta t ute contained in 18 U.S.C.

§201, the U.S.

T r avel Act, the USA PATRIOT Act and possibly other state and nation a l anti-bribery and anti-money laund e ring laws in countries in which we conduct a c tivities.

Anti-corruption laws are interpreted broadly and prohibit companies and their e m ployees, agents, third-party in t e rm e di a ries, jo i nt ventu r e partners and collaborato r s from authorizing, promising, offering or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.

We use CROs abroad for clinical t r ials.

I n addition, we m a y engage third-party intermediaries to sell our product candidates and solu t ions abroad once we enter a commercialization phase for our product cand i dates and/or to obtain nec e ssary permits, licenses, and other regulatory approvals.

We or our third-party intermediaries may have direct or in d i rect interactions with o fficials and employees of government agencies or state-owned or a ffi l i a ted en t it i es.

We c a n be h e ld li a ble for the corrupt or other i l leg a l ac t ivi t ies of these third-party intermediarie s , o ur employees, representatives, contractors, partners and agents, even if we do not explicitly authori z e or have actual knowledge of such activities.

We have adopted an anti-corruption policy , which mandates compliance with the FCPA and other anti - corruption laws applicable to our business throughout the world.

However, the r e can be no assurance that our employees and third-par t y in t e rm e di a ries w i ll co m ply wi t h t his po l icy or such anti-corruption laws.

Non-compl i ance wi t h a nti-corruption and anti-money laundering laws could subject us to whistleblower compl a ints, investigations, sanctions, settlements, prosecution, other investigations, or other en f orcement actions.

If such actions are launched, or governm e ntal or o t her sanctions a r e imposed, or if we do not prevail in any p o ssible civil or criminal liti g ation, our business, results of operations and financial condition could be mat e rially harmed.

In addition, res p onding to any ac t ion w i ll lik e ly result in a ma t e r i al l y sign i ficant diversion of manag e me n t ’s attention and resources and significant defense and compliance costs and other professional fees.

In certa i n cases, enforcement a u tho r ities may even cause us to appoint an inde p e ndent compliance monitor, whi c h c a n result in added costs and administrative burdens.

If we fail to comp l y with e n v iron m ental, he a l th, and safety laws and r e g u lations, in c luding reg u lations go v e r ning t h e han d ling, storage or disposal of hazardous materials, we could become subj e c t to fines or p e na l ti e s or inc u r co s t s that c ould harm our busi n e s s .

We will be subje c t to numerous environmental, health and safety laws and regulations, including those governing laboratory pro c edures and the handling, use, storage, treatme n t and disposal of hazardous mat e rials and wastes.

Our operations involve the use of hazardous mat e ri a ls, inc l uding chemicals, biol o gical m a terials and infectious agents.

Our operations also may p r oduce hazardous waste p r oducts.

We generally c ontract with third parties for the disposal of these ma t e r i als and w a s t es.

We will not be ab l e to e li m in a te the risk of c o n t a m ina t ion or in j ury f r om the s e m a t e rials.

In the event of contami n ation or injury resulting from any use by us of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources.

We also could incur s i gnifi c a nt costs asso c i a ted w i th c i vil or c r iminal fines and penalt ie s for fai l ure to c omply with such laws and regulations.

Although we will maintain wo r k ers’ compensat i on insu r a nce to cover us for costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materia l s, this insurance may not provide adequate coverage against potential liabilities.

We do not maintain insurance for environmental liability o r toxic tort claims that may be ass e rted against us in connection with our storage or disposal of bio l ogical or hazardous ma t e ri a ls.

In addition, we may incur subst a nti a l c osts in order to comp l y wi t h cur r ent or future environmental, h e al t h, and s a fety l a ws a nd regulations.

These current or future laws and regu l ations may impair our research, development, or production efforts.

Our failure to comply with the s e l a ws a nd regulations also may result in substanti a l fines, penalties or other sancti o ns.

If we or any of our thir d - p a r t y manufacturers that we may engage use hazardous and biological materials in a manner that causes injury or violates a p plicable law, we may be liable for damages.

Our research and development activities involve the co n t rolled use of p otentially hazardous substan c es, incl u ding chemical and biological mate r ials, by us and any third-party manufacturers that we may use in the future.

We and a n y of our third-party manufact u rers that we may eng a ge are s ubje c t to federal, state and local l a ws and regulations in the U.S.

gov e rning the use, manufacture, stora g e, handling and disposal of medical and haza r d ous materials.

Although we believe that our pro c edures for using, storing and disposing of these materials comply with legally pre s cribed standards, we cannot completely elimi n ate the risk of contamination or i n jury resulting from medic a l or hazardous materia l s.

As a result of any such contamination or injury, we m a y in c ur l iab i li t y or loc a l, c ity, st a te or f e der a l author i ti e s m a y c urta i l the use of th e s e m a t e ri a ls and in t e rru p t our business operations.

In the event of an accident, we could be held l i able for damages or penalized w i th fines, a n d the l iab i li t y could exceed o ur resources.

We do not have any ins u r a nce for liabilities arising f r om medical or hazardous mate r ials.

Compliance with applicable environme n tal laws and regulations is e x pensive, and current or future environmental regulations may impair our research, development and production efforts, which could harm our business, prospects, financial condition or results of operations.

Changes in funding for the FDA, the SEC and other government agen c i e s co u l d hind e r t h eir abili t y to hire and retain key leader s hip and other personnel, preve n t new products and services from being developed or commerc i alized in a t i me l y manner or otherwise p r e v e n t t h ose agencies from performing normal functions on which the operation of our b u s i n e ss may r e l y , wh i c h c o u ld negatively impact o u r busines s .

The ability of the FDA to review and approve new products can be affected by a v a riety of factors, i n cluding government budget and funding levels, ability to hire and retain key personnel and accept payment of u s er fees and statutory, regulato r y, and policy changes.

Average rev i ew t i m e s at the agency have fluctuated in recent years as a result.

In addition, government funding of the FDA, t h e Securities and E x change Co m mission, or the SEC, and other government agencies on w h ich our operations may rely is i nherently fluid and unpredictable.

Disruptions at the FDA and oth e r a genc i es m a y also slow the time necessary for new drugs to be reviewed and/or approved by nec e ssary government agencies, which would adversely affect o ur business.

For example, over the last several years, incl u d ing beginning on December 22, 2018, the U.S.

g o vernment has shut d o wn several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough crit i c a l F D A, SEC and other government employ e es and stop critical activities.

In respo n se to the COVID ‑ 19 pand e mic, in 2020, the FDA had announced that it will contin u e to p o stpone domestic and f o reign routine surveillance inspections due to COVID ‑ 19.

According to FDA’s 2021 guidance on manufacturing, supply chain, and drug and biological product inspections during COVID ‑ 19 public health emergency, FDA indicated that it intends to continue using other tools and approaches where possible for pre-approval inspections, and that it will continue to conduct “mission-critical” inspections on a case-by-case basis, or, where possible to do so safely, resume prioritized domestic inspections, such as pre-approval and surveillance inspections.

If a prolonged government shutdown occurs, or if the government experiences a protracted backlog of inspections and regulatory review, it could significantly impact the abi l ity of t he FDA to t i me l y r e view and p r o c ess our regulatory submissions, which could have a material adverse effect on our business.

F u rther, future government shutdo w ns , delays, or prioritization policies could potentially impact our ability to access the public markets and obtain necessary capital in order to properly ca p i talize and cont i nue our operations.

If we fail to comp l y with f e deral and s t ate healthcare and promotional laws, including fraud and ab u se and information privacy and security laws, we could face substantial penalties and o u r busines s , fi n an c ial c onditio n , r e sults of operations, and prospects could be adversely affe c ted.

As a biopharmaceutical company, we are sub j ect to many federal and sta t e healthcare laws, including the federal Anti - Kickback S t a tut e , or AKS, t he FCA, the civil monetary pen a lt i es st a tut e , the Medicaid Drug Rebate s t atute and other price reporting requirements, the federal Physician Payment Sunshine Act, the Veter a ns Health Care Act of 1992, HIP A A (as amended b y the Health Inf o rmation Technology for Economics and C l ini c al He a lth Act), the FCPA, the Patient Pro t ection and Affordable Care Act of 2010 (as amended by the Health Care and Education Reconcilia t ion Act), or the ACA, and similar state laws.

Even though we do not make referrals of healthcare services or bill directly to M e dicare, Medicaid, or other third-party payors, certain fe d e ral and sta t e healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and w i ll be applicable to our b u siness.

If we do not comply with all app l icable fraud and abuse laws, we may be sub j ect to healthcare fraud and abuse enforc e ment by both the federal government and the states in which we conduct our business.

Laws and re g ulations re q uire c a lculation and reporting of compl e x pricing information for presc r iption drugs, and compliance will require us to invest in sig n ificant resources to develop a price reporting infrastructure, or depend on third parties to compute and report our drug p ricing.

Pricing reported to the Centers for Medicare and Med i caid Services, or CMS, must be certified.

Non - compliant activiti e s expose us to FCA risk if t he y re s u l t in o v ercharging agencies, underpaying rebates to age n cies, or causing agencies to overpay providers.

If we or our operations are found to be in violation of any fed e ral o r state healthcare law, or any other gove r n mental regulations that apply to us, we may be subject to penalties, including civ i l, c r im i nal, a nd a dministrative pen a lties, d a mag e s, fin e s, d i sgorgement, debarment from government contracts, refusal of orders under existing contracts, exclusion from participation in U.S.

federal or state hea l th care programs, corpor a te i ntegr i ty agre e m e nts a nd the curtailment or restructuring of our op e rations, any of which could materially adv e rsely affect our ability to operate our business and our financial results.

If any of the physicians or other healthcare p r o v iders or entities with whom we expect to do bu s iness, including our collaborators, is found not to be in compliance with applicable laws, they may be subject to criminal, civil, or administrative sanctions, including but not limited to, exclusions from participation in government healt h care programs, which could also materially affect our business.

In particular, if we are found to have impermissibly promoted any of our product candidates, we may become subject to significant liability and government fines.

We, and any of our collaborators, must comply with requirements concerning advertising and promotion for any of our product candidates for which we or they obtain marketing approval.

Pro m otional communications with respe c t t o t her a peut i cs are subject to a variety of legal and regulatory restrictions and continuing review by the FDA, Department of Justice, Department of Health and Human Services’ Office of Inspector General, state attorneys general, members of Congress, and the public.

When the FDA or comparable foreign regulatory authorities issue regulatory approval for a product candidate, the regulato r y approval is limited to t hose specific uses and i n dications for which a product is approved.

If we are not able to obtain FDA approval for desired uses or indications for our produ c t candidates, we may not m arket or promote our prod u ct candidates for those indic a tions and uses, refe r red to as off-label uses, and our busin e ss may be adversely affected.

W e further must be able to sufficiently substantiate any c l aims that we make for our p r oduct candidates including claims comparing our product candidates to other companies’ prod u cts and must abide by the FDA ’ s s t rict requirements regarding the content of p r omotion and advertising.

While physicians may c h oose to prescribe produ c ts for uses that are not described in the product’s labeling and for uses that d iffer from those tested in clinical trials and approved by the regula t ory authorities, we are prohibited from m a rketing and promoting the products for indications and uses that are n o t specifically approved by the FDA.

These off-label uses are common across medical specialties and may c onstitute an appropriate tr ea t m e nt for s o me pat i ents in v a ri e d c i rcu m s t anc e s.

Regulatory authorities in the United States generally do not restrict or regulate the behavi o r of physicians in their choice of treatment within the practice of medicine.

Regulatory au t horities do, however, restrict communications by biopharmace u t i c a l co mp a n i e s concerning off-label use.

The FDA and ot h e r agencies actively enforce the laws and regulations r e garding product promotion, p a rticularly those prohibiting the promotion of off-label uses, and a company t h at is found to ha v e imprope r ly promoted a produ c t may be subject to s i gnificant sanctions.

The fe d e ral government has lev i ed large c ivil a nd cr i min a l fines aga i nst c ompan i e s for a l leged improper promotion and has en j oined s e ver a l comp a nies from engaging in off-label promotio n .

The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.

Thus, we and any of our collaborators will not be able to promote any products we develop for indicat i ons or uses for which they are not approved.

In the United States, engaging in the imp e rmissible promotion of our products, follow i ng approval, for off-label uses can also subje c t us to false c l ai m s and other litigation under f e deral and state statutes, inc l uding fraud and abuse and consumer protection laws, which can lead to civil and criminal penalties and fines, agreements with governmental authori t ies that materially restrict the manner in whi c h we promote or distr i bute therapeutic products and do business through, for example, corporate integrity agreements, sus p ension or exclusion f rom participation in fede r a l and s t ate h e a l thc a re programs, and debarment from gove r n ment c o ntracts and refusal of future orders under existing contracts.

These false claims st a tut e s in c lude the F CA, which allows any individual to bring a l a wsuit against a biopharmaceut i cal company on behalf of t h e fe d e ral government alleging submission of false or fraudulent claims or causing others to pre s ent such false or fraudulent claims, for p a yment by a federal program such as Medic a re or Medicaid.

If the g o vernment decides to intervene a nd pr e va i ls in the l a wsu i t, t h e individual will share in the proceeds from any fines or settl e me n t funds.

If the g o vernment declines to inte r v ene, the individ u al may pursue the case alone.

The s e FCA lawsuits a ga i nst m a nufacture r s of drugs a nd biologics have increased significantly in volume and breadt h , l e ading to s e ver a l substan t i a l c ivil a nd criminal settlements, up to $3.0 billi o n, pertaining to c e rta i n s a l e s practices and promoting off - label u ses.

In addition, FCA lawsuits may e x pose manufacturers to fol l ow-on claims by private payo r s based on fraudulent marketing practices.

This growth in litigation has increased the risk that a biopharmaceutical company will have to defend a f a lse claim action, pay s e tt l em e nt fines or r e s t itu t ion, as w e ll as c rim i nal and c i vil pen a lt i es, agr e e t o c omply with burdensome reporting and compliance obligations, and be exc l uded from M e d i c a re, M e d i ca i d, or ot h e r federal and state hea l thcare programs.

If we or our future c oll a bora t ors do not law f ully promote our approved products, if any, we may become s ubject to such litigation and, if we do not successfully defend against such actions, those actions may have a material adve r s e effect on our bu s iness, financial condition, resul t s of o perations and prospects.

Although an effective compliance program can mitigate the risk of investigation and pro s ecution for violations of these laws, t he risks cannot be entirely eliminated.

Moreo v er, achieving and sustaining c ompl i an c e w i th a ppli c ab l e feder a l a nd state fraud laws may prove costly.

Any action against u s for violation of these laws, even if we succ e ssfully defend against it, could cause us to incur significant legal expenses and div e rt our ma n a gement’s attention from the oper a tion of our business.

Coverage and reimbursement may be limited or unavai l able in certain market segments for o u r product candidates, which could ma k e it difficult for us to sell our product candidates pro f itably.

In both domestic and forei g n markets, sales of our product candid a tes, if approved, depend on the availability of coverage and adequate reimbursement from third-party payors.

Such third-party payors include government health programs such as Medicare and M e dicaid, managed care providers, private health insu r e rs and other org a nizations.

In addition, because our product candidates represent n e w approaches to the treatment of cancer, we cannot accurately estimate the potential r e venues from our product candidates.

Patients who are provided medical treatment for their conditions g e nerally rely on third-party payo r s to reimburse all or part of the costs a s so c ia t ed w i th the i r t r ea t men t .

Ob t a i ning c overage and adequate rei m bursement from g o vernmental healthcare programs, s u ch as Medicare and Med i caid, and commercial payors is critical to new product acceptance.

Government authorities and third - party payors decide which drugs and treatments they will cover and the amount of reimbursemen t .

Coverage decisions may depend upon clinical and economic standards that disf a vor new drug products when more est a blished or lower cost therapeutic a l tern a tiv e s are alr e ady ava i l a ble or s ubsequently become available.

If rei m bursement is not available, or is available only to l im i ted l e vels, our product candidates may be competitively disadvantaged, a n d we, or our c o llaborators, may not be able to s u ccessfully commercialize our product candid a t e s.

E ven if c over a ge is provided, the approved reimbursement amount may not be high enough to allow us, or our collaborators, to establish or maintain a m a rket share sufficient to realize a sufficient return on our or their investments.

Alternatively, securing favorable r e imbursement terms m a y r e quire us to compromise pricing and prevent us from realizing an adequate margin over cost.

Reimbursement by a third-party payor may depend upon a num b er of factors, including, but not limited to, the third-party p a yor’s determination that use of a product is:

a covered benefit under its health plan;

saf e , eff e c t ive and med i c a lly ne c e s s a ry;

a ppropriate for the specific patient;

c os t -eff e ct i ve;

neither experimental nor investigati o nal.

Obtaining co v e rage and reimbursement approval of a product from a government or o t her third-party payor is a time - c onsuming and costly process that could require us to provide to the payor supporting scientific, clinical and cost-effectiveness data for the use of our product candidates.

Even if we o b tain coverage for a given product, the res u lting r e imbursement p a yment rates might not be adequate for us to achieve or sust a in profit a bil i ty or m a y require co-payments that patients find unacceptably high.

Moreover, the factors noted above have continued to be the foc u s of p olicy and regulatory debate that has, thus far, shown the potential for movement towards permanent policy chang e s;

th i s tr e nd is lik e ly t o c ontinu e , and may result in more or less favorable impacts on pricing.

Patients are unlikely to use our p r o d uct cand i dates unless coverage is provided, and reimbu r se m e nt is a dequ a te to cover a significant portion of the cost of our product candidates.

In the United States, no uniform policy of coverage and reimbursement for products exists among thi r d-party payors.

Therefore, coverage and reimbursement for products can differ significantly from payor to payor.

As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our product candidates to each p a yor separately, with no assurance that coverage and ade q uate reimbursement will be obtained.

Prices p a id for a drug also vary d e pending on the class of trade.

Prices charged to government c u stomers are subject to price c on t rols, inc l uding ceilings, and private institutions obtain discounts t h rough group purchasing organizations.

Net prices for drugs may be further reduced b y man d atory discounts or rebates required by government hea l thcare programs and demanded by private payors.

It is also not uncom m on for market conditio n s to warrant multiple disc o unts to d i fferent customers on the same unit, such as purcha s e discounts to institution a l care providers and reb a t e s to the he a l th pl a ns th a t pay them, which reduces the net r e a l iz a tion on t he origin a l s a le.

In addition, federal programs impo s e penalties on manufacturers of drugs marketed under an NDA or BLA, in the form of mandatory additional rebates and/or discounts if commercial prices increase at a rate greater than the Consumer P r ice Index-U r b a n, and these rebates and/or discou n ts, which can be substantial, may impact our ab i li t y t o r a ise c om m erc i al pri c es.

Regu l atory au t horities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medicat i ons, which could affect our ability or that of our collaborators to sell our product candidates profitably.

These payors may not v i ew our products, if a n y, as cost-effecti v e, and cover a ge and reimbursement may n o t be available to our customers, or those of our collaborators, or may not be sufficient to allow our products, if any, to be marketed on a competit i ve basis.

Cost control initiatives could cause us, or our collaborators, to decrease, discount, or rebate a portion of the p r ice we, or they, might establish for products, which could result in lower than anticipated p r oduct revenues.

If the realized prices for our product candidates, if any, decrease or if governmental and other third-party p a yors do not provide adequate coverage or reimbursement, our p r ospects f or revenues a nd profitability will suffer.

Moreover, the recent and o n going series of congressional hearings relating to drug pricing has presented heigh t ened attention to the biopharmaceutical i nd u st r y, creating the po t e n t ial for poli t ic a l and public pr e s sure, whi l e the pot e nti a l for resulting legisla t ive or policy changes pr e s e nts un c ert a inty.

Assuming cove r a ge is approved, the resulting reimbursement payment rat e s might n o t be adequate.

If payors subject our p r o duct candidates to maximum payment amounts or impose limitations that make it difficult to obtain reimbursement, providers may choose to use therapies which are less expensive when compared to our product candidates.

Additionally, if payors require h i gh c o payments, benefic i aries may decline p rescriptions and seek alternative therapies.

We may need to conduct post-marketing studies in order to de m onstrate the cost-effectiveness of any fut u re products to the satisfacti o n of hospitals and other target customers and their third-party p a yors.

Such studies might require us to commit a s i gnificant amou n t of management time and finan c ial and other res o u r ces.

Our future p r od u cts might not ultimately be consid e red cost- e ffec t iv e .

Ad e quate third-party coverage and reimbursement might not be ava i lab l e to enab l e us to ma i nta i n pr i ce l e vels suff i ci e nt to r e a l ize a n a ppropria t e r e tu r n on investment in prod u ct development.

Third-party payors, whether domestic or fo r eign, or governmental or comme r cial, are developing increasingly sophisticated meth o ds of controlling healthcare costs.

In addition, third-party payors are requiring higher levels of evidence of the benefits and clinical o u tcomes of new technologies and are challenging the prices charged.

We, and our collaborators, c a nnot be sure that coverage w i ll be available for any prod u ct candidate that we, or they, commercia l ize a nd, if a va i lab l e, th a t the re i mburs e ment rates will be adequate.

Further, t h e net reimbursement for drug products may be subject to additional r e ductions if there are changes to laws that presently restrict imports of drugs fr o m countries where they may be sold at low e r pri c es t han in the Un ite d Sta t es.

An in a bil i ty to pro m ptly obt a in coverage and adequate payment rates from bo t h government-funded and private payors for any of our product candidates for which we obtain marketing approval could have a material adverse effe c t on our operating results, our ability to raise capit a l needed to commercialize products, and our overall financial condition.

There have been, and likely will continue to be, legislative and regulatory proposals at the federal and s t ate levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare.

We cannot predict the initiatives that may be adopted in t h e future.

The continuing efforts of the government, insurance companies, managed care organizations and other p a yors of healthcare s e rvices to contain o r reduce costs of hea l thc a re and / or i m pose price controls m a y adversely affect:

t he demand for our product candidates, if we obtain regulatory approval;

our ability to set a price that we b e lieve is f a ir for our product candidates;

our ability to generate revenues and achieve or maintain profitability;

t he level of taxes that we are required to pay;

t he ava i lab i li t y of c a pit a l.

Any reduction in r e imbursement fr o m Medicare or other gove r nment programs may result in a similar reduct i on in payments from p r ivate payors, which may adversely affect our future pro f itabil i ty.

A particular challenge for our product candidates arises from the fact that they will prima r ily be used in an inpatient setting.

Inpatient rei m bursement generally relies o n s t ringent packaging rules that may m e an that th e re is no s e par a t e payment for our product candidates.

Additionally, d a ta used t o set t he p a ym e nt r a t e s for i npat i ent a d missions is usually several years old and would n ot take into account all of the additional therapy costs associated w i th the administration of our product candidates.

If special rules are not created for reimbursement for imm u notherapy t r eatments such as our product candidates, hosp i tals might not receive enough rei m bursement to c over their costs of treatment, which will have a negative effect on the i r adoption of our product candidates.

We are subject to new legislati o n, regulatory propo s als, and healthcare payor initiatives that may increase our costs of compl i ance, and adversely affect our ability to market our product candidates, obta i n collaborators, a n d raise capital.

In the United States and some foreign j u risdictions, there have been a n u mber of legislative and regula t ory changes and propos e d c h anges regarding the healthcare system that could p r event or delay marketing approval of our product cand i dates, restrict or regulate post-approval activities, and affect our ability, or the ability of our c o llaborators, to profitably sell any products for which we obta i n marketing approval.

We expect that c urrent l a ws, as w e ll as other healthcare reform measures that may be adopted in the f u ture, may result in more rigorous co v e rage criteria and in additional downward press u r e on the price that we, or our collabora t ors, may receive for any approved products.

Since enactment of the ACA in 2010, in both the United States and ce r tain foreign jurisdictions, there have been a number of l e gislative and regulatory changes to the health care sys t em that could impact our ability to sell our product candidates profitably.

In August 2011, the Budget Control Act of 2 0 11, among other things, created measures for spending reductions by Congress.

A Joint Select Committee on Deficit Reduction, t a sk e d w i th recommending a targeted defi c it reducti o n including implementation of aggregate reductions of Medicare payments to providers up to 2% per fiscal year, whi c h went into effect on April 1, 2013 and will remain in effect until 2030, with the exception of a temporary suspension implemented under various COVID ‑ 19 relief legislation from May 1, 2020 through the end of 2021, un l ess additional Congressional action is taken.

In J a nuary 2013, the American Taxpayer Relief Act of 2012, or ATRA, was approved which, among other things, reduced Medicare p a yments to several provi d e rs, w i th primary foc u s on the hospit a l outpatient setting and ancillary services, including hospitals, imaging centers and can c er t re a tm e nt cen t e rs, and inc r eased the st a tute of li m it at ions period for the government to recover ove r payments to providers from three to five years.

Since its enactment, various portions of the ACA have been subject to judicial and constitutional challenges.

In particular, on D e c e mber 14, 2018, the U.S.

District Court for the N o r thern District of Texas struck down the ACA, deemi n g it unconstitutional giv e n that Congress repealed the individual mandate in 2017;

on July 9, 2019, the U.S.

Court of Appeals for the Fifth Circuit heard arguments on appeal in this matter.

On December 18, 2019, the Fifth Circuit r u led that the ACA’s individual mand a te is unconstitutional gi v e n t hat the T a x A c t e l i min a ted the t a x p e nal t y a s soc i a t ed with the individual mandate.

In concluding that the individual mand a te is unconstitutional, the ques t ion remains whether, or how much of, the rest of the ACA i s severable from that constitutional defect.

The Fifth C i rcuit further r e manded the case to the U.S.

Dis t rict Court for the Northern District of Tex a s to further analyze whether the other provisions of the ACA are severable as they currently exist under the law.

The Supreme Court of the United States held oral arguments on the Fifth Circuit Court case in November 2020 and is expected to issue a decision later in 2021.

Although the U.S.

Supreme Court has not yet ruled on the constitutionality of the ACA, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, among other directives.

It is unclear how this Supreme Court decision, future litigation, and healthcare measures promulgated by the Biden administration will impact the ACA, our business, financial condition and results of operations.

We will c ontinue to ev a lua t e the eff e ct th a t the ACA and its possible repeal and replacement has on our business.

Complying with any new legislat i on or reversing changes imp l emented under the ACA could be time-intensive and expensive, resulting in a mater i al adverse effect on our business.

Additional federal and state healthca r e reform measures may be adopted in the future that may result in more r igorous coverage crit e ria, in c re a s e d regulatory burdens and operating costs, decreased revenues from our bioph a rmaceutical product candidates, decreased potential r eturns from our development efforts, and additional downward pressure on the pri c e that we re c e ive for any a pproved drug.

Any reduction in rei m bursement from Medicare or other governm e nt healthcare programs m a y result in a similar reduction in pay m ents from private payors.

The implem e ntation of c o st containment measures or o t her healthcare reforms may prevent us from being able to gene r a te rev e nues, a tt a in prof i t a bil i ty or c ommercialize our prod u ct candidates.

Legislative and regulatory proposals may also be made to expand post-approval requirements and restrict s a les and promotional a ctivities for drugs.

We cannot be sure whether add i tional legislati v e changes will be enacted, or whether t h e FDA regulations, guid a nce, or interpretations will be changed, or what the impact of such c h anges on the m a rketing approvals of our produ c t candidates, if any, may b e .

In addition, increased s c rutiny by Congress of the FDA’s approval process may si g nificantly delay or prevent marketing approval, as w e ll as subject us to more stringent prod u ct labeling and post-marketing testing and other requirements.

In addition, there ha v e been increasing legislative efforts and enforcement interest in the United States with respect to drug pricing practices, including Congressional inquiries and proposed federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.

At the federal level, the Trump administration used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives, some of which resulted in lawsuits against the HHS challenging various aspects of the rules.

In January 2021, the Biden administration issued a “regulatory freeze” memorandum that directs department and agency heads to review new or pending rules of the prior administration.

The impact of these lawsuits as well as legislative, executive, and administrative actions of the Biden administration on us and the pharmaceutical industry as a whole remains unclear.

At the sta t e level, legislatures have increasingly passed legislation and implemented regulations designed to control p h armaceutical and biological product pricing, including price or patient reimbursem e nt constraints, dis c ounts, restrictions on certain product access and marketing cost discl o sure and transparency measures, an d , in some cases, designed to encou r age importation from other countries and bulk purc h asing .

We are unable to predict the future course of federal or state healthcare l e g i s l at i on in the Uni t ed States directed at broaden i ng the availability of healthcare and containing or lowering the cost of h e a l thc a re.

T he ACA and any further changes in t h e law or regulatory framewo r k that reduce our revenues or increase our costs could also have a material and a d verse effect on our business, financial con d ition and results o f operations.

Go v e r n m e n ts o u tside t h e Un i ted S t ates tend t o i mpose s t r i ct pri c e co n trols, whi c h may ad v e r s e ly aff e ct our r e v e n u e s , if an y .

In international markets, reimbu r sement and health care pa y m ent systems vary significantly by country, and many countries have i ns t itu t e d price ceilings o n specific products and therapies.

I n some countries, p a rticularly the countries of t h e EU, the pricing of prescript i on pharmaceuticals is subject to governmental contr o l.

In these countries, pricing negotiations with governmental authorities can take considerable time aft e r the r e c e ipt of m a rk e ting approval for a product.

To obtain coverage and reimbursement or pricing approval in s o me countries, we may be required to conduct a c l ini c al tr i a l th a t compares the cost-effectiveness of our product candidate to other avail a ble therapies.

There can be no assurance that our prod u ct candidates will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be ava i lable, or that the third- p arty payors’ reimbursement p o licies will not adversely affect our ability to sell our product c a ndidates pro f itably.

If r e imbu r sement of our product cand i dates is unavailable or limited in scope or amount, or if pricing is set at unsatis f actory l e vels, our business c ould be harmed, possibly materially.

Our employees, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper ac t i v it i es, in c luding non c omp l ian c e with r e gu la tory standards a n d requirements.

We are exposed to the risk of employee fraud or other illegal activity by our employee s , independent contractors, consultants, commercial partners and vendors.

Misconduct by these parties could inc l ude intentional, reckless and/or negli g ent conduct that fails to:

comply with t h e laws of the F DA and other similar foreign regulatory bodies, provide true, complete and accurate information to the FDA and other similar foreign r egulatory bodies, comply with manufacturing standards we have established, comply with h e alt h care fraud and abuse laws in the Un i t e d S ta t es a nd si m il a r foreign f r audulent misconduct laws, or report f i nancial i n f ormation or data accu r ately or to disclose unauthorized activities to us.

I f we obtain FDA approval of any of our prod u ct candidates and begin comm e rcializing those product candidates in the United States, our potential exposure under such l aws will in c re a se sig n ificantly, and o u r costs associated with compliance with such laws are also likely to increase.

These laws may impact, among other things, our current activities with principal investigators and research patients, as well as proposed and future sales, marketing a nd education programs.

In particular, the promotion, sales and marketing of healthcare items and services, as well as certain business a r rangements in the healthcare industry, are subje c t t o extensive laws designed to prevent fraud, kickb a cks, self-dealing and other abusive pra c ti c es.

Th e s e l a ws and regulations may restrict or prohibit a wide range of pricing, discounting, mar k eting and promotion, structuring and commission(s), certain customer incentive programs and other bu s iness arrangements generally.

Activities subject to these laws also involve the improper use of information obta i ned in the course of patient rec r uit m ent for c l i nic a l tri a ls.

It is not always possible to identify a nd deter misconduct or other imp r oper activities by our employ e es or third parties that we engage for our business o p erations, including independent contractors, consultants, commercial collaborators, principal investigators, CROs, suppliers and vendors, and the precautions we take to detect and prevent inappropriate conduct may not be e ffective in cont r o lli n g unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations.

Efforts to ensure that our business arrangements will comply with applicable healthcare laws may involve substantial c o sts.

It is possible that governmental and enforcement authorities will con c lude that our, or our employee s ’, consultants’, coll a borators’, contractors’, or vendors’ bus i ness practices may not comply with current or fut u r e statutes, regulations or case law interpret i ng a ppli c able fr a ud and abuse or other healthcare laws and regulations.

If any such actions are instituted against us, a nd we are not successful in defending oursel v es or asserting our rights, those actions could have a si g nificant impact on our business, including the imposit i on of civil, criminal and administrative penalties, d a mages, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other fed e ral healthcare programs, contr a ctual damages, reputational ha r m, diminished profits and future earnings, compliance agreeme n ts, withdrawal of product approvals, and c u rtailme n t of our oper a tions, among other th i ngs, any of which could adversely affect our ability to oper a te our business and our results of operations.

In addition, the approval and commer c ialization of any of our prod u ct candidates outside the United States will also likely subject us to foreign equivalents of the healthcare laws mention e d above, among other foreign laws.

R i s k s R e lat e d to I n te l le c tual P r o p er t y

If we are unable to obtain, mai n tain, protect and enfor c e patent protection and other proprietary rights for our product candi d ates and technologies, we may n ot be able to c omp e t e e ffectively or oper a te profitably.

Our success is dependent in l a rge p a rt on our obtaining, maint a ining, protecting and enforcing patents and other proprietary r i ghts in the Uni t ed St a t e s and other countries with respect to our product candidates and technology and on our ability to avoid i n fringing the intellectual property and other proprietary rights of oth e rs.

Certain of our intel l ectual property rights are licensed from other entities, and as such the pr e paration and prosecution of any such patents and patent applic a tions was not performed by us or under our control.

Furthermore, patent law relating to the sco p e o f c l a i m s in the biotechnology field in which we oper a te is still evolving and, consequently, patent posi t ions in our industry may not be as st r ong as in other more well-established fields.

The patent positions of biotechnology compani e s can be highly uncertain and involve complex legal and fact u al questions for which important legal principles remain unresolved.

No consistent policy regarding the breadth of claims allowed in biotechnology pa t ents has emerged to date.

The issuance of a patent is not conclusive as to its validity or enfor c e a bil i ty a nd i t is unc e rt a in how much protection, if an y , will be provided by our patents, including if they are challenged in court or in other proceedings, such as re-examinations or o p positions, which may be brought in the United St a t e s or for e ign jurisdi c tions to c ha l l e nge t h e validity of a patent.

A third party may challenge the validity or enforceability of a p a tent a fter i t s issuance.

It is possible th a t a c ompe t itor m a y suc c essfu l ly cha l l e nge our patents or that a challenge wi l l result in li m it i ng t h e ir cov er age.

Moreover, the cost of litigation to uphold the validity of patents and to prevent infringement can be subst a ntial.

If the outcome of litigation is a d verse to us, t h ird parties may be able to use our patented invention wi t hout payment to us.

Moreover, it is possible that competi t ors may infringe our patents or successfully avoid the patented technology through design innovation.

To stop t h ese activities, we may need to file a law s uit.

These lawsuits are exp e nsive and would consume time and other resou r ces, even if we were suc c essful in stopping the violation of our p a tent rights.

In addition, there is a r i sk that a court would decide that our patents are not valid and that we do not have the right to stop the other party from using the inventions.

The r e is a l so the risk tha t , even if the validity of our patents were upheld, a c o urt would refuse to stop t h e other party on the grounds that its activities are not c o vered by, t h at is, do not infringe, our patents.

Should third pa r ties file patent applications, or be issued p a tents claiming technology also used or claimed by our licensor(s) or by us in any future patent application, we may be requ i red to p a rti c ip a te in int e rference proceedings in the U.S.

Patent a nd T rade m ark Off i ce ( “ U S P T O”) t o d e ter m ine priority of invention for those patents or patent applications t h at a re sub j e c t t o t h e f i rs t -to- i nvent l a w in the Un i t e d S ta t e s , or may be required to participate in derivation proceed i ngs in the USPTO f or those paten t s or patent a p plications that are subject to the f irst-inve n tor-to-f i le l a w in the Unit e d S tate s .

We may be r e qu i red to p a rti c ip a te in su c h i nterference or derivation p r oceedings inv o lving our issued patents and pend i ng applications.

We may be required to cease us i ng the technology or to license rights from prevailing t h ird parties as a result of an unfavorable out c ome in an int e rfer e nce proceeding or derivation proceeding.

A prevailing p a rty in that case may not offer us a li c ense on c omm e rc i a l l y a cc e pt a ble t e r m s or at a l l.

Ev e n i f we were able to obtain a license, it could b e non-exclusive, thereby giving our c o mpetitors and other third parties access to the same technologies licensed to us, and it could require us to m a ke subst a nti a l li c ensing and royalty payments.

Any of the foregoing could have a material a dverse effect on our b u siness, financi a l condition, results of op e rations and prospects.

If any of our owned or in-lice n sed patent applications do not issue as patents in any jurisdi c tion, we may not be able to compete e f fec t i v el y .

Changes in either the patent laws or the i r interpretation in the United States and other c ountries may diminish our ability to protect our inventions, obtain, m a int a in, a nd e nfor c e our int e l l e c tual property rights and, more generally, could affect the v a lue of our in t e l l e c tual property or narrow the scope of our owned and lice n sed paten t s.

W ith respe c t to bo t h i n-li c e n sed and owned intellectual property, we can n ot predict whether the patent applications we and our licensors are currently pursuing will issue as patents in any particular j u risdiction or whether the claims of any i ssued patents will provide sufficient protection from competitors or other third pa r ties.

The patent prosecution process is expensive, time-consuming, and complex, and we may not be a ble to fil e , pros e c u t e, m a int a in, e nforc e , or l i c e nse all necessary or desir a ble patent applications at a reasonable cost or in a t i m e ly m a nn e r.

It is also possible t hat we w i ll fa i l t o id e nt i fy patentable aspects of our research and development output in time to obtain patent protection.

Althou g h we enter into nondisclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of o ur research and development outp u t, such as our emplo y ees, corporate collaborato r s, outside scientific collabo r ators, CROs, c ontract manufactu r ers, consultants, advisors, and other third parties, any of t h ese par t ies may bre a ch the agr e em e nts a nd disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.

In addition, o ur ability to obtain and maintain valid and enforceable pate n ts depends on whether the differences bet w een our inventions and the prior art allow our inventions to be patentable over the prior a r t.

Furthermore, publications of discoveries in the s c i e ntif i c li t era t ure oft e n l a g behind the actual discoveries, and patent a ppli c at i ons in the Unit e d States and other jurisdicti o ns are typically not p u blished until 18 months after filing, or in some cases not at all.

Therefore, we cannot be certain that we or our licensors w e re the first to make t he inventions claimed in any o f our o wned or licensed patents or pending pat e nt applications, or that we or our licensors were the first to file for patent protection of such inventions.

If the scope of any pate n t protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our abili t y t o pre v e n t our c omp e ti to r s f r o m c o m m e r c i a l i z i n g s i mi la r o r id e n t i c al t ec hn ology and product candidates would be adversely affected.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions, and has been the subje c t of m uch l it i ga t ion i n r e cent y e ars.

As a res u lt, t he issu a nce, s c ope, va l idi t y, enfor c eab i li t y, and com m er c ial value of our patent rights are highly uncertain.

Our owned or in-licensed p e nding and future patent appli c ations may not res u lt in patents being issued which protect our Anktiva, hAd5, aldoxorubicin or other product candidates or other t e chnologies or which effective l y prevent others from commerc i alizing competit i ve technologies and product candidates.

Moreover, the coverage claimed in a patent applicati o n can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issu a nce.

E ven if pat e nt appl i ca t ions we license or own currently or in the future issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competit o rs or other third p a rties from c o mpeting w i th us, or otherwise provide us with any co m pet i tive a dvant a ge.

Any patents that we own or in - license may be challenged, na r ro w ed, circumvented, or invalidated by third parties.

Consequently, we do not know whether our Anktiva , hAd5 or other product candidates or other technologies will be protectable or remain protected by valid and enforc e able p a ten t s.

Our competitors or other third parties may be able to circumvent our patents by developing similar or alterna t ive technologies or p roducts in a non-infringing manner which could materially adversely affect our business, financial condition, results of operations and growth prospects.

The issuance of a patent is not conclusive as to its in v e nto r ship, scope, validity, or enforceability, and our p a tents may be c hallenged in the courts or patent o f fices in the United States and abroad.

We or our licens o rs may be subject to a third-p a rty preissuance submission of p rior art to the USPTO, or become involved in opposition, derivation, revoc a tion, reexaminat i on, post-grant and int e r pa r t e s review, or interference pro c eedings or ot h e r similar proceedings challenging our owned or licensed patent rights.

An ad v e rse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate or render unenforceable, our owned or in-licensed pat e nt rights, allow third par t i e s to c o m m e r c i a lize our Anktiva, hAd5 or other prod u ct candidates or other techno l ogies and compete directly with us, without payment to us, or result in our inability to ma n uf a c t ure or co m mer c i a li z e prod u cts without infringing third-party patent rights.

Moreover, we, or o ne of our licensors, may have to participate in inter f erence proceedings declared by the USPTO to determine priority of i nvention or in post-grant challenge proceed i ngs, s u ch as oppositions in a fo r e ign patent office, that challenge our or our licensor’s priority of invention or other features of patentabi l ity with respect to our owned or in-licensed patents and patent applications.

Such challenges may result in loss of patent rights, loss of exclusivity, or in patent c l aims being narrowed, invalidated, or held unenforceable, which could limit our ability to stop others from usi n g or commercializing similar or identical technology and products, or limit the dura t ion of the patent protection of our Anktiva, hAd5 or other product c a n didates and other te c hnologies.

Such proceedings also may result in s ubstantial cost and req u ire significant time from our scientists and management, even if t he e ven t ual out c ome is f a vorab l e t o u s .

If we or our collaborators are unsuccessf u l in any such proceeding or other priority or inventorship dispute, we may be required to obtain and maintain licenses from third parties, including parties involved in any such interference proceedings or other priority or invento r ship disputes.

Such licenses may not be available on commercially reasonable terms or at all, or may be non-exclusive.

If we are unable to obtain and maintain such licenses, we may n e ed to cease the dev e lopment, manufacture, and commercialization of one or more of the product candidates we may develo p .

The loss of exc l usivity or the narrowing of our own e d and licensed patent claims could limit our ability to stop others from using or comme r cializing similar or identical technology and products.

In addition, given the amount of time required for the development, testing, and regulatory r e view of new product candidates, p atents protecting such prod u ct candidates might e xpire before or shortly after s u ch product candidates are commercia l ized.

As a result, our intellectual property may not provide us with sufficient rights to exclude others f r o m commercializing p r oducts similar or identical to ours.

Some of our owned and in-licensed patents and patent appli c ations are, and may in the future be, co-owned with third parties.

I n addition, certain of our licensors co-own the patents and p a tent a ppli c at i ons we in-l i cense with oth e r th i rd parties with whom we do not have a direct r elationship.

Our exclusive rights to certain of these patents and p a tent applications are de p endent, in part, on inter-insti t utional or other operating a g r e ements b e t w e e n the joint owners of such patents and patent applications, who are not par t ies to our l i cense agr e e m ents.

If our licensors do not have ex c lusive co n t rol of the grant of licenses under any such third-party co-ow n ers’ interest in such patents or patent applications or we are otherwise unable to s e cure such e xc l us i ve rights, such co-owners may be able to license their rights to other third parties, including our c o mpetitors, and our competit o rs could market competing prod u cts and technology.

In addition, we may need the cooperation of any such co- o wners of our patents in order to enforce such patents against third parties, and such cooperat i on may not be p r o vided to us.

Any of the foregoing could have a material a dverse effect on our comp e titive positi o n, b u siness, financial conditions, results of operations and growth prospects.

We may be i n v olv e d i n lawsu i ts to prote c t or enforce our patents or other intellectual property or the patents or o t h e r i n t e l lectual property of our licensors, which could be expensive, t i m e -consum i ng a n d u n s u c ce ssf u l .

Competitors and other third par t ies may infringe, misappropriate or otherwise v i olate our patents or o t her int e ll e c t ual proper t y or the patents or other intellectual property of our licensors.

In addition, our patents or the patents of our lic e nsors also may become involved in i n ventorship, priority or validity disputes.

To counter i n fringement or other una u t horized use, we may be required to file infringement claims, which can be expensive and time-consuming.

In addition, in an infrin g ement proceeding, a court may decide that one or more of our p a tents is not valid or is u n enforceable or may refuse to stop the other party from using the t e chnology at issue on the grounds that our patents do not cover the technology in ques t ion.

An adverse result in any litigation or defense proceeding could put one or more of o ur o w ed or licensed paten t s at risk of being invalidated, held unen f o r ceable, or interpreted narrowly, and could put our patent applica t ions at risk of not iss u ing.

Defense of these cl a im s , reg a rdl e ss of th ei r merit, would involve subst a nti a l li t iga t ion e xpense a nd would be a substantial diver s ion of employee resources from our business.

Furthermore, beca u se of the substantial amount of discovery required in connection w i th intellectual proper t y litigation, there is a risk that some of our confidential information could be compromised by disclosure dur i ng this type of litigation.

Even if resolv e d in our f a vor, li t ig a tion or other legal proceed i ngs relating to intellectual prop e rty claims may cause us to i ncur significant expenses and could distract our personnel from their norm a l responsibilities.

I n addit i on, there could be public announcements of the resul t s of hearings, m o tions, or other interim proceedings or dev e lop m ents, a nd if secur i ti e s an a lysts or investors per c eive t hese results to be negative, it c o uld have a substantial adverse eff e ct on the pri c e of our common stock.

Such litigation or proceedings c o uld substan t ially increase our operating los s es and reduce the resources ava i l a ble for d e ve l op m ent a c t i vit i es or any future s a l e s, marketing, or distribution ac t ivities.

We may not have s u f f icient financial or other resources to conduct such litigation or proce e dings adequately.

Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can b e cause of their greater finan c ial resources and more mature a n d developed intellectual property portfoli o s.

Un c e rt a in t ies r e sult i ng from the in i ti a t i on and continuation of patent litigation or o t her proceedings could have a m a ter i al a d verse effect on our ability to comp e te in the m a rke t p l a c e.

Issued patents covering our t e chnology and product candidates could be found invalid or u n e n for c eab l e if c ha l l e ng e d in c ourt or before administrative bodies in the United States or abroad.

If we or one of our licensors initiate legal proceedings against a third party to enforce a patent covering one of our product candidates or o t her technologies, the defendant could counterclaim that t h e patent is invalid and / or unenforceable or that we infringe their paten t s.

In patent litigation in the United States, defendant counte r claims alleging invalidity and/or unenforceability are commonplace, and there are numerous gro u nds upon which a third party can assert invalidity or unenforceability of a pate n t .

Groun d s for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablemen t .

Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or o t her applicable body, or made a misleading statement, during prosecution.

T h ird parties may also raise similar claims be f ore administrative bodies in the United States or abro a d, ev e n outside t he cont e xt of l i tig a tion.

Such m e chan i s m s include re-examination, post grant review, int e r par t e s review, interference proce e dings, derivation proceedings, and equivalent procee d ings in foreign jurisdictions (e.g., opposition proceedings).

The cost to us of any litigati o n or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial.

Some of o u r competitors may be better a b le t o sus t ain the c os t s of such li t ig a tion or ot h e r proceeding b e cause t h ey have su b stantially greater resources.

Such proceedings could result in revocati o n or cancellation of, or amendment to, our patents in such a way that they no longer cover our product candidates or technologies.

The outcome following legal assertions of invalidity and unenforceability is unpredi c table.

With respect to the v alidity question, for example, we cannot be certain that there is no invalidating prior art, of which we, our licensor, our or our licensor’s patent counsel and the patent exa m iner were unaw a re during prosecution.

If a third party were to prevail on a legal ass e rtion of invalidity and/or unenforceability, we would lose at least part, and perha p s all, of the patent protection on our p r o duct candidates.

Such a loss of patent protection c o uld have a material a dve r s e impact on our business, financial co n dition, results of o p erations and prospects.

T h e u se of o u r t e c h no l ogy a n d product candidates could pote n t ia l ly confli c t with the rights of others, and third-party claims of intellectual property in f r ingement, misappropriat i on or other violation against us, our licensors or our collaborators may prevent or delay the deve l opment and com m ercia l ization of our product candidates a n d technologies.

Our com m er c ial suc c ess dep e nds in part on ou r , our lice n sors’ and our collaborators’ ability to avoid infringing, misappropriating and otherwise violating the patents and other intellectu a l property rights of third parties.

There is a substantial amount of complex litiga t ion involving patents and other intellectual property rights in the biopharmaceutic a l industry.

Our potential competitors or other parties may have, develop or acquire patent or other intellectual property rights that they could assert again s t us.

If they do so, then we may be required to alter our product candidates, pay lic e nsing fees or cease our development and comme r cialization activiti e s with respect to the applicable product candidates or technologies.

If our product candidates conflict with patent or other intellectual property rights of others, such parti e s could bring legal act i ons against us or our collaborators, licensees, suppliers or customers, claim i ng damages and seeking to enjoin manufacturing, use and marketing of the affected products.

Although we have conducted fr e edom - to-operate, or FTO, analyses of the patent landscape with respect to our lead product candi d ates and continue to u n dertake FTO analyses of our manufacturing processes, our Anktiva product candidate, and contemplated future processes and pr o ducts, because patent applications do not p ublish for 18 months, and because the claims o f patent applicat i ons can change ov e r ti m e, no F T O analysis can be considered exhaustive.

We may not be aware of patents that have already been issued and that a competitor or other third party m i ght a s sert are infringed by our c u r rent or future product c a ndidates or technologies.

It is also possible that we could be found to have infringed patents owned by third parties of which we are aware, but which we do not believe are relevant to our product candidates or technologies.

In addition, because patent applications can take many years to i s su e , th e re m a y be curr e ntly pending patent a ppli c a t ions th a t may l a ter result i n issued p atents that our product candidates or technologies may i n f r inge.

Furthermore, patent and other intellectu a l property rights in biotechnology remains an evolving area with many risks and uncertainties.

As such, we may not be able to ensure that we can market our product candidates without conflict with the rights of others.

If intellectual property-related leg a l ac t ions a s s e r t ed aga i nst us a re su c c e s sful, i n a ddit i on to any pot e nti a l l i a bil i ty for d amages (including treble damages and attorneys’ fees for willful i n fringement), we could be enjoined from, or required to obtain a license to continue, manufacturing, promoting the use of or marketing the affected p r o d ucts.

We may n ot prevail in any legal a c tion and a required license under the applicable patent or other int e ll e ctu a l proper t y m a y not be available on acceptable terms or at a ll.

E ven if we were a ble to obta i n a l i c e ns e , it cou l d be non-exclusive, thereby giving our competitors and other t h ird parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments.

We also cou l d be required to redesign our infringing p r o ducts, which may be impossible or require substantial time and monetary expenditure.

Defense of i n f ringement claims, regardless of their merit, wou l d involve substantial litigation expense and would be a substan t ial diversion of management and other employee re s ources from our business, and may i m pact our reputation.

Some of our competitors may be able to su s t a in the c osts of litigation or administrative proceedings more effectively than we can because of greater fin a ncial resources.

In addition, t here could be public announcements of the results of hearings, m o tions, or other interim proceedings or dev e lopments, and if securities analysts or investors per c e i v e th e s e results to be negative, it could have a substantial adve r s e effect on the price of our common s t ock.

The occurrence of any of t he foregoing could have a material adve r s e effect on our bu s iness, financial condition, resul t s of o perations and prospects.

Obtaining and maintaining our patent prote c tion depends on compliance with various procedural, do c ument submission, fee paymen t , and other requirements imposed by govern m ent patent agencies, and our patent protection could be red u ced or eliminated for non-compliance with th e se r e qu i r e m e n t s.

Periodic maintenance fees, renewal fees, annuity fees, and various other government fees on pat e nts and patent applications are due to be p a id to t he USPTO and foreign patent agencies in several stages over the lifetime of a patent.

The USPTO and various fore i gn governmental pat e nt agen c i e s require compliance with sever a l procedural, documentary, fee payment and other similar provisions during the pat e nt application p r ocess.

In certain circumstances, we rely on our licensors to pay these fees and take the ne c e ss a ry ac t ions t o co m ply w i th t hese requi r e m e nts.

Wh i le an inadvertent lapse can in many cases be cured by payment of a late f e e or by o t her me a ns in a c cord a n c e with the app l ic a ble rul e s, there a re s i tua t ions in which n o ncompliance can result in ab a ndonment or lapse of the patent or patent applica t ion, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

Noncompliance e v ents that cou l d result in abandonment or lapse of a patent or patent applica t ion inclu d e, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents.

In such an event, our competitors might be able to e n ter the market with similar or identical products or technology, which would have a mat e rial a dverse imp a ct on our business, financial condition, results of operations and prospects.

Changes in United States patent law could diminish the value of patents in general, t h e r e by i m pairing our ability to protect our product candidates.

As is the case with other i m munotherapy and biopharmaceutical companies, our success is dependent on intellec t ual property, particularly patents.

Obtaining and enforcing patents in the b i opharmaceutical industry invol v e both technological and legal complexity, and is ther e fore costly, time-consuming and inherently uncertain.

In a ddit i on, the Unit e d S t a tes h a s r e cen t ly ena c ted and is currently implementing wide-ranging patent reform legislation.

Assuming that other requir e m e nts for pat e nt a bil i ty a re m e t, prior to M a rch 2013, i n t he Un i ted S t at e s, the first t o invent the claimed invention was entitled to t h e p a t e nt, while outside t he Un i ted S t a t es, the first to file a p a tent a ppli c at i on was e nt i tl e d to t he patent.

After March 2013, u n der the Leahy-Smith America Inv e nts Act, or the America Invents Act, enacted in September 2011, the United States transitioned to a first-to-file system in which, assuming that other requir e men t s for p a t e ntab i li t y a re m e t , the first inventor to file a patent application w i ll be en t it l ed t o t he p a t e nt on an invention regardless of whether a third party was the first to invent the claimed inve n t ion.

A third party that files a pat e nt application in the USPTO after March 2013, but before us could the r efore be awarded a patent covering an invention of ours even if we had made the inve n tion before it was made by such third party.

This will require us to be co g nizant of the time from invention to filing of a patent application.

Since patent appli ca t ions in the United States a n d most other countries a r e con f idential for a period of time after filing or until issuance, we cannot be cert a in that we or our licensors were the first to either file any patent ap p l ication r e lated to our product candidates or other technologies or invent any of t he inventions c l aimed in our or o u r licensor’s patents or patent applications.

The Ame r ica I nvents Act also includes a n u mber of significant changes that affect the way patent applications will be pro s e c ut e d a nd a l so m a y a ffect patent litig a t i on.

These in c lude a l lowing thi r d-party submission of p r ior art to the USPTO during patent p r osecution and additional proced u r es to attack the validity of a p a tent by USPTO-administered post - g r ant proceedings, i ncluding post-grant review, int e r pa r t e s review, a n d derivation proceedings.

There f ore, the America Invents Act and its imp l ementation could increase the uncertainties and costs surrounding the prosecution of our owned or in-licensed patent appli c ations and the enforcement or defense of our owned o r in-licensed issued patents, all of which c ould have a material adverse effect on our business, financial condition, res u lts of operations, and prosp e c ts.

Additionally, recent U .

Supreme Court rulings have narr o wed the scope of patent pro t ec t ion ava i lab l e in cer t a in c i rcu m s t anc e s and weak e ned the rights of patent owners in cer t ain situations.

I n addition to i n creasing uncertainty with regard to our ability to obtain pate n ts in the futur e , this comb i nat i on of even t s has cre a t e d unc e rt a inty with respe c t t o the value of patents, once ob t ained.

Depending on decisio n s by Congress, the federal courts, and the USPTO, t h e laws and regulations governing patents could change in unpredictable ways that would weaken our abi l ity to obtain new patents or to enforce our exist i ng patents and patents that we m i ght obtain in the fut u re.

While we do not believe that any of the patents ow n e d or licensed by us will be found invalid based on the foregoing, we cannot predict how future decisions by Congress, the federal c o urts or the USPTO may impact the value of our patents.

Our rights to develop and comme r cialize our product cand i dates and technologies are s u b j ec t , in part, to the t e r m s and condit i o ns of l i c e n s es granted to us by others.

We will rely on licenses to cer t ain patent rights and proprietary technology from third parties t h at are important or necessary to the developme n t of aldoxorubicin and products enabled by our yeast, inclu d ing T armogen, technologies.

For example, in July 2017, we entered into a n exc l us i ve li c ense agreement with CytRx Corporation, or CytRx, pursuant to which we r e c e ived an ex c lusive li c e n s e to c e rtain of CytRx’s int e ll e c t u al property relating to aldoxorubicin.

I n January 2020 we e n tered into an exclusive license agreement w i th GlobeImmune, Inc., or GlobeImmune, pursuant to which we obtained a n e xc l us i ve l i c e nse to c e r t ain of GlobeImmune’s intel l e c tual prop e rty r e l a ting to the i r T armogen platform to c o mplem e nt our proprietary yeast technology.

I n August 2020, we entered into an exclusive license agreement with ios B io Ltd., formerly named Stabilitech Bi o pharma Ltd., or iosBio, pursuant to which iosBio granted us an exclusive license to c e rt a in of iosBio’s i nt e llectual property rights relating t o the SARS-CoV-2 and successor vaccine candidates (and, in connection with such license, we granted iosBio a non-exclusive license relating to its adenovirus constructs for the prevention and treatment of s h ingles and other infec t ious disease ta r g ets to be mutua l ly agreed by the parties in good fai t h).

License agreements may not prov i de exclusive r ights to use certain licensed i n tellectual property and technology in all releva n t fiel d s of use and in all territories in which we may wish to dev e lop or commercialize our technology and produ c t candidates in the f uture.

As a result, we may not be able to prevent competitors or other third parties from developi n g and commercializing competitive products that a l so utilizes technology that we have in-l i cens e d.

In addition, subject to the terms of any s u ch license agreements, we do n ot have the right to control the preparation, filing, prosecution and maintenance, and we may not have the right to control the enforcement, and defense of patents and patent appli c ations covering the technology that we l i cense from third parties.

We cannot be cer t ain that our in-licensed or out - licensed patents and patent applications that are controlled by our licensors or licensees will be prepa r ed, filed, prosecuted, maintained, enforced, a n d defended in a manner con s istent with the best interests of our b usiness.

If our licensors or li c e ns e es f a il to pros e c ut e , m a int a in, e nforce, and defend such patents, or lose rig h ts to those patents or patent application s , the rights we have licensed may be reduced or eliminated, our right to develop and commercialize A nktiva and any of our product candidates that are subject of such licensed rights could be adversely affec t ed, and we may not be able to prevent competitors from making, using and s e lling competing products.

I n addition, even where we have the right to control patent prosecution of patents and patent applications we have licensed to and from third parties, we may still be adversely affected or prejudiced by actions or inact i o ns of our licensees, our licensors and the i r counsel that took place prior to the date upon which we assumed control over patent prosecution.

Furthermore, our owned and in-li c ensed patents may be su b j ect to a reservation of rights by one or more third parties.

For example, certain of our in-licensed intellectual property was funded in part by the U.S.

As a res u lt, t h e U.S.

government m a y have certain rig h t s to s u c h in t e l l e c tu al property.

When new technologies are deve l oped with U.S.

government f unding, the U.S.

gover n ment generally obtains certain righ t s in any resulting patents, including a non-exclusive license au t horizing the U.S.

gover n ment to use the invention or to have others use the invention on its behalf.

government’s righ t s may also permit it to disclose the funded inventions and technology to third parties and to exercise m arch-in rights to use or allow third parties to use the technology we have licensed that was developed using U.S.

government funding.

government may ex e rcise i t s march-in rights if it determines that action is necessary because we fail to achieve practical a pplication of the government-funded technology, or because ac t ion is ne c e ssary to a ll e vi a te he a lth or saf e ty ne e ds, t o m e et requirements of fed e ral regulations, or to give preference to U.S.

In addition, our rights in such inventions may be subject to certain requirements to manufact u re products embodying s u ch inventions in the Unit e d Stat e s in c e rt a in circumstances if this requir e ment is not waived.

Any exercise by the U.S.

government of such rights or by any third party of its reserved rights could have a material adverse effect on our competitive positi o n, business, financial cond i tion, results of operations and growth prosp e c t s .

If we fail to comp l y with our obl i gations i n t h e agr e em e n t s u n der wh i c h we l i c e n s e i n tellectual property r i ghts from third par t ies or otherwise experience disruptions to our business r e lat i o n s h ips with o u r lic e n s ors, we co u l d lo s e l ic e n s e righ t s t h at are important to our b u s i n e s s .

We have en t e r e d in t o l ic e nse a gre e men t s with third par t ies and may need to obtain additional lice n ses from others to advance our research or allow commercialization of our product c a ndidates.

It is possible that we may be unable to obtain additional licen s es at a reasonable cost or on reasonable terms, if at all.

In that event, we may be r e quired to expend sign i ficant time and resources to redesign our technology, product candidates, or the methods for manufacturing them or to deve l op or license replace m ent technology, all of which may not be feasible on a technical or commercial basis.

If we are unable to do so, we may be unable to develop or com m ercialize the aff e cted product candidates or continue to utilize our existing technology, which could harm our business, financial condition, results of operations and growth prospects significan t ly.

We cannot provide any assurances that third-party p a tents do not exist which might be enforced aga i nst our current technology, manufacturing methods, p r o duct candid a tes, or future methods or products resulting in either an injunct i on prohibiting our man u f acture or fut u r e sales, or, with respect to our future sale s , an obligation on our part to pay royalties and/or other forms of compensation to third parti e s, which could be significant.

In addition, each of our license agreements, and we expect our future agreements, will im p ose various development, diligence, c ommercialization, and other obligatio n s on us.

Certain of our license agreements also r e quire us to meet development ti m el i nes, or t o e xerc i se c omm er cially reasonable efforts to develop and commercialize licensed product s , in order to maintain the licenses.

In spite o f our efforts, our licensors mig h t conclude that we have ma t e ri a l l y bre a ch e d our oblig a tions und e r such l i c e nse ag r ee m e n ts a nd might ther e fore t e rmin a te the lic e nse a gr e ements, th e reby removing or limiting our ability to develop and com m ercialize products and t e chnology covered by these license agr e ements.

If these in-licenses are t e rmin a t e d, or if the u n derlying patents fail to provide the int e nded exclusivity, competitors or other third parties would have t h e freedom to seek regulatory approval of, and to market, products identical to ours and we may be required to cease our development and commerciali z ation of certain of our product candidates or of Anktiva.

Any of the foregoing could have a material adver s e effect on our comp e titive position, business, financial conditions, results of o p erations and growth prospects.

Moreover, disputes may arise regar d ing intellectual property subject to a licensing agr e ement, including:

t he scope of rights granted un d er the license a g r e em e nt and o t her int e rpre t a t i on-re l a t e d i s sues;

t he extent to which our technology and p r ocesses infringe on intellectual property of the licensor that is not subject to the l i censing agr e em e nt;

t he sublicensing of patent a nd other rights under our collaborative development relationships;

our diligence obligations under the license agreement and what activ i ties satisfy those diligence obligations;

t he inventorship a n d ownership of inventions and know-how resulting from the joint c r eati o n or use of intellect u a l property by our licensors and us a nd our pa r tners;

t he priority of invent i on of patented technology.

In addition, the agreements und e r which we curre n t ly license i n tellectual property or technology from third parties are complex, and certain provisions in such agr e e m ents m a y be susc e ptib l e to m ult i ple in t e rpr e ta t i ons.

The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant i n tellectual property or technology, or increase what we b elieve to be our financial or other obligations under t h e relevant agreement, either of which could have a material adverse eff e ct on our business, financial condition, results of o p erations and growth prospects.

Moreover, if disputes over intellectual property that we have l i censed prevent or impair our a b i li t y to m a int a in our current l ic e ns i ng arrangements on com m erc i a l ly a c c e pt a ble t e rms, we m a y be unable to successfully develop and commerci a li z e the aff e c t ed p r odu c t c a ndida t e s, wh i ch could have a material adve r s e effect on our busi n ess, financial conditions, results of operations and growth prospects.

We have l i mi t e d for e ign int e l l ec t ual proper t y rights and may not be able to protect o u r intellectual property rights t h roug h out the world.

We have limited int e llectual property rights outside the United States.

Filing, prosecuting and def e nding patents on product c a ndidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the Unit e d S t a tes can be l e ss extensive than those in the Uni t ed States.

In addition, the laws of some foreign countries do not protect int e llectual property rights to the s a me e xt e nt a s feder a l and s t ate l a ws in the Unit e d St a te s .

Consequently, we may not be able to p r event third parties from p r acticing our inv e ntions in all countries o u tside the United States, or from selling or importing products made using our inventions in and into t h e United States or other jurisdictions.

Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise in f ringing products to territories w h ere we have patent protection, but enforcement is not as strong as that i n the Unit e d Stat e s.

The s e prod u cts may compete with our product candid a tes and our patents or other intellectual property rights may not be effective or suff i ci e nt to pr e vent th e m from c omp e ting.

Many companies ha v e encountered significant problems in protecting and defending intellectual property rights in foreign juris d ictions.

The legal systems of certain countries, particularly certain developing c ount r ies, do not favor the enforcement of patents, trade secrets and other intellectual property protection, parti c ularly those relating to biopharma c eutical p r o d ucts, whi c h could make it diffic u lt for us to stop the infringement of our patents or marketing of competing products in vio l ation of our proprietary rights generally.

Proceedings to enforce our patent rights i n foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent appli c ations at risk of not issuing and could provoke third parties to assert claims ag a inst us.

We may not prevail in a ny l a wsu i ts t h a t we i nit i at e , and the damages or other r e medies awa r ded, if any, may not be c o m m er c ia l ly me a ningful.

A c cordingly, our e f forts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties.

I n addition, many countries limit the enforceabili t y of patents against government agencies or gov e rnment contractors.

In these countries, the patent owner may have li m it e d r e med i es, wh i c h could materially diminish the value of such patent.

If we or any of our licensors is forced to grant a l i c e nse to th i rd pa r ti e s w i th respect to any patents relevant to our business, our competi t ive position may be impaired, and our business, financial conditi o n, results of operations and prospects may be a dversely affected.

We may be subject to claims that our employees, consultants or i n depende n t co n trac t ors h ave wro n gfully used or disclosed trade s e cr e ts or oth e r confident i al i n forma t ion of third parti e s or claims asserti n g ownership of what we regard as our own intellectual property.

We have r e c e ived conf i dent i al and proprietary information from third parties and their employees and con t ractors.

In addition, we plan to employ and contract with individuals who were previously e m ployed at other biotechnology or pharmaceutical companies.

We may be subject to c la i ms t hat we or o u r employees, consultants or ind e pendent contractors have inadver t ently or otherwise used or disclosed the trade secrets or o t her confidential information of these third parties o r our emp l oyees’ former e m ployers.

Litigation may be necessary to defend against or pursue these c l ai m s .

E ven if we are succ e ssful in resolv i ng th e s e c l a ims, l i tig a tion cou l d result in sub s t a nti a l c ost and be a distraction to our management and employees.

In addition, while it is our poli c y to require our empl o yees, c onsultants and independ e nt contractors who m a y be involved in the conception or development of intellectual prop e rty to execute agreements assigning such intell e ctual property to us, we may be unsuccessful i n executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own.

The assignment o f intellectual property rights may not be self-executing, or t h e a s s i gn m e nt agr e e m ents may be bre a ched, a nd we may be forced to bring claims against t h ird parties, or defend claims that they may bring against us, to determine the ownership of wh a t we r e gard as our int e ll e ctual property.

Any of the f o r e going could have a material adve r s e effect on our bu s iness, financial condition, resul t s of o perations, and prospects.

We may not be able to li c ense or acquire new or necessary i n tellectual property rights or t e chnology from t h i r d pa r ti e s.

An element of our intellectual property s t rategy is to license intel l ectual property rights and t echnologies from third parties and/or our a f filiates.

Other parties, including our competitors or our affiliates, may have p a tents and have filed and are l i kely filing pat e nt applications potentially relevant to our b u siness.

In order to avoid infringing these patents, we may find it necessary or prud e nt to obtain licenses to such patents f r om such parties.

In addition, w i th r e sp e c t to any pa t e nts we c o-own w i th other parties, including our affiliates, we may require l i c e nses to such co-owners’ in terest to such patents.

The licensing or acquisition of intellectual property rights is a competitive area, and other mo r e established companies may pursue strategies to license or acquire third-party intellect u al property rights that we may consider attract i ve or necessary.

These established companies may have a competitive advantage over us due t o t heir siz e , c a pit a l r es ources and greater clinical development and commercial i z a tion c a p a bi l it i es.

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

We also may be unable to license or acquire third party intelle c tual property rights on terms that would allow us to make an approp r iate return on our inv e stment or at all.

No assurance can be given that we will be succ e s s ful in licensing any additional rights or technologies from t h ird parties and/or our af f iliates.

Our inability to l i cense the rights and techno l ogies that we have identified, or th a t we m a y i n t he future id e ntify, c ould have a material a dverse impact on our ability to c o mplete the development of our product candidates or to develop additional product c a ndidates.

Even if we were able to obtain a lice n se, it could be non-exclu s ive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments.

Failure to obtain any necessary rights or licenses may detriment a lly af f ect our planned development of o u r current or future additional product candidates and could increase the cost, and extend the timelines associated with our development, of such other products, and we may have to abandon development of the relevant program or product candidate.

Any of the foregoing could have a material adverse e ffect on our business, financial co n dition, results of o p erations and prospects.

If we do not ob t ain pa t ent t e rm ext e nsion and data exclusivity for any product ca n didat e s we may d e v e lop, our business may be m at e r i ally harmed.

Depending upon the timing, duration and specifi c s of any FDA marketing approval of any product candidates we may develop, one o r more of our owned or in-licensed U.S.

patents may be eligible for limited patent term extension under the D r u g Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Wa x m an Act.

The Hatch-Waxman Act permits a patent term extension of up to five years as compensation for patent te r m lost d u r ing the FDA reg u latory review p r o c ess.

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

Similar e x tensions as compensation for patent term lost during r e gulatory re v i ew processes are also a va i lab l e in certain foreign countries and territories, such as in Europe under a Supplementary Patent Certificate.

Howev e r, we may not be g ranted an extension in the United States and/or foreign countries and territories because of, for example, failing to exercise due diligence during t h e testing phase or regulatory review process, failing to apply within applicable d e adlines, failing to apply prior to e xpiration of relevant patents, or otherwise fa i ling to s a tisfy applicable requirements.

Mor e over, the a ppli c ab l e ti m e period or the scope of patent protect i on afforded could be less than we request.

If we are unable to obtain patent term extension or the term of any such extension is shorter t h an what we request, our competitors may obtain approval of competing prod u cts following our patent e x piration, and our busine s s, financial condition, results of operations and growth prospects co u ld be m a t e ri a lly harm e d.

We may be subject to claims challenging the inv e n t orship of our patents a n d oth e r int e ll e c t ual propert y .

We or our licensors may be subject to claims that fo r mer employees, collaborators or o t her third par t ies h a ve an int e rest in our owned or in-licensed patents, trade secrets, or other intellectual property as an inventor or co-inv e ntor.

For example, we or our licensors may ha v e inventorship disputes a r ise from conflicting obligations of emplo y ees, consult a nts or others who are involved in developing our Anktiva product candidates or other technologies.

Litigation may be necessary to defend against these and other c l aims challenging inventorship or our or our licensors’ ownership of our owned or in-licensed patents, trade secrets or oth e r intellectual property.

If we or our licensors fail in defending any such claims, in addition to p a ying monetary dam a ges, we m a y lose v a lu a ble in t e l l ec t ual prope r ty rights, such as exclusive ownership of, or right to use, in t e l l e c tual prop e rty that is important to our Anktiva product candidates and oth e r technologies.

Even if we are successful in defending against such claims, litigation could r e sult in sub s t a nti a l c osts and be a distraction to management and other employees.

Any of the foregoing could have a material adverse e ffect on our b usin e ss, financial condition, results of operati o ns and growth prospects.

If we are unable to protect t h e confidentiality of o u r t r ade s e c r ets, o u r business and co m pe t it i ve pos i t i on wou l d be h ar m ed.

In addition to seeking patents for Anktiva, hAd5 and yeast te c hn o logies and other p r oduct candidates and oth e r technologies, we a lso r e ly on tr a de s e cr e ts and confidentiality agreements to p r otect o u r unpatented know-how, technology, and other proprietary information and to mainta i n our c omp e ti t ive p o sition.

Trade secrets and know-how can be difficult to protect.

We expect our trade secrets and know-how to over time be dis s e m ina t ed w i thin the industry through independent deve l opment, the publication of journ a l articles des c ribing the methodology, and the movement of p ersonnel from academic to industry s c ientific positions.

We seek to protect these trade secrets a nd other proprietary technology, in part, by entering into nondisclosure and confidentia l i t y agr e e m ents w i th parties who have access to them, such as our employees, corporate collaborators, outs i de s c ien t ific c oll a borators, CROs, CMOs, consultants, advisors, and other th i rd par t i e s.

W e also ent e r i nto c onfid e nti a li t y and invention or pat e nt a s sign m ent agr e e m ents with our employees and consultants as well as t r ain our employees not to bring or use proprietary information or t e chnology from former employers to us or in their w o r k, and remind former empl o yees when they leave t h eir employment of their confidentiality obli g ations.

We cannot guarantee that we have e nt e red into su c h agreements with each party that may have or have had access to our trade secrets or proprietary technology and processes.

Despite our efforts, any of these par t ies may bre a ch the agr e em e nts a nd disclose our proprietary i n formation, including our trade secrets, and we may not be able to obtain adequate rem e dies for such bre a ches.

Enfor c ing a cl a im th a t a p a rty il l e g ally disclosed or misappropriated a t rade secr e t is d i fficu l t, expensive, and time-consuming, and the outcome is unpredictable.

In addition, some c ourts inside and outside the Uni t ed States are less willing or u n willing to protect trade secrets.

If any of our trade secrets w e re to be lawfully obtained o r independently developed by a c o mpetitor or other third party, we would have no rig h t to prevent them from using that technology or information to compete with us.

If any of our t r ade secr e ts were t o be disclosed to or independently developed by a competitor or other third party, our com p etitive p osition would be materially and adversely harmed.

If our trademarks and trade names are not ad e quately protected, t h en we may not be able to build name recognition in our marke t s of interest and o u r busi n e ss may be adversely affected.

Our registered or unregistered trademarks or t r ade names may be challenged, infringed, circumvented or dec l ared generic or det e rmined to be infringing on other marks.

We may not be able to pro t e c t our righ t s to these tr a dem a rks a nd tr a de names, which we need to build name reco g nition among p o tential partners or customers in our markets of interest.

At times, competitors or other t h ird parties may adopt trade names or tr a de m arks sim i l a r to o u r s , t h ereby im p e ding our ability to build brand identity and possibly leading to mar k et confusion.

In addition, there could be potential trade name or tradema r k infringement claims brought by owners of other registered t r ademarks or trademarks that incorporate variations of our registered or u n r e gistered trademarks or trade names.

Over the long term, if we are unable to e s tablish n a me recognition based on our tradem a rks and trade names, th e n w e m a y not be able to c om p ete eff e ctively and our business may be adversely aff e cted.

Our efforts to enforce or protect o u r proprietary rights related to trademarks, trade sec r ets, domain names, copyrights or other intellectual property m a y be ineffective and could resu l t in substan t i a l c os t s and diversion of resources and could adversely affect our business, financial condition, r e sults of operations and growth prospect s .

Intellectual pr o perty rights do not necessarily address all potential threats.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to m a i nta i n our comp e ti t ive advantage.

others may be able to make p r o ducts t h at are similar to our product candidates or utilize similar technology but that are not covered by the claims of the patents that we license or may own;

we, or our current or future licensors or collaborators, might not have been the first to make the inven t ions covered by the i ssued patent or pending patent appl i cation that we license or own now or in the future;

we, or our current or future licensors or collaborators, might not have been the first to file p a tent a pplications covering c e rtain of our or their inventions;

others may independently deve l op similar or alternati v e technologies or duplicate any of our technologies without infringing our ow n e d or l i c en s e d in t e l l e c tual property rights;

i t is possible that our current or future pending owned or licensed patent applications will not le a d t o issued pat e nts;

i ssued patents that we hold r ights to may be held invalid or unenforceable, including as a result of legal challenges by our c ompetitors or other third parties;

our competitors or other third pa r ties m i ght conduct research and development activities in countries where we do not have pa t ent rights and then use the information learned from s u ch activities to develop competitive products for sale in our major commercial mark e t s;

we may not develop additional proprietary technologies that are patenta b le;

t he patents of others m a y harm our business;

we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a p a tent covering such intellectual property.

Should any of these events occur, they could have a material adverse ef f ect on our business, financial condition, results of operations a n d growth prospects.

O n e of our i s s u ed U .

pa t e n ts i s subject to a claim chall e ng i n g t h e i n v e n t or s h ip.

On September 10, 2020, a legal complaint was filed in a California court where Institute for Cancer Research (d/b/a Fox Chase Cancer Center) argued that it has a co-ownership i n terest in U.S.

10,456,420 a n d its underlying U.S.

Patent Application No.

15/529, 8 48, as well a s in c e rta i n r e la t e d patent applications or issued p a ten t s th a t inc l ude cl a im e d subj e c t m a tt e r a ll e gedly invented by one of the claimant’s employee s .

On September 30, 2020, we fil e d motion with the court asking that the c ompl a int be dismissed.

We dis a gr e e t hat th i s c l aim for co-owner s hip has merit and intends to vigorously defend our posi t ion.

All of t he exist i ng n a m e d inventors have assigned their righ t s in this p a t e nt to us.

We will continue to have an u ndivided interest in the entire patent even if claimant succeeds in this suit.

However, l it i gat i ng t his m a t t er could result in substantial costs and be a distraction to management and other employees.

Any of the foregoing could have a ma t erial adverse effect on o u r business, financial cond i tion, results of operations and growth prospects.

Risks Related to Our Common Stock

Soon-Shiong, o u r E xecutive C hairman and our principal stockholder, h a s signifi c ant interests in oth e r c ompanies w h i c h may c onfli c t w i th our i n t e r e sts.

Our Executive C hairma n , Dr.

Soon-Shiong, is the founder of NantWorks, L L C (“NantWorks”).

The various NantWorks companies are currently exploring opportunities in the immunotherapy, oncology, infectious disease and inflammatory disease fields.

In particular, we have agreements with a number of related parties that provide services, technology and equipment for use in their efforts to develop their product pipelines.

Soon-Shiong holds a controlling interest, either directly or indirectly, in these entities.

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Soon-Shiong and the companies with which he is involved could impact us.

We may also pursue supply arrangements for various investigational agents controlled by affiliates to be used in our clinical trials.

Soon-Shiong was to cease his affiliation with us, ImmunityBio, or with NantWorks, these entities may be unwilling to continue these relationships with us on commercially reasonable terms, or at all, and as a result may impede our ability to control the supply chain for our combination therapies.

These supply and collaboration agreements do not typically specify how sales will be apportioned between the parties upon successful commercialization of the product.

As a result, we cannot guarantee that we will receive a percentage of the revenue that is at least proportional to the costs that we will incur in commercializing the product candidate.

Furthermore, in November 2015, we entered into a Shared Services Agreement with NantWorks, pursuant to which NantWorks and/or any of its affiliates provides corporate, general and administrative, manufacturing strategy, research and development, regulatory and clinical trial strategy, and other support services to us and our subsidiaries.

We are also pursuing supply arrangements for various investigational agents controlled by affiliates to be used in their clinical trials.

Soon-Shiong w e re to cease his affiliation with us or NantWorks, these entities may be unwilling to continue these relationships with us on commercially reasonable terms, or at all, and as a result may impede our ability to control the supply chain for our combination therapies.

These collaboration agreements do not typically specify how sales will be apportioned between the parties upon successful commercialization of the product.

As a result, we cannot guarantee that we will receive a percentage of the revenues that is at least proportional to the costs that we will incur in commercializing the product candidate.

We have entered into sh a red s e rvic e s agr e e m ents with NantWorks, pursuant to which NantWorks and its affiliates provide corporate, general and administrative and other support services to us.

Soon-Shiong was to cease his affiliation with us or with NantWorks, we may be unable to establish or maintain this relationship with NantWorks on a commercially reasonable basis, if at all.

As a result, we could experience a lack of business continuity due to loss of historical and institutional knowledge and a lack of familiarity of new employees and/or new service providers with business processes, operating requirements, policies and procedures, and we may incur additional costs as new employees and/or service providers gain necessary experience, particularly in connection with issues or concerns we may have as a public company.

In addition, the loss of the services of NantWorks might significantly delay or prevent the development of our products or achievement of other business objectives by diverting management’s attention to transition matters and identification of suitable replacements, if any, and could have a material adverse effect on our business and results of operations.

*We will need to grow the size and capabilities of our organization, and we may experience difficulties in managing this growth.

To effect our business plan, we will need to add other management, administrative, regulatory, manufacturing and scientific staff.

As of September 30, 2020, we had 160 employees.

We will need to attract, retain and motivate a significant number of new additional managerial, operational, sales, marketing, financial, and other personnel, as well as highly skilled scientific and medical personnel, and to expand our capabilities to successfully pursue our research, development, manufacturing and commercialization efforts and secure collaborations to market and distribute our products.

This growth may strain our existing managerial, operational, financial and other resources.

We also intend to add personnel in our research and development and manufacturing departments as we expand our clinical trial and research capabilities.

Moreover, we may need to hire additional accounting and other personnel and augment our infrastructure as a result of operating as a public company.

Any inability to attract and retain qualified employees to enable our planned growth and establish additional capabilities or our failure to manage our growth effectively could delay or curtail our product development and commercialization efforts and harm our business.

*We have limited manufacturing experience and may not be able to manufacture our haNK, taNK, t ‑ haNK or ceNK cells on a large scale or in a cost-effective manner.

haNK, taNK, t‑haNK and ceNK cells have been grown in various quantities in closed cell culture systems and intermediate to larger-scale bioreactors.

With all manufacturing efforts being conducted in-house, we will need to develop the ability to grow haNK, taNK, t‑haNK and ceNK cells on a large-scale basis in a cost efficient manner.

While we have made great strides with our haNK and t‑haNK production, including a validated cryopreserved form of the product, we have not demonstrated the ability to manufacture these cells beyond quantities sufficient for our clinical programs.

We have not demonstrated the ability to manufacture our taNK, t‑haNK and ceNK cells beyond quantities sufficient for research and development and limited clinical activities.

We have also experienced increases in manufacturing costs and sporadic decreases in manufacturing yield of haNK, taNK, t‑haNK and ceNK cells.

In addition, we have no experience manufacturing our NK cells specifically at the capacity that will be necessary to support commercial sales.

The novel nature of our technology also increases the complexity and risk in the manufacturing process.

In addition, we may encounter difficulties in obtaining the approvals for, and designing, constructing, validating and operating, any new manufacturing facility.

We may also be unable to hire the qualified personnel that we will require to accommodate the expansion of our operations and manufacturing capabilities.

If we relocate our manufacturing activities to a new facility during or after a pivotal clinical trial, we may be unable to obtain regulatory approval unless and until we demonstrate to the FDA’s satisfaction the similarity of our haNK, taNK, t‑haNK and ceNK cells manufactured in the new facility to our cells manufactured in prior facilities.

If we cannot adequately demonstrate similarity to the FDA, we could be required to repeat clinical trials, which would be expensive, and would substantially delay regulatory approval.

Because our product candidates are cell-based, their manufacture is complicated.

In addition, we rely on certain third party suppliers for manufacturing supplies such as X‑VIVO 10 media to grow and produce our cells.

Reliance on such third-party suppliers exposes us to supply interruptions and shortages that could have an adverse effect on our ability to produce product.

Moreover, our present production process may not meet our initial expectations as to reproducibility, yield, purity or other measurements of performance.

Any supply interruption from third parties and entities that are affiliated with Dr.

Soon‑Shiong and/or NantWorks could materially harm our ability to manufacture our product candidates until a new source of supply, if any, could be identified and qualified.

We may be unable to find a sufficient alternative supply channel in a reasonable time or on commercially reasonable terms.

In addition, we may have to customize a bioreactor system to our manufacturing process.

Because our manufacturing process is unproven, we may never successfully commercialize our products.

In addition, because the clinical trials were conducted using a system that will not be sufficient for commercial quantities, we may have to show comparability of the different versions of systems we have used.

For these and other reasons, we may not be able to manufacture haNK, taNK, t‑haNK, ceNK and MSC cells on a large scale or in a cost-effective manner.

aNK platform cells have been produced at academic institutions associated with our other clinical trial sites.

In the past, the lack of production of aNK platform cells has caused delays in the commencement of our clinical trials.

We have been establishing NK cell production capacity to meet anticipated demand for our planned clinical trials but may not be able to successfully build out our capacity to meet our current and anticipated future needs.

Any damage to or destruction of our facility and equipment, prolonged power outage, contamination or shut down by the FDA or other regulatory authority could significantly impair or curtail our ability to produce haNK, taNK, t ‑haNK and ceNK cells.

*We are dependent on third parties to store our aNK, haNK, taNK, t ‑ haNK and ceNK cells, and any damage or loss to our master cell bank would cause delays in replacement, and our business could suffer.

The aNK cells of our master and working cell banks are stored in freezers at a third party biorepository and also stored in our freezers at one of our production facilities.

If these cells are damaged at these facilities, including by the loss or malfunction of these freezers or back-up power systems, as well as by damage from fire, loss of power, or other natural disasters, we would need to establish replacement master and working cell banks, which would impact clinical supply and delay our patients’ treatments.

If we are unable to establish replacement cell banks, we could incur significant additional expenses and liability to patients whose treatment is delayed, and our business could suffer.

*If we or any of our third party manufacturers that we may use do not maintain high standards of manufacturing, our ability to develop and commercialize haNK, taNK, t‑haNK or ceNK cells could be delayed or curtailed.

We and any third parties that we may use in the future to manufacture our products must continuously adhere to cGMP regulations rigorously enforced by the FDA through its facilities inspection program.

If our facilities or the facilities of third parties who we may use in the future to produce our products do not pass a pre-approval inspection, the FDA will not grant market approval for haNK, taNK, t‑haNK or ceNK cells.

In complying with cGMP, we and any third-party manufacturers must expend significant time, money and effort in production, record keeping and quality control to assure that each component of our haNK, taNK, t‑haNK and ceNK cell therapies meets applicable specifications and other requirements.

We or any of these third-party manufacturers may also be subject to comparable or more stringent regulations of foreign regulatory authorities.

If we or any of our third-party manufacturers fail to comply with these requirements, we may be subject to regulatory action, which could delay or curtail our ability to develop, obtain regulatory approval of, and commercialize haNK, taNK, t‑haNK or ceNK cells.

If our component part manufacturers and suppliers fail to provide components of sufficient quality to meet our required specifications, our clinical trials or commercialization of haNK, taNK, t‑haNK or ceNK cells could be delayed or halted, and we could face product liability claims.

If we or any of our third-party manufacturers that we may engage use hazardous and biological materials in a manner that causes injury or violates applicable law, we may be liable for damages.

Our research and development activities involve the controlled use of potentially hazardous substances, including chemical and biological materials, by us and any third-party manufacturers that we may use in the future.

We and any of our third party manufacturers that we may engage are subject to federal, state and local laws and regulations in the U.S.

governing the use, manufacture, storage, handling and disposal of medical and hazardous materials.

Although we believe that our procedures for using, storing and disposing of these materials comply with legally prescribed standards, we cannot completely eliminate the risk of contamination or injury resulting from medical or hazardous materials.

As a result of any such contamination or injury, we may incur liability or local, city, state or federal authorities may curtail the use of these materials and interrupt our business operations.

In the event of an accident, we could be held liable for damages or penalized with fines, and the liability could exceed our resources.

We do not have any insurance for liabilities arising from medical or hazardous materials.

Compliance with applicable environmental laws and regulations is expensive, and current or future environmental regulations may impair our research, development and production efforts, which could harm our business, prospects, financial condition or results of operations.

We have not yet developed a validated methodology for freezing and thawing large quantities of taNK and t ‑ haNK cells, which we believe will be required for the storage and distribution of our taNK and t ‑ haNK product candidates.

We have not demonstrated that taNK and t‑haNK cells can be frozen and thawed in large quantities without damage, in a cost-efficient manner and without degradation over time.

We may encounter difficulties not only in developing freezing and thawing methodologies, but also in obtaining the necessary regulatory approvals for using such methodologies in treatment.

If we cannot adequately demonstrate similarity of our frozen product to the unfrozen form to the satisfaction of the FDA, we could face substantial delays in our regulatory approvals.

If we are unable to freeze taNK and t‑haNK cells for shipping purposes, our ability to promote adoption and standardization of our products, as well as achieve economies of scale by centralizing our production facility, will be limited.

Even if we are able to successfully freeze and thaw taNK and t‑haNK cells in large quantities, we will still need to develop a cost-effective and reliable distribution and logistics network, which we may be unable to accomplish.

For these and other reasons, we may not be able to commercialize haNK, taNK or t‑haNK cells on a large scale or in a cost-effective manner.

*We rely on third party healthcare professionals to administer haNK, taNK, t ‑ haNK or ceNK cells to patients, and our business could be harmed if these third parties administer these cells incorrectly.

We rely on the expertise of physicians, nurses and other associated medical personnel to administer haNK, t‑haNK, MSC or ceNK cells to clinical trial patients.

If these medical personnel are not properly trained to administer, or do not properly administer, haNK, taNK, t‑haNK, MSC or ceNK cells, the therapeutic effect of haNK, taNK, t‑haNK, MSC or ceNK cells may be diminished or the patient may suffer injury.

In addition, if we achieve the ability to freeze and thaw our haNK, t‑haNK, MSC and ceNK cells, third party medical personnel will have to be trained on proper methodology for thawing haNK, t‑haNK, MSC and ceNK cells received from us.

If this thawing is not performed correctly, the cells may become damaged and/or the patient may suffer injury.

While we intend to provide training materials and other resources to these third-party medical personnel, the thawing of haNK, t‑haNK, MSC or ceNK cells will occur outside our supervision and may not be administered properly.

If, due to a third-party error, people believe that haNK, t‑haNK, MSC or ceNK cells are ineffective or harmful, the desire to use haNK, t‑haNK, MSC or ceNK cells may decline, which would negatively impact our business, reputation and prospects.

We may also face significant liability even though we may not be responsible for the actions of these third parties.

Even if any of our product candidates receive regulatory approvals, they may fail to achieve the broad degree of market acceptance and use necessary for commercial success.

Any potential future commercial success of any of our product candidates will depend, among other things, on its acceptance by physicians, patients, healthcare payors, and other members of the medical community as a therapeutic and cost-effective alternative to commercially available products.

Because only a few cell-based therapy products have been commercialized, we do not know to what extent cell-based immunotherapy products will be accepted as therapeutic alternatives.

If we fail to gain market acceptance, we may not be able to earn sufficient revenues to continue our business.

Market acceptance of, and demand for, any product that we may develop, if approved for commercial sale, will depend on many factors, including:

our ability to provide substantial evidence of safety and efficacy;

convenience and ease of administration;

prevalence and severity of adverse side effects associated with our product candidates;

availability of alternative and competing treatments;

the cost effectiveness of any approved product and competing treatments;

the ability to offer appropriate patient access programs, such as co-pay assistance;

the extent to which physicians recommend our products to their patients;

effectiveness of our marketing and distribution strategy and pricing of any product that we may develop;

publicity concerning our products or competitive products;

our ability to obtain sufficient third-party coverage and adequate reimbursement.

If haNK, taNK, t‑haNK and ceNK cells are approved for use, but fail to achieve the broad degree of market acceptance necessary for commercial success, our operating results and financial condition will be adversely affected.

In addition, even if haNK, taNK, t‑haNK and ceNK cells gain acceptance, the markets for treatment of patients with our target indications may not be as significant as we estimate.

Even if we are able to commercialize any product candidates, such products may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which would harm our business.

The regulations that govern marketing approvals, pricing and reimbursement for new drugs vary widely from country to country.

Some countries require approval of the sale price of a drug before it can be marketed.

In many countries, the pricing review period begins after marketing or product licensing approval is granted.

In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted.

As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay the commercial launch of the product and negatively impact the revenue we are able to generate from the sale of the product in that country.

Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if any product candidates we may develop obtain marketing approval.

Our ability to successfully commercialize any products that we may develop also will depend in part on the extent to which reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations.

Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels.

A primary trend in the U.S.

healthcare industry and elsewhere is cost containment.

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

Reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval.

Government authorities also impose mandatory discounts for certain patient groups and may seek to increase such discounts at any time.

Future regulation may negatively impact the price of our products, if approved.

It may be difficult to promptly obtain coverage and profitable payment rates from both the government-funded and private payors for any of our approved product candidates, and this may have a material adverse effect on our operating results, our ability to raise capital and our overall financial condition.

*There are risks inherent in our business that may subject us to potential product liability suits and other claims, which may require us to engage in expensive and time-consuming litigation or pay substantial damages and may harm our reputation and reduce the demand for our product.

Our business exposes us to product liability risks, which are inherent in the testing, manufacturing, marketing and sale of biopharmaceutical products.

We will face an even greater risk of product liability if we commercialize haNK, taNK, t‑haNK and ceNK cells.

For example, we may be sued if any product we develop allegedly causes or is perceived to cause injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.

Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties.

Claims could also be asserted under state consumer protection acts.

If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our products.

Even a successful defense would require significant financial and management resources.

Certain aspects of how haNK, taNK, t‑haNK and ceNK cells are processed and administered may increase our exposure to liability.

Medical personnel administer haNK, taNK, t‑haNK and ceNK cells to patients intravenously in an outpatient procedure.

This procedure poses risks to the patient similar to those occurring with infusions of other cell products, such as T‑cells and stem cells, including blood clots, infection and mild to severe allergic reactions.

Additionally, haNK, taNK, t‑haNK and ceNK cells or components of our haNK, taNK, t‑haNK and ceNK cell therapy may cause unforeseen harmful side effects.

For example, a patient receiving haNK, taNK, t‑haNK and ceNK cells could have a severe allergic reaction or could develop an autoimmune condition to materials infused with the haNK, taNK, t‑haNK and ceNK cells.

In addition, we have not conducted studies on the long-term effects associated with the media that we use to grow our haNK, taNK, t‑haNK and ceNK cells.

Similarly, we expect to use media in freezing our haNK, taNK, t‑haNK and ceNK cells for shipment.

These media could contain substances that have proved harmful if used in certain quantities.

As we continue to develop our haNK, taNK, t‑haNK and ceNK cell therapy, we may encounter harmful side effects that we did not previously observe in our prior studies and clinical trials.

Additionally, the discovery of unforeseen side effects of haNK, taNK, t‑haNK and ceNK cells could also lead to lawsuits against us.

Regardless of merit or eventual outcome, product liability or other claims may, among other things, result in:

decreased demand for any approved products;

injury to our reputation and significant negative media attention;

withdrawal of clinical trial participants or cancellation of clinical trials;

costs to defend the related litigation;

a diversion of management’s time and our resources;

substantial monetary awards to clinical trial participants or patients;

regulatory investigations, product recalls, withdrawals or labeling, marketing or promotional restrictions;

exhaustion of any available insurance and our capital resources;

loss of revenue;

a potential decrease in our share price;

the inability to commercialize any products we develop.

Our inability to obtain and maintain sufficient product liability insurance at an acceptable cost and scope of coverage to protect against potential product liability claims could prevent or inhibit the commercialization of our products.

We obtained product liability insurance covering our clinical trials with policy limits that we believe are customary for similarly situated companies and adequate to provide us with coverage for foreseeable risks.

Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage.

If we determine that it is prudent to increase our product liability coverage due to the commercial launch of any approved product, we may be unable to obtain such increased coverage on acceptable terms, or at all.

Our insurance policies also have various exclusions and deductibles, and we may be subject to a product liability claim for which we have no coverage.

We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

Moreover, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses.

If and when we obtain approval for marketing our product candidates, we intend to expand our insurance coverage to include the sale of the applicable products;

however, we may be unable to obtain this liability insurance on commercially reasonable terms.

If a successful product liability or other claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, our assets may not be sufficient to cover these claims and our business operations could suffer.

We currently have no marketing and sales organization and have no experience in marketing products.

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

We currently have no sales, marketing or distribution capabilities and have no experience as a company in marketing products.

If we develop an internal sales, marketing and distribution organization, this would require significant capital expenditures, management resources and time, and we would have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and sales personnel.

If we are unable or decide not to establish internal sales, marketing and distribution capabilities, we expect to pursue collaborative arrangements regarding the sales, marketing and distribution of our products.

However, we may not be able to establish or maintain such collaborative arrangements, or if we are able to do so, their sales forces may not be successful in marketing our products.

Any revenue we receive would depend upon the efforts of such third parties, which may not be successful.

We may have little or no control over the sales, marketing and distribution efforts of such third parties and our revenue from product sales may be lower than if we had commercialized our product candidates ourselves.

We also face competition in our search for third parties to assist us with the sales, marketing and distribution efforts of our product candidates.

There can be no assurance that we will be able to develop internal sales, marketing and distribution capabilities or establish or maintain relationships with third-party collaborators to commercialize any product in the U.S.

*A variety of risks associated with marketing our product candidates internationally could materially adversely affect our business.

We plan to seek regulatory approval of our product candidates outside of the U.S.

and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countries if we obtain the necessary approvals, including:

differing regulatory requirements in foreign countries;

unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;

economic weakness, including inflation, or political instability in particular foreign economies and markets;

compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

foreign taxes, including withholding of payroll taxes;

foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;

difficulties staffing and managing foreign operations;

workforce uncertainty in countries where labor unrest is more common than in the U.S.;

differing payor reimbursement regimes, governmental payors or patient self-pay systems, and price controls;

potential liability under the Foreign Corrupt Practices Act of 1977 or comparable foreign regulations;

challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the U.S.;

production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;

the impact of public health epidemics on the global economy, such as the coronavirus pandemic curren tly having an impact throughout the world ;

business interruptions resulting from geo-political actions, including war and terrorism.

These and other risks associated with international operations may materially adversely affect our ability to attain or maintain profitable operations.

*We have formed, and may in the future form or seek, strategic alliances or enter into additional licensing arrangements in the future, and we may not realize the benefits of such alliances or licensing arrangements.

We have formed, and may in the future form or seek, strategic alliances, create joint ventures or collaborations or enter into additional licensing arrangements with third and related parties that we believe will complement or augment our development and commercialization efforts with respect to our product candidates and any future product candidates that we may develop.

For example, during the third quarter of 2020, we entered into a Joint COVID‑19 Collaboration Agreement with ImmunityBio, a related party, as further described above.

In addition, we entered into an agreement whereby Viracta granted to us exclusive world-wide rights to Viracta’s phase II drug candidate, VRx‑3996, for use in combination with our platform of NK cell therapies.

However, if Viracta fails to raise sufficient capital to complete their pivotal phase II trial, if their trial is unsuccessful, or if our future clinical trial of NK cell therapy in combination with VRx‑3996 fails, the value of the Viracta license would be adversely affected.

Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business.

In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex.

Moreover, we may not be successful in our efforts to establish a strategic partnership or other alternative arrangements for our product candidates because they may be deemed to be at too early of a stage of development for collaborative effort and third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy.

If we license products or acquire businesses, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture.

We cannot be certain that, following a strategic transaction or license, we will achieve the revenue or specific net income that justifies such transaction.

Any delays in entering into new strategic partnership agreements related to our product candidates could delay the development and commercialization of our product candidates in certain geographies for certain indications, which would harm our business prospects, financial condition and results of operations.

*Our internal computer systems, or those used by our contractors or consultants, may fail or suffer security breaches.

Our business model involves the storage and transmission of clinical trial and other data on our systems and on the systems of our consultants and contractors, and security breaches expose us to a risk of loss of this information, governmental fines and penalties, litigation and/or potential liability, in addition to negative publicity.

Despite the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable to damage from computer viruses and unauthorized access.

Our security measures and those of our contractors and consultants may also be breached due to employee error, malfeasance or otherwise.

If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations.

For example, the loss of clinical trial data from completed, ongoing or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

Likewise, we rely on affiliated entities and third parties for research and development of our product candidates and to conduct clinical trials and may rely on third parties for the manufacture of our product candidates and similar events relating to their computer systems could have a material adverse effect on our business.

We expect that these risks and exposures related to our internal computer systems will remain high for the foreseeable future due to the rapidly evolving nature and sophistication of cyber threats to our internal computer systems.

Moreover, as the use of technology has become more prevalent in the course of business as a result of COVID‑19, we may become more susceptible to operational, financial and information security risks resulting from cyber-attacks and/or technological malfunctions.

There can be no assurance that our efforts to implement adequate security measures will remain sufficient to protect the company against future cyber-attacks.

To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, suffer damage to our reputation, the further development and commercialization of our product candidates could be delayed, and our stock price could decline.

Future acquisitions and investments could disrupt our business and harm our financial condition and operating results.

Our success may depend, in part, on our ability to expand our products and services.

In some circumstances, we may determine to do so through the acquisition of complementary businesses and technologies rather than through, or in conjunction with, internal development.

The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions.

The risks we face in connection with acquisitions include:

diversion of management time and focus from operating our business to addressing acquisition integration challenges;

retention of key employees from the acquired company;

coordination of research and development functions;

integration of the acquired company’s accounting, management information, human resources and other administrative systems;

liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, employee disputes, and alleged violations of laws;

unanticipated write-offs or charges.

Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.

Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, incremental operating expenses or the write-off of goodwill, any of which could harm our financial condition or operating results.

*Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our operations, and those of our contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and pandemics, acts of terrorism, acts of war and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured.

The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses.

We may rely on third-party manufacturers to produce and process our product candidates.

Our ability to obtain clinical supplies of our product candidates could be disrupted if the operations of these suppliers are affected by a man-made or natural disaster, pandemics, epidemics, or other business interruption, including the continuing coronavirus pandemic.

The extent to which coronavirus pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID‑19 and the actions to contain SARS‑CoV‑2 or treat its impact, among others.

If any disaster were to occur, our ability to operate our clinical trials could be seriously, or potentially completely, impaired.

Our corporate headquarters are in California near major earthquake faults and fire zones.

Our operations and financial condition could suffer in the event of a major earthquake, fire or other natural disaster.

*A coronavirus pandemic is ongoing in many parts of the world and may result in significant disruptions to our clinical trials, preclinical studies and supply chain which could have a material adverse effect on our business.

A coronavirus pandemic exists as of the filing of this report.

As the pandemic continues to evolve, much of its impact remains unknown, and it is impossible to predict the impact it may have on the development of our business.

The coronavirus pandemic may result in significant delays or disruptions in our clinical trials, which could affect or delay the regulatory approval process of our product candidates.

If the patients involved with these clinical trials become infected with the coronavirus disease, we may have more adverse events and deaths in our clinical trials as a result.

We may also face difficulties enrolling patients in our clinical trials if the patient populations that are eligible for our clinical trials are impacted by the coronavirus pandemic.

Additionally, if our clinical trial patients are unable to travel to our clinical trial sites as a result of quarantines or other restrictions resulting from the coronavirus pandemic, we may experience higher drop-out rates or delays in our clinical trials.

The severity of the coronavirus pandemic could also make access to our existing supply chain difficult or impossible by delaying the delivery of key raw materials used in our product candidates and therefore delay the delivery of such products for use in our clinical trials.

Any of these results could have a material adverse effect on our business.

*Our manufacturing facilities may be negati vely impacted by the ongoing coronavirus p andemic.

The coronavirus pandemic, including any actions we have taken in response, may disrupt our internal operations, including by heightening the risk that a significant portion of our workforce could suffer illness or otherwise not be permitted or be unable to work, and required that certain of our employees work remotely, which has heightened certain risks, including those related to cybersecurity and internal controls.

Additionally the coronavirus pandemic has impacted, and may continue to impact, our office and manufacturing locations, as well as our analytical, process development, and transitional research teams, including through the effects of facility closures, reductions in operating hours and other social distancing efforts.

For example, if even a small number of our employees in our working clusters related to manufacturing, analytical, process development, or translational research, tested positive for COVID‑19, it would require us to temporarily close a number of our offices or manufacturing facilities and temporarily suspend operations in order to conduct a deep clean of the facilities in order to ensure the safety of our employees.

Additionally, we cannot predict whether these conditions and concerns will continue or whether we will experience more significant or frequent disruptions in the future, including the complete closure of one or more of our facilities.

In addition, in the event demand for our products is significantly reduced as a result of the coronavirus pandemic and related economic impacts, we may need to assess different corporate actions and cost-cutting measures, including reducing our workforce or closing one or more facilities, and these actions could cause us to incur costs and expose us to other risks and inefficiencies, including whether we would be able to rehire our workforce or recommence operations at a given facility if our business experiences a subsequent recovery.

*Our employees, affiliates, independent contractors, clinical investigators, CROs, data safety and monitoring boards, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, and insider trading.

We are exposed to the risk of employee fraud, misconduct or other illegal activity by our employees, affiliates, independent contractors, clinical investigators, CROs, data safety and monitoring boards, consultants, commercial partners and vendors.

Misconduct by these parties could include intentional, reckless or negligent conduct that fails to:

comply with the laws and requirements of the FDA and other similar foreign regulatory bodies;

provide true, complete and accurate information to the FDA and other similar foreign regulatory bodies;

comply with manufacturing standards we have established;

comply with healthcare fraud and abuse, privacy and security and other laws in the U.S.

and similar foreign fraudulent misconduct laws;

comply with federal securities laws regulating insider trading;

report financial information or data accurately or to disclose unauthorized activities to us.

*Our current and future business operations may subject us to fraud and abuse, transparency, health information privacy and security, and other healthcare laws and regulations.

Failure to comply with such laws and regulations may result in substantial penalties.

Our current and future business operations may subject us to fraud and abuse, transparency, health information privacy and security, and other healthcare laws and regulations.

If we obtain FDA approval of any of our product candidates and begin commercializing those products in the U.S., our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase.

These laws may impact, among other things, our current activities with principal investigators and research patients, as well as proposed and future sales, marketing and education programs.

In particular, the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices.

These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally.

Activities subject to these laws also include the collection and/or use of information obtained in the course of patient recruitment for clinical trials.

The healthcare laws that may affect our ability to operate include, but are not limited to:

the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or providing any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs;

federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalty laws, which impose criminal and civil penalties against individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment or approval from the federal government including Medicare and Medicaid, that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government;

federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional U.S.

federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private), and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose requirements, including mandatory contractual terms, on certain covered healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information;

federal Physician Payments Sunshine Act, created under the Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, which we refer to collectively as ACA, and its implementing regulations, which require certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the U.S.

Department of Health and Human Services, or HHS, information related to payments or other transfers of value made to physicians (currently defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members by the 90th day of each subsequent calendar year, and disclosure of such information will be made by HHS on a publicly available website;

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

Additionally, we are subject to state and foreign laws and regulations that are analogous to the healthcare laws and regulations described above, among others, some of which may be broader in scope and may apply regardless of the payor.

Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and relevant compliance guidance promulgated by the federal government;

some state laws require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;

some state and local laws that require the registration of pharmaceutical sales representatives;

and some state and foreign laws govern the privacy and security of health information in ways that differ, and in certain cases are more stringent than, HIPAA, thus complicating compliance efforts.

We have adopted a code of business conduct and ethics, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent inappropriate conduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.

Efforts to ensure that our business arrangements will comply with applicable healthcare laws may involve substantial costs.

It is possible that governmental and enforcement authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations.

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

Defending against any such actions can be costly, time-consuming, and may require significant financial and personnel resources.

Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.

Competing generic medicinal products or biosimilars may be approved.

In the European Union, or E.U., there exists a process for approval of generic biological medicinal products once patent protection and other forms of data and market exclusivity have expired.

Arrangements for approval of biosimilar products exist in the U.S., as well.

Other jurisdictions are considering adopting legislation that would allow the approval of generic biological medicinal products.

If generic medicinal products are approved, competition from such products may substantially reduce sales of our products.

Public opinion and scrutiny of cell-based immunotherapy approaches may impact public perception of our company and product candidates, or may adversely affect our ability to conduct our business and our business plans.

Our platform utilizes a relatively novel technology involving the genetic modification of human cells and utilization of those modified cells in other individuals, and no natural killer cell-based immunotherapy has been approved to date.

Public perception may be influenced by claims, such as claims that cell-based immunotherapy is unsafe, unethical, or immoral and, consequently, our approach may not gain the acceptance of the public or the medical community.

Negative public reaction to cell-based immunotherapy in general could result in greater government regulation and stricter labeling requirements of cell-based immunotherapy products, including any of our product candidates, and could cause a decrease in the demand for any products we may develop.

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

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

More restrictive government regulations or negative public opinion could have an adverse effect on our business or financial condition and may delay or impair the development and commercialization of our product candidates or demand for any products we may develop.

Adverse events in our clinical trials, even if not ultimately attributable to our product candidates, and the resulting publicity could result in increased governmental regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our potential product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.

Risks Relating to Government Regulation

*We may fail to obtain or may experience delays in obtaining regulatory approval to market our aNK platform product candidates, which will significantly harm our business.

We do not have the necessary approval to market or sell aNK platform products in the U.S.

or any foreign market.

Before marketing aNK platform product candidates, we must successfully complete extensive preclinical studies and clinical trials and rigorous regulatory approval procedures.

We cannot offer assurances that we will apply for or obtain the necessary regulatory approval to commercialize aNK platform product candidates in a timely manner, or at all.

Conducting clinical trials is uncertain and expensive and often takes many years to complete.

The results from preclinical testing and early clinical trials are often not predictive of results obtained in later clinical trials.

In conducting clinical trials, we may fail to establish the effectiveness of haNK, t‑haNK, MSC and ceNK cells for the targeted indication or we may discover unforeseen side effects.

Moreover, clinical trials may require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit.

Clinical trials are also often subject to unanticipated delays.

In addition, haNK, t‑haNK, MSC and ceNK cells are produced in small-scale cell culture systems and we may be unable to adapt the production method to large-scale production systems.

In addition, patients participating in the trials may die before completion of the clinical trial or suffer adverse medical effects unrelated to treatment with haNK, t‑haNK, MSC and ceNK cells.

This could delay or lead to termination of our clinical trials.

A number of companies in the biotechnology industry have suffered significant setbacks in every stage of clinical trials, even in advanced clinical trials after positive results in earlier clinical trials.

To date, the FDA has approved only a few cell-based therapies for commercialization.

The processes and requirements imposed by the FDA may cause delays and additional costs in obtaining regulatory approvals for our product candidates.

Because our aNK platform product is novel, and cell-based therapies are relatively new, regulatory agencies may lack experience in evaluating product candidates like our aNK platform products.

This inexperience may lengthen the regulatory review process, increase our development costs and delay or prevent commercialization of our aNK platform products.

In addition, the following factors may impede or delay our ability to obtain timely regulatory approvals, if at all:

potential delays in or failure to reach agreement on acceptable terms with prospective CROs and clinical sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

our failure to obtain sufficient enrollment in our clinical trials or participants may fail to complete our clinical trials;

regulators may require us to perform additional or unanticipated clinical trials to obtain approval or we may be subject to additional post-marketing testing requirements to maintain regulatory approval;

regulators may revise the requirements for approving our product candidates, or such requirements may not be as we anticipate;

the cost of clinical trials of our product candidates may be greater than we anticipate, and we may need to delay or suspend one or more trials until we complete additional financing transactions or otherwise receive adequate funding;

the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate or may be delayed;

our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate trials;

regulatory authorities may suspend or withdraw their approval of a product or impose restrictions on its distribution;

our limited experience in filing and pursuing Biologics License Applications, or BLAs, necessary to gain regulatory approvals related to genetically modified cancer cell line therapies;

any failure to develop substantial evidence of clinical efficacy and safety, and to develop quality standards and manufacturing processes to demonstrate consistent safety, purity, identity, and potency standards;

a decision by us, institutional review boards, or regulators to suspend or terminate our clinical trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

regulatory inspections of our clinical trials, clinical trial sites or manufacturing facilities, which may, among other things, require us to undertake corrective action or suspend or terminate our clinical trials if regulators find us not to be in compliance with applicable regulatory requirements;

our ability to produce sufficient quantities of haNK, taNK, t‑haNK and ceNK cells to complete our clinical trials;

varying interpretations of the data generated from our clinical trials;

timely coordination with our related party, ImmunityBio, in connection with the filing of our BLA as a combined therapy;

the ability of our related party, ImmunityBio, being commercially ready with a fully completed CMC package, and compliant with cGMP, for the manufacture of N‑803 and aldoxorubicin;

changes in governmental regulations or administrative action.

Any delays in, or termination of, our clinical trials could materially and adversely affect our development and collaboration timelines, which may cause our stock price to decline.

If we do not complete clinical trials for haNK, taNK, t‑haNK and ceNK cells and seek and obtain regulatory approvals, we may not be able to recover any of the substantial costs we have invested in the development of haNK, taNK, t‑haNK and ceNK cells.

*Even if we obtain regulatory approvals for aNK related platform products, those approvals and ongoing regulation of our products may limit how we manufacture and market our products, which could prevent us from realizing the full benefit of our efforts.

If we obtain regulatory approvals, our aNK platform products, and our manufacturing facilities will be subject to continual regulatory review, including periodic unannounced inspections, by the FDA and other U.S.

and foreign regulatory authorities.

In addition, regulatory authorities may impose significant restrictions on the indicated uses or impose ongoing requirements for potentially costly post-approval studies.

aNK platform product candidates would also be subject to ongoing FDA requirements governing the labeling, packaging, storage, advertising, promotion, recordkeeping and submission of safety and other post-market information.

These and other factors may significantly restrict our ability to successfully commercialize haNK, taNK, t‑haNK and ceNK cell therapies.

Manufacturers of biopharmaceutical products and their facilities, vendors and suppliers are subject to continual review and periodic unannounced inspections by the FDA and other regulatory authorities for compliance with cGMP regulations, which include requirements relating to quality control and quality assurance , as well as to the corresponding maintenance of records and documentation.

Furthermore, our manufacturing facilities must be approved by regulatory agencies before these facilities can be used to manufacture aNK platform products, and they will also be subject to additional regulatory inspections.

Any material changes we may make to our manufacturing process or to the components used in our products may require additional prior approval by the FDA and state or foreign regulatory authorities.

Failure to comply with FDA or other applicable regulatory requirements may result in criminal prosecution, civil penalties, recall or seizure of products, partial or total suspension of production or withdrawal of a product from the market.

We must also report adverse events that occur when our products are used.

The discovery of previously unknown problems with aNK, haNK, taNK, t‑haNK and ceNK cells and therapies or our manufacturing facilities may result in restrictions or sanctions on our products or manufacturing facilities, including withdrawal of our products from the market or suspension of manufacturing.

Regulatory agencies may also require us to reformulate our products, conduct additional clinical trials, make changes in the labeling of our product or obtain further approvals.

This may harm our business and results of operations or cause our reputation in the market place to suffer or subject us to lawsuits, including class action suits.

Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects or adverse events caused by such products, a number of potentially significant negative consequences could result, including but not limited to:

regulatory authorities may withdraw approvals of such product or require additional warnings on the label;

we may be required to change the way the product is administered or conduct additional clinical trials or post-approval studies;

we may be required to create a Risk Evaluation and Mitigation Strategy, or REMS, plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers, or other elements to assure safe use;

we could be sued and held liable for harm caused to patients;

our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations, and prospects.

In addition, if we, our product candidates or the manufacturing facilities for our product candidates fail to comply with applicable regulatory requirements, a regulatory agency may:

issue warning letters that can produce adverse publicity;

impose civil or criminal penalties;

suspend regulatory approval;

suspend any ongoing clinical trials;

refuse to approve pending applications or supplements to applications filed by us;

impose restrictions on operations, including costly new manufacturing requirements;

seize or detain products or request us to initiate a product recall;

pursue and obtain an injunction.

Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.

Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others.

For example, even if the FDA grants marketing approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the product, manufacturing, and in many cases reimbursement of the product candidate in those countries.

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

In some cases, the price that we intend to charge for our products is also subject to approval by regulatory authorities.

We may also submit marketing applications in other countries.

Regulatory authorities in jurisdictions outside of the U.S.

have requirements for approval of product candidates with which we must comply prior to marketing in those jurisdictions.

Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries.

If we fail to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed.

We may seek orphan drug status or breakthrough therapy designation for one or more of our product candidates, but even if either is granted, we may be unable to maintain any benefits associated with breakthrough therapy designation or orphan drug status, including market exclusivity.

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition or for which there is no reasonable expectation that the cost of developing and making available in the U.S.

a drug or biologic for a disease or condition will be recovered from sales in the U.S.

for that drug or biologic.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA to market the same drug or biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity.

In 2012, the FDA established a Breakthrough Therapy Designation, which is intended to expedite the development and review of products that treat serious or life-threatening conditions.

We may seek orphan drug status for one or more of our product candidates, but exclusive marketing rights in the U.S.

may be lost if we seek approval for an indication broader than the orphan designated indication and may be lost if the FDA later determines that the request for designation was materially defective or if we are unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

In addition, we may seek breakthrough therapy designation for one or more of our product candidates, but there can be no assurance that we will receive such designation.

We will need to obtain FDA approval of any proposed product brand names, and any failure or delay associated with such approval may adversely impact our business.

A biopharmaceutical product cannot be marketed in the U.S.

or other countries until we have completed rigorous and extensive regulatory review processes, including review and approval of a brand name.

Any brand names we intend to use for our product candidates will require approval from the FDA regardless of whether we have secured a formal trademark registration from the U.S.

Patent and Trademark Office, or the USPTO.

The FDA may object to a product brand name if they believe the name creates potential for confusion or inappropriately implies medical claims.

If the FDA objects to any of our proposed product brand names, we may be required to adopt an alternative brand name for our product candidates.

If we adopt an alternative brand name, we would lose the benefit of our existing trademark applications for such product candidate and may be required to expend significant additional resources in an effort to identify a suitable product brand name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.

We may be unable to build a successful brand identity for a new trademark in a timely manner or at all, which would limit our ability to commercialize our product candidates.

Coverage and reimbursement decisions by third-party payors may have an adverse effect on pricing and market acceptance.

There is significant uncertainty related to the third-party coverage and reimbursement of newly approved drugs.

Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment.

Therefore, market acceptance and sales of our products, if approved, in both domestic and international markets will depend significantly on the availability of adequate coverage and reimbursement from third party and/or government payors for any of our products and may be affected by existing and future healthcare reform measures.

Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drugs they will cover and establish approved lists, known as formularies, and establish payment levels for such drugs.

Formularies may not include all FDA-approved drugs for a particular indication.

Private payors often follow Medicare coverage policy and payment limitations in setting their own payment rates.

Any reduction in payment under Medicare Part D may result in a similar reduction in payments from non-governmental payors.

We cannot be certain that coverage and adequate reimbursement will be available for any of our products, if approved, or that such coverage and reimbursement will be authorized in a timely fashion.

In addition, we cannot be certain that reimbursement policies will not reduce the demand for, or the price paid for, any of our products, if approved.

If reimbursement is not available or is available on a limited basis for any of our products, if approved, we may not be able to successfully commercialize any such products.

Reimbursement by a third party or government payor may depend upon a number of factors, including, without limitation, the third-party or government payor’s determination that use of a product is:

a covered benefit under its health plan;

safe, effective and medically necessary;

appropriate for the specific patient;

cost-effective;

neither experimental nor investigational.

Obtaining coverage and reimbursement approval for a product from a government or other third-party payor is a time consuming and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products to the payor.

We may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement or to have pricing set at a satisfactory level.

If reimbursement of our products, if any, is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels such as may result where alternative or generic treatments are available, we may be unable to achieve or sustain profitability.

Assuming we obtain coverage for a given product, the resulting reimbursement payment rates might not be adequate or may require co-payments that patients find unacceptably high.

Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.

In the U.S., third-party payors include federal and state healthcare programs, government authorities, private managed care providers, private health insurers, and other organizations.

No uniform policy of coverage and reimbursement for products exists among third-party payors, and third-party payors are increasingly challenging the price, examining the medical necessity, and reviewing the cost-effectiveness of medical drug products and medical services, in addition to questioning their safety and efficacy.

Therefore, coverage and reimbursement for products can differ significantly from payor to payor.

As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.

We or our collaborators may need to conduct expensive pharmaco-economic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain the FDA approvals.

In some foreign countries, particularly in Europe, the pricing of prescription pharmaceuticals is subject to governmental control.

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

To obtain reimbursement or pricing approval in some countries, we may be required to conduct additional clinical trials that compare the cost-effectiveness of our products to other available therapies.

If reimbursement of any of our products, if approved, is unavailable or limited in scope or amount in a particular country, or if pricing is set at unsatisfactory levels, we may be unable to achieve or sustain profitability of our products in such country.

* Recent legislative and regulatory activity may exert downward pressure on potential pricing and reimbursement for our products, if approved, that could materially affect the opportunity to commercialize.

and several other jurisdictions are considering, or have already enacted, a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell any of our products profitably, if approved.

Among policy-makers and payors in the U.S.

and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access to healthcare.

In the U.S., the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.

There have been, and likely will continue to be, legislative and regulatory proposals at the federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare.

We cannot predict the initiatives that may be adopted in the future.

The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect:

the demand for any of our products, if approved;

our ability to set a price that we believe is fair for any of our products, if approved;

our ability to generate revenues and achieve or maintain profitability;

the level of taxes that we are required to pay;

the availability of capital.

In March 2010, ACA became law in the U.S.

The goal of ACA is to reduce the cost of healthcare, broaden access to health insurance, constrain healthcare spending, enhance remedies against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose taxes and fees on the health industry, impose additional health policy reforms, and substantially change the way healthcare is financed by both governmental and private insurers.

While we cannot predict what impact on federal reimbursement policies this legislation will have in general or on our business specifically, ACA may result in downward pressure on pharmaceutical reimbursement, which could negatively affect market acceptance of any of our products, if they are approved.

Provisions of ACA relevant to the pharmaceutical industry include the following:

an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, not including orphan drug sales;

an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively;

a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70% point-of-sale discounts on negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the Federal Poverty Level, thereby potentially increasing manufacturers’ Medicaid rebate liability;

expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

new requirements for certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions to report annually certain financial arrangements with physicians, as defined by such law, and teaching hospitals, as defined in ACA and its implementing regulations, including reporting any payment or “transfer of value” provided to physicians and teaching hospitals and any ownership and investment interests held by physicians and their immediate family members during the preceding calendar year;

expansion of healthcare fraud and abuse laws, including the U.S.

federal False Claims Act and the U.S.

federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance;

a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research;

a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected.

The ACA has been modified and amended recently, including the elimination of the individual mandate that individuals purchase healthcare insurance.

Furthermore, the current presidential administration and Congress may continue to attempt broad sweeping changes to the current health care laws.

We face uncertainties that might result from modification or repeal of any of the provisions of the ACA, including as a result of current and future executive orders , legislative actions , and litigation, including the pending review by the U.S.

Supreme Court of the constitutionality of the ACA .

The impact of those changes on us and potential effect on the pharmaceutical and biotechnology industry as a whole is currently unknown.

However, any changes to the ACA are likely to have an impact on our results of operations, and may have a material adverse effect on our results of operations.

We cannot predict what other healthcare programs and regulations will ultimately be implemented at the federal or state level or the effect of any future legislation or regulation in the U.S.

may have on our business.

We are subject to governmental export and import controls that could impair our ability to compete in international markets due to licensing requirements and subject us to liability if we are not in compliance with applicable laws.

Compliance with these legal requirements could limit our ability to compete in foreign markets and subject us to liability if we violate them.

Our products and solutions are subject to export control and import laws and regulations, including the U.S.

Export Administration Regulations, U.S.

Customs regulations, and various economic and trade sanctions regulations administered by the U.S.

Treasury Department’s Office of Foreign Assets Controls.

Exports of our products and solutions outside of the U.S.

must be made in compliance with these laws and regulations.

If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges;

fines, which may be imposed on us and responsible employees or managers;

and, in extreme cases, the incarceration of responsible employees or managers.

In addition, changes in our products or solutions or changes in applicable export or import laws and regulations may create delays in the introduction, provision, or sale of our products and solutions in international markets, prevent customers from using our products and solutions or, in some cases, prevent the export or import of our products and solutions to certain countries, governments or persons altogether.

Any limitation on our ability to export, provide, or sell our products and solutions could adversely affect our business, financial condition and results of operations.

We are subject to U.S.

and foreign anti-corruption and anti-money laundering laws with respect to our operations and non-compliance with such laws can subject us to criminal and/or civil liability and harm our business.

We are subject to the U.S.

Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S.

domestic bribery statute contained in 18 U.S.C.

§201, the U.S.

Travel Act, the USA PATRIOT Act, and possibly other state and national anti-bribery and anti-money laundering laws in countries in which we conduct activities.

Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, third-party intermediaries, joint venture partners and collaborators from authorizing, promising, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.

We have used contract research organizations abroad for clinical trials.

In addition, we may engage third party intermediaries to sell our products and solutions abroad once we enter a commercialization phase for our product candidates and/or to obtain necessary permits, licenses, and other regulatory approvals.

We or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities.

We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize or have actual knowledge of such activities.

We adopted an anti-corruption policy in connection with the consummation of the IPO of our common stock in July 2015.

The anti-corruption policy mandates compliance with the FCPA and other anti-corruption laws applicable to our business throughout the world.

However, there can be no assurance that our employees and third party intermediaries will comply with this policy or such anti-corruption laws.

Noncompliance with anti-corruption and anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other investigations, or other enforcement actions.

If such actions are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations and financial condition could be materially harmed.

In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense and compliance costs and other professional fees.

In certain cases, enforcement authorities may even cause us to appoint an independent compliance monitor, which can result in added costs and administrative burdens.

* Changes in funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal functions on which the operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept payment of user fees, and statutory, regulatory, and policy changes.

Average review times at the agency have fluctuated in recent years as a result.

In addition, government funding of the FDA, the Securities and Exchange Commission, or SEC, and other government agencies on which our operations may rely is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

For example, over the last several years, including beginning on December 22, 2018, the U.S.

government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities.

If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Further, future government shutdowns could potentially impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

We may be, or may become, subject to data protection laws and regulations, and our failure to comply with such laws and regulations could lead to government enforcement actions and significant penalties against us, and adversely impact our operating results.

has adopted data protection laws and regulations which may apply to us in certain circumstances, or in the future.

These laws, which impose significant compliance obligations, are commonly known as the General Data Protection Regulation, or GDPR.

The GDPR, which is wide-ranging in scope and applicability, imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third party processors in connection with the processing of personal data, including clinical trials.

The GDPR also imposes strict rules on the transfer of personal data out of the E.U.

to the U.S., provides an enforcement authority, and imposes large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater.

Implementation of the GDPR, as applicable to us, will increase our responsibility and liability in relation to personal data that we process, including in clinical trials, and we may in the future be required to put in place additional mechanisms to ensure compliance with the GDPR, which could divert management’s attention and increase our cost of doing business.

In addition, other new regulation or legislative actions regarding data privacy and security (together with applicable industry standards) may increase our costs of doing business.

In this regard, we expect that there will continue to be new proposed laws, regulations and industry standards relating to privacy and data protection in the U.S., the E.U.

and other jurisdictions, and we cannot determine the impact such future laws, regulations and standards may have on our business.

Risks Relating to Our Intellectual Property

*If our efforts to protect the intellectual property related to our product candidates are not adequate, we may not be able to compete effectively in our market.

We rely upon a combination of patents, trade secret protection and contractual agreements, including confidentiality agreements to protect the intellectual property related to our product candidates and technology.

Any disclosure to or misappropriation by third parties of our confidential proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, eroding our competitive position in the market.

We believe that we have worldwide commercial rights to the NK‑92 cell line and we believe that we control commercial use of our haNK, taNK, t‑haNK, MSC and ceNK cells in key territories.

We have developed and in-licensed numerous patents and patent applications and we possess substantial know-how and trade secrets relating to the development and commercialization of natural killer cell-based immunotherapy product candidates, including related manufacturing processes and technology.

Our owned and licensed patent portfolio consists of patents and pending patent applications in the U.S.

disclosing subject matter directed to certain of our proprietary technology, inventions, and improvements and our most advanced product candidates, as well as licensed and owned patents and pending applications in jurisdictions outside of the U.S., that, in many cases, are counterparts to the foregoing U.S.

patents and patent applications.

We believe we have intellectual property rights that are necessary to commercialize haNK, taNK, t‑haNK, MSC and ceNK cells.

However, our patent applications may not result in issued patents, and, even if issued, the patents may be challenged and invalidated.

Moreover, our patents and patent applications may not be sufficiently broad to prevent others from practicing our technologies or developing competing products.

We also face the risk that others may independently develop similar or alternative technologies or may design around our proprietary property.

The patent application process, also known as patent prosecution, is expensive and time-consuming, and we and our current or future licensors and licensees may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.

It is also possible that we or our current licensors, or any future licensors or licensees, will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them.

Therefore, these and any of our patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

Defects of form in the preparation or filing of our patents or patent applications may exist, or may arise in the future, for example with respect to proper priority claims, inventorship, etc.

If we or our current licensors, or any future licensors or licensees, fail to establish, maintain or protect such patents and other intellectual property rights, such rights may be reduced or eliminated.

If our current licensors, or any future licensors or licensees, are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised.

If there are material defects in the form or preparation of our patents or patent applications, such patents or applications may be invalid and unenforceable.

Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.

The strength of patents in the biopharmaceutical field involves complex legal and scientific questions and can be uncertain.

This uncertainty includes changes to the patent laws through either legislative action to change statutory patent law or court action that may reinterpret existing law or rules in ways affecting the scope or validity of issued patents.

The patent applications that we own or in-license may fail to result in issued patents in the U.S.

or foreign countries with claims that cover our product candidates.

Even if patents do successfully issue from the patent applications that we own or in-license, third parties may challenge the validity, enforceability or scope of such patents, which may result in such patents being narrowed, invalidated or held unenforceable.

Any successful challenge to our patents could deprive us of exclusive rights necessary for the successful commercialization of our product candidates.

Furthermore, even if they are unchallenged, our patents may not adequately protect our product candidates, provide exclusivity for our product candidates, or prevent others from designing around our claims.

If the breadth or strength of protection provided by the patents we hold or pursue with respect to our product candidates is challenged, it could dissuade companies from collaborating with us to develop, or threaten our ability to commercialize our product candidates.

Patents have a limited lifespan.

In the U.S., the natural expiration of a patent is generally 20 years after its earliest effective non-provisional filing date.

Various extensions may be available;

however, the life of a patent, and the protection it affords, is limited.

Without patent protection for our product candidates, we may be open to competition from generic versions of our product candidates.

Further, if we encounter delays in our development efforts, including our clinical trials, the period of time during which we could market our product candidates under patent protection would be reduced.

In addition to the protection afforded by patents, we also rely on trade secret protection to protect proprietary know-how that may not be patentable or that we elect not to patent, processes for which patents may be difficult to obtain or enforce, and any other elements of our product candidates, and our product development processes (such as a manufacturing and formulation technologies) that involve proprietary know-how, information or technology that is not covered by patents.

However, trade secrets can be difficult to protect.

If the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating any trade secrets.

Misappropriation or unauthorized disclosure of our trade secrets could significantly affect our competitive position and may have a material adverse effect on our business.

Furthermore, trade secret protection does not prevent competitors from independently developing substantially equivalent information and techniques and we cannot guarantee that our competitors will not independently develop substantially equivalent information and techniques.

The FDA, as part of its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including information that we may consider to be trade secrets or other proprietary information, and it is not clear at the present time how the FDA’s disclosure policies may change in the future, if at all.

In an effort to protect our trade secrets and other confidential information, we require our employees, consultants, advisors, and any other third parties that have access to our proprietary know-how, information or technology, for example, third parties involved in the formulation and manufacture of our product candidates, and third parties involved in our clinical trials to execute confidentiality agreements upon the commencement of their relationships with us.

These agreements require that all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties.

However, we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed despite having such confidentiality agreements.

Adequate remedies may not exist in the event of unauthorized use or disclosure of our trade secrets.

In addition, in some situations, these confidentiality agreements may conflict with, or be subject to, the rights of third parties with whom our employees, consultants, or advisors have previous employment or consulting relationships.

To the extent that our employees, consultants or contractors use any intellectual property owned by third parties in their work for us, disputes may arise as to the rights in any related or resulting know-how and inventions.

If we are unable to prevent unauthorized material disclosure of our trade secrets to third parties, we may not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, operating results and financial condition.

Changes in U.S.

patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly on obtaining and enforcing patents.

Obtaining and enforcing patents in the pharmaceutical industry involves both technological and legal complexity, and therefore, is costly, time-consuming and inherently uncertain.

In addition, the U.S.

had previously enacted and implemented wide-ranging patent reform legislation (e.g., the Leahy-Smith America Invents Act in September 2011) and are currently considering additional legislation that may materially impact our ability to obtain or enforce our patents.

Further, recent U.S.

Supreme Court rulings and recent decisions from the United States Court of Appeals for the Federal Circuit have either narrowed the scope of patent protection available in certain circumstances or weakened the rights of patent owners in certain situations.

In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.

In addition, changes to U.S.

patent laws provide additional procedures for third parties to challenge the validity of issued patents based on patent applications filed after March 15, 2013.

If the breadth or strength of protection provided by the patents and patent applications we hold or pursue with respect to our current or future product candidates is challenged, then it could threaten our ability to commercialize our current or future product candidates and could threaten our ability to prevent competitive products from being marketed.

Further, if we encounter delays in our clinical trials, the period of time during which we could market our current or future product candidates under patent protection would be reduced.

patent applications are confidential for a period of time after filing, we cannot be certain that we were the first to either (i) file any patent application related to our product candidates, or (ii) invent any of the inventions claimed in our patents or patent applications.

Furthermore, for applications filed before March 16, 2013, or patents issuing from such applications, an interference proceeding can be provoked by a third party or instituted by the U.S.

Patent and Trademark Office, or USPTO, to determine who was the first to invent any of the subject matter covered by the patent claims of our applications and patents.

As of March 16, 2013, the U.S.

transitioned to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention.

A third party that files a patent application with the USPTO before us could, therefore, be awarded a patent covering an invention of ours even if we had made the invention before it was made by the third party.

The change to “first-to-file” from “first-to-invent” is one of the changes to the U.S.

patent laws resulting from the Leahy-Smith America Invents Act, or the Leahy-Smith Act, signed into law on September 16, 2011.

Among some of the other significant changes to the patent laws are changes that limit where a patentee may file a patent infringement suit and provide opportunities for third parties to challenge any issued patent in the USPTO.

This applies to all of our U.S.

patents, even those issued before March 16, 2013.

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S.

federal court necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.

Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action.

It is not yet clear what, if any, impact the Leahy-Smith Act will have on the operation of our business.

However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

We may not be able to protect our intellectual property rights throughout the world.

We strive to control cell line distribution, as well as limit commercial use through licenses and material transfer agreements with third parties in addition to our patents and patent applications.

However, a company may illicitly obtain our cells or create their own modified variants and attempt to commercialize them in foreign countries where we do not have any patents or patent applications where legal recourse may be limited.

For example, we believe that certain companies, including at least one in China, may be using our NK‑92 cell line without our permission.

This may have a significant commercial impact on our foreign business operations.

Filing, prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the U.S.

can be less extensive than those in the U.S.

The requirements for patentability may differ in certain countries, particularly developing countries.

In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the U.S.

and in some cases, may even force us to grant a compulsory license to competitors or other third parties.

Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the U.S., or from selling or importing products made using our inventions in and into the U.S.

or other jurisdictions.

Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement on infringing activities is inadequate or not as strong as that in the U.S.

These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Patents granted by the European Patent Office may be opposed by any person within nine months from the publication of their grant and, in addition, may be challenged before national courts at any time.

Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property or prevent others from designing around our claims.

If the breadth or strength of protection provided by the patents and patent applications we hold, license or pursue with respect to our product candidates is threatened, it could threaten our ability to commercialize our product candidates.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.

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

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

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

In addition, certain countries in Europe and certain developing countries, including India and China, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties.

In those countries, we may have limited remedies if our patents are infringed or if we are compelled to grant a license to our patents to a third party, which could materially diminish the value of those patents.

This could limit our potential revenue opportunities.

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

Finally, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws.

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

The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent prosecution process.

Periodic maintenance fees and various other governmental fees on any issued patent and/or pending patent applications are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of a patent or patent application.

We have systems in place to remind us to pay these fees, and we employ an outside firm and rely on our outside counsel to pay these fees.

While an inadvertent lapse may sometimes be cured by payment of a late fee or by other means in accordance with the applicable rules, there are many situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

If we fail to maintain the patents and patent applications directed to our product candidates, our competitors might be able to enter the market earlier than should otherwise have been the case, which would have a material adverse effect on our business.

Third-party claims alleging intellectual property infringement may adversely affect our business.

Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties, for example, the intellectual property rights of competitors.

Our research, development and commercialization activities may be subject to claims that we infringe or otherwise violate patents owned or controlled by third parties.

Numerous U.S.

and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing our product candidates.

As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our activities related to our product candidates may give rise to claims of infringement of the patent rights of others.

We cannot assure you that our product candidates will not infringe existing or future patents.

We may not be aware of patents that have already issued that a third party, for example a competitor in our market, might assert are infringed by our product candidates.

It is also possible that patents of which we are aware, but which we do not believe are relevant to our product candidates, could nevertheless be found to be infringed by our product candidates.

Nevertheless, we are not aware of any issued patents that we believe would prevent us from marketing our product candidates, if approved.

There may also be patent applications that have been filed but not published that, when issued as patents, could be asserted against us.

Third parties making claims against us for infringement or misappropriation of their intellectual property rights may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our product candidates.

Further, if a patent infringement suit were brought against us, we could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit.

Defense of these claims, regardless of their merit, would cause us to incur substantial expenses, and would be a substantial diversion of employee resources from our business.

In the event of a successful claim of infringement against us by a third party, we may have to (1) pay substantial damages, including treble damages and attorneys’ fees if we are found to have willfully infringed the third party’s patents;

(2) obtain one or more licenses from the third party;

(3) pay royalties to the third party;

and/or (4) redesign any infringing products.

Redesigning any infringing products may be impossible or require substantial time and monetary expenditure.

Further, we cannot predict whether any required license would be available at all or whether it would be available on commercially reasonable terms.

In the event that we could not obtain a license, we may be unable to further develop and commercialize our product candidates, which could harm our business significantly.

Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, which could result in our competitors gaining access to the same intellectual property.

Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms.

Defending ourselves or our licensors in litigation is very expensive, particularly for a company of our size, and time-consuming.

Some of our competitors may be able to sustain the costs of litigation or administrative proceedings more effectively than we can because of greater financial resources.

Patent litigation and other proceedings may also absorb significant management time.

Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace.

The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition or results of operations.

We may become involved in lawsuits to protect or enforce our patents or other intellectual property or the patents of our licensors, which could be expensive and time consuming.

Third parties may infringe or misappropriate our intellectual property, including our existing patents, patents that may issue to us in the future, or the patents of our licensors to which we have a license.

As a result, we may be required to file infringement claims to stop third-party infringement or unauthorized use.

Further, we may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the U.S.

Generic drug manufacturers may develop, seek approval for, and launch generic versions of our products.

If we file an infringement action against such a generic drug manufacturer, that company may challenge the scope, validity or enforceability of our or our licensors’ patents, requiring us and/or our licensors to engage in complex, lengthy and costly litigation or other proceedings.

For example, if we or one of our licensors initiated legal proceedings against a third party to enforce a patent covering our product candidates, the defendant could counterclaim that the patent covering our product candidates is invalid and/or unenforceable.

In patent litigation in the U.S., defendant counterclaims alleging invalidity and/or unenforceability are commonplace, and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent.

In addition, within and outside of the U.S., there has been a substantial amount of litigation and administrative proceedings, including interference and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in various foreign jurisdictions, regarding patent and other intellectual property rights in the biopharmaceutical industry.

The Leahy-Smith Act introduced procedures including inter partes review and post grant review.

The implementation of these procedures brings uncertainty to the possibility of challenges to our patents in the future, including those that patents perceived by our competitors as blocking entry into the market for their products, and the outcome of such challenges.

Such litigation and administrative proceedings could result in revocation of our patents or amendment of our patents such that they do not cover our product candidates.

They may also put our pending patent applications at risk of not issuing, or issuing with limited and potentially inadequate scope to cover our product candidates.

The outcome following legal assertions of invalidity and unenforceability is unpredictable.

With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution.

Additionally, it is also possible that prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim, may, nonetheless, ultimately be found by a court of law or an administrative panel to affect the validity or enforceability of a claim, for example if a priority claim is found to be improper.

If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates.

Such a loss of patent protection could have a material adverse impact on our business.

Enforcing our or our licensor’s intellectual property rights through litigation is very expensive, particularly for a company of our size, and time-consuming.

Some of our competitors may be able to sustain the costs of litigation more effectively than we can because of greater financial resources.

Patent litigation and other proceedings may also absorb significant management time.

Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace.

The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition or results of operations.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure.

In addition, during the course of litigation or administrative proceedings, there could be public announcements of the results of hearings, motions or other interim proceedings or developments or public access to related documents.

If investors perceive these results to be negative, the market price for our common stock could be significantly harmed.

*If we fail to comply with our obligation in any of the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

Licensing of intellectual property rights is of critical importance to our business and involves complex legal, business and scientific issues.

We rely on our exclusive license from Hans Klingemann, M.D., Ph.D., one of our founders and the inventor of our aNK and related platform product cell therapies, and subject to our freedom to operate we may or may not rely on our exclusive licenses from Rush University Medical Center, Fox Chase Cancer Research Center, the University Health Network, and other current and future licensors, including ImmunityBio with respect to the Joint COVID‑19 Collaboration.

If we fail to comply with the diligence obligations or otherwise materially breach our license agreement and fail to remedy such failure or cure such breach, the licensor may have the right to terminate the license.

Our obligation to pay royalties to Dr.

Klingemann under the license agreement, as amended, runs until the expiration of the underlying patents and the license agreement may be terminated earlier by either party for material breach.

Under the license agreement, we have the right to enforce the licensed patents.

Disputes may arise between us and our licensors regarding intellectual property rights subject to a license agreement, including:

the scope of rights granted under the license agreement and other interpretation-related issues;

our right to sublicense intellectual property rights to third parties under collaborative development relationships;

our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations.

While we would expect to exercise all rights and remedies available to us, including seeking to cure any breach by us, and otherwise seek to preserve our rights under the patents licensed to us, we may not be able to do so in a timely manner, at an acceptable cost, or at all.

Generally, the loss of any one of our current licenses, or any other license we may acquire in the future, could materially harm our business, prospects, financial condition and results of operations.

In late May 2020, we received a letter from Fox Chase Cancer Center alleging breaches of our license.

If the letter is found to be a proper notice of termination and the alleged breaches are confirmed and found to be material, we will lose the licensed rights.

We do not consider these licensed rights to be material.

*One of NantKwest’s ten issued U.S.

patents is subject to a claim challenging the inventorship.

On September 10, 2020, a legal complaint was filed in a California court where Institute for Cancer Research (d/b/a Fox Chase Cancer Center) argued that it has a co-ownership interest in U.S.

10,456,420 and its underlying U.S.

Patent Application No.

15/529,848, as well as in certain related patent applications or issued patents that include claimed subject matter allegedly invented by one of the claimant’s employees .

On September 30, 2020, NantKwest filed motion with the court asking that the complaint be dismissed.

NantKwest disagrees that this claim for co-ownership has merit and intends to vigorously defend its position.

All of the existing named inventors have assigned their rights in this patent to NantKwest.

NantKwest will continue to have an undivided ownership interest in the technology covered by this patent even if claimant succeeds in this suit.

Litigating this matter could result in substantial costs and be a distraction to management and other employees.

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

Confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information and may not adequately protect our intellectual property, which could limit our ability to compete.

Because we operate in the highly technical field of research and development, we rely in part on trade secret protection and confidentiality agreements, including those with our employees and consultants, in order to protect our proprietary trade secrets and unpatented know-how.

However, trade secrets are difficult to protect, and we cannot be certain that others will not develop the same or similar technologies on their own.

We have taken steps, including entering into confidentiality agreements with our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors, to protect our trade secrets and unpatented know-how.

These agreements generally require that the other party keep confidential and not disclose to third parties all confidential information developed by the party or made known to the party by us during the course of the party’s relationship with us.

We also typically obtain agreements from these parties, which provide that inventions conceived by the party in the course of rendering services to us will be our exclusive property.

However, these agreements may not be honored and may not effectively assign intellectual property rights to us.

Adequate remedies may not exist in the event of unauthorized use or disclosure of our confidential intellectual property.

Enforcing a claim that a party illegally obtained and is using our trade secrets or know-how is difficult, expensive and time consuming, and the outcome is unpredictable.

In addition, courts outside the U.S.

may be less willing to protect trade secrets or know-how.

The failure to obtain or maintain trade secret protection could adversely affect our competitive position.

Also, third parties, including our competitors, may independently develop substantially equivalent proprietary information and technologies or otherwise lawfully gain access to our trade secrets and other confidential information.

In such a case, we would have no right to prevent such third parties from using such proprietary information or technologies to compete with us, which could harm our competitive position.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

We have received confidential and proprietary information from third parties.

In addition, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors.

We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise improperly used or disclosed intellectual property, including trade secrets, confidential information, or other proprietary information, of these third parties or our employees’ or consultants’ or independent contractors’ former or other employers.

Further, we may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are involved in developing our product candidates.

We may also be subject to claims that former employees, consultants, independent contractors, collaborators or other third parties have an ownership interest in our patents or other intellectual property.

Litigation may be necessary to defend against these and other claims challenging our right to and use of confidential and proprietary information.

If we fail in defending any such claims, in addition to paying monetary damages, we may lose our rights therein.

Such an outcome could have a material adverse effect on our business.

Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees.

Risks Relating to Our Common Stock

*Our Chairman, and entities affiliated with him, collectively own a significant majority of our common stock and will exercise significant influence over matters requiring stockholder approval, regardless of the wishes of other stockholders.

As of September 30, 2020, our Chairman, Dr.

Patrick Soon-Shiong, and entities affiliated with him, collectively own approximately 64.4% of the outstanding shares of our common stock.

Additionally, Dr.

Soon‑Shiong holds vested options to purchase an aggregate of 900,000 additional shares of our common stock, which would give him and his affiliates ownership of approximately 64.7% of our outstanding shares of common stock if they were exercised in full.

In addition, the loss of the services of NantWorks might significantly delay or prevent the development of our product ca n didates or achievement of other business objectives by diverting management’s attention to transition matters and identification of suitable replacements, if any, and could have a material adverse effect on our business and results of operations.

Soon-Shiong, through his voti n g co n t r ol of t h e compan y , has the ability to control actions that req u ire stockholder a p proval.

Soon-Shiong, through his direct and indi r ect ownership of the company’s common stock, has voting control of the company.

As of March 31, 2021 , Dr.

So o n - S hiong and certain of his af f iliates beneficially own approximately 81.8% of the company’s common stock outstanding.

A dditionally, an affilia t e of Dr.

Soon-Shiong holds a warrant to pur c ha s e an additional 1,638,000 shares of the comp a ny’s common stock that will become exercisable if certain perfor m ance conditions are satisfie d .

Soon-Shiong and his related party also h old approximately $279.5 million in the aggregate of contingent value rights (“C V Rs”) iss u ed to the fo r mer s t ockholders of Altor BioScience Corporation (succeeded by Altor BioScience LLC) (“Altor ” ) in connection with NantCell ’s acquisition of Altor.

I f the u n derlying conditions for payment are met, the CVRs become paya b l e in cash or shares of the company’s common stock or any combination as the holder elects.

Soon-Shiong and his related party have irrevocably agreed to receive shares of the company’s common stock in satisfaction of their CVRs.

Soon-Shiong is in a position to con t rol the outcome of corporate actions that require, or may be accomplished by, sto c kholder approval, including amending the bylaws of the company, the elect i on or removal of directors and transactions involving a change of control.

Soon-Shiong’s controlling ownership could limit the a b ility of the remaining stockholders of the company to influence corporate m a t t ers, and the interests of Dr.

Soon-Shiong may not coincide with the company’s interests or the int e rests of its remaining stockholders.

In a ddit i on, ent i ti e s affiliated with Dr.

Soon-Shiong hold p r o m issory representing $297.5 million in indebtedness, including interest thereon, of the company as of March 31, 2021 .

In addition, pursuant to the Nominating Agreement between us and Cambridge Equities, LP, or Cambridge, an entity that Dr.

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Soon-Shiong and his affiliates will therefore have significant influence over management and significant control over matters requiring stockholder approval, including the annual election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, for the foreseeable future.

This concentrated control will limit stockholders’ ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial.

This control will limit stockholders’ ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial.

As a result, the market price of our common stock could be adversely affected.

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variations in our quarterly operating results;

our cash position and the amount and nature of any debt we may incur;

our liquidity position and the amount and nature of any debt we may incur;

announcements that our revenue or income are below or that costs or losses are greater than analysts’ expectations;

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general economic slowdowns;

investors' perceptions regarding the viability and timing of a COVID‑19 vaccine;

the other factors described in this “ Risk Factors ” section.

coordinated actions by independent third-party actors to affect the price of certain stocks, coordinated via the Internet and otherwise;

other factors described in this “ Risk Factors ” section.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities.

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If our stockholders sell, or the market perceives that our stockholders intend to sell substantial amounts of our common stock in the public market, the market price of our common stock could decline significantly.

In addition, as of September 30, 2020 our Chairman, Dr.

Patrick Soon‑Shiong, and his affiliates beneficially owned approximately 64.7% of our outstanding shares of common stock.

In addition, our Executive Chairman, Dr.

Soon-Shiong, and his affiliates cur r ently beneficially own approximately 81.8% of our outstanding shares of common stock.

Sales of stock by Dr.

Soon-Shiong and his affiliates could have an adverse effect on the trading price of our common stock.

Certain holders of approximately 46.2 million shares of our common stock are entitled to certain rights with respect to the registration of their shares under the Securities Act.

Certain holders of our common stock are entitled to certain rights with respect to the registration of their shares under the Securities Act.

Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by our affiliates as defined in Rule 144 under the Securities Act.

Any sales of securities by these stockholders could have an adverse effect on the market price of our common stock.

In addition, we expect that additional capital may be needed in the future to continue our planned operations, including conducting clinical trials, commercialization efforts, expanded research and development activities and costs associated with operating a public company.

To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time.

If we sell common stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales.

Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock.

To raise capital, we may sell common stock, including as part of the offering, issuance and sale by us of up to a maximum aggregate offering of $500.0 million of our common stock that may be issued and sold under an “at-the-market” sales agreement with Jefferies LLC, or the ATM, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time.

If we sell common stock, including through the ATM, convertible securities or other equity securities, investors may be materially diluted and new investors could gain rights, preferences and privileges senior to the holders of our common stock.

We have incurred and will continue to incur costs as a result of operating as a public company and our management has been and will be required to devote substantial time to compliance initiatives and corporate governance practices, including maintaining an effective system of internal control over financial reporting.

As a public company listed in the U.S., and increasingly after we are no longer an “emerging growth company,” we have incurred and will continue to incur significant additional legal, accounting and other expenses as a result of operating as a public company.

As a public company listed in the U.S., and increasingly after we no longer qual i fy as a “smaller reporting company,” we have incurred and will continue to incur significant additional legal, accounting and other expenses as a result of operating as a public company.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, including Sarbanes-Oxley and regulations implemented by the SEC and Nasdaq, may increase legal and financial compliance costs and make some activities more time consuming.

These laws, regulations and standards are subject to varying interpretations and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.

We intend to invest resources to create a larger finance function with additional personnel to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.

We intend to invest resources to create a larger finance function with additional personnel to comply with evolving laws, regulations and standards, and this investment will result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.

If, notwithstanding our efforts to comply with new laws, regulations and standards, we fail to comply, regulatory authorities may initiate legal proceedings against us, and our business may be harmed.

As a public company in the U.S., we are required, pursuant to Section 404 of Sarbanes-Oxley, or Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.

We must disclose any material weaknesses identified by our management in our internal control over financial reporting, and, when we are no longer an “emerging growth company,” and if we are not a smaller reporting company at that time, we will need to provide a statement that our independent registered public accounting firm has issued an opinion on our internal control over financial reporting.

As a public company in the U.S., we may be required, pursuant to Section 404 of Sarbanes-Oxley, or Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.

The controls and other procedures are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is disclosed accurately and is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

We did not engage our independent registered public accounting firm to perform an audit of, and give an opinion on, our internal control over financial reporting for the year ended December 31, 2019, or for any other prior period.

No such opinion was expressed in 2019 and, based on current rules and regulations, an independent audit of our internal control over financial reporting may not be necessary for some time, if ever.

In addition, we are required to disclose any material weakn e sses identified by our management in our internal control over financial reporting, and, when we no longer qualify as a “ s maller reporting company,” w e will be required to provide a statement that our independent registered public accounting firm has issued an opinion on our internal control over f inancial reporting.

To date, we have not engaged our independent registered public accounting firm to perform an audit of, and give an opinion on, our internal control over financial reporting.

There can be no assurance that we will not discover deficiencies or a material weakness in our internal control over financial reporting or that our auditor will agree with management’s assessment of our internal control over financial reporting if or when our auditor conducts such audit and delivers an opinion.

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In the event that we are not able to demonstrate compliance with Section 404 in a timely manner, or are unable to produce timely or accurate financial statements, we may be subject to sanctions or investigations by regulatory authorities, such as the SEC or Nasdaq, and investors may lose confidence in our operating results and the price of our common stock could decline.

Furthermore, if we are unable to certify that our internal control over financial reporting is effective and in compliance with Section 404, we may be subject to sanctions or investigations by regulatory authorities, such as the SEC or stock exchanges , and investor could lose confidence in the accuracy and completeness of our financial reports, which could h urt our business, the price of our common stock and our ability to access the capital markets.

Furthermore, if we are unable to certify that our internal control over financial reporting is effective and in compliance with Section 404, we may be subject to sanctions or investigations by regulatory authorities, such as the SEC or stock exchanges, and investors could lose confidence in the accuracy and completeness of our financial reports, which could hurt our business, the price of our common stock and our ability to access the capital markets.

Operating as a public company makes it more expensive for us to obtain directors’ and officers’ liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.

These factors could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors, or as members of senior management.

*If a restatement of our financial statements were to occur, our shareholders’ confidence in the company’s financial reporting in the future may be affected, which could in turn have a material adverse effect on our business and stock price.

If a restatement of our financial statements were to occur , our stock holders’ confidence in the c ompany’s financial reporting in the future may be affected , which could in turn have a material adverse effect on our business and stock price.

If any material weaknesses in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements, and we could be required to restate our financial results.

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Because we are relying on the exemptions from corporate governance requirements as a result of being a “controlled company” within the meaning of the Nasdaq listing standards, you do not have the same protections afforded to stockholders of companies that are subject to such requirements.

Our Chairman, Dr.

Our Executive Chairman, Dr.

Patrick Soon-Shiong, and entities affiliated with him, control a majority of our common stock.

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However, our board of directors is currently comprised of a majority of independent directors.

In addition, although not required by the rules of Nasdaq, in August 2019, our board of directors established a nominating and corporate governance committee comprised of two directors, which are independent.

We are an “emerging growth company” and a “smaller reporting company,” and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act enacted in April 2012, or the JOBS Act, and may remain an “emerging growth company” for up to five years following the completion of our IPO, or December 31, 2020, although, if we have more than $1.07 billion in annual revenue, the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of June 30 of any year, or we issue more than $1.0 billion of non-convertible debt over a three-year period before the end of that five-year period, we would cease to be an “emerging growth company” as of the following December 31.

For as long as we remain an “emerging growth company,” we are permitted and intend to continue to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not “emerging growth companies.” These exemptions include:

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

Although we no longer qualify as an emerging g r owth company, we qualify as a “smaller r e porting company” during fiscal year 2021, which allows us to take advantage of many of the same e x emptions from disclosu r e requirements, including reduced dis c losure obligations regard i ng executive compensation in our periodic reports and proxy statements.

These exemptions include:

being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s discussion and analysis of financial condition and results of operations” disclosure;

not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;

not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

reduced disclosure obligations regarding executive compensation.

exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We have taken advantage of reduced reporting requirements in our public filings.

In particular, we have not included all of the executive compensation related information that would be required if we were not an emerging growth company.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies.

We have irrevocably elected not to avail ourselves of this exemption and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

Even after we no longer qualify as an emerging growth company, we may, under certain circumstances, still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

Investors may find our common stock less attractive as a result of our reliance on these exemptions.

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

*Our ability to use our net operating loss carryforwards, or NOLs, and certain other tax attributes to offset future taxable income may be subject to certain limitations.

As of December 31, 2019 we had U.S.

federal, state and foreign NOLs of $291.8 million, $255.7 million and $0.2 million, respectively, some of which begin to expire in various years starting with 2022, if not utilized.

As of December 31, 2019, we also had federal and state research and development tax credit carryforwards of $8.5 million and $5.7 million, respectively.

These net operating loss and research and development tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes, such as research tax credits, to offset its future post-change income and taxes may be limited.

In general, an “ownership change” occurs if there is a cumulative change in our ownership by “5% shareholders” that exceeds 50 percentage points over a rolling three-year period.

Similar rules may apply under state tax laws.

We completed an IRC Section 382/383 analysis through March 2019 regarding the limitation of net operating loss and research and development credit carryforwards.

The analysis concluded that the federal and state carryforwards associated with the NOLs were reduced by the amount of tax attributes estimated to expire during their respective carryforward periods.

Since we will need to raise substantial additional funding to finance our operations, we may experience further ownership changes in the future, some of which may be outside of our control.

Limits on our ability to use our pre-change NOLs or credits to offset U.S.

federal taxable income could potentially result in increased future tax liability to us if we earn net taxable income in the future.

In addition, under the legislation commonly referred to as the Tax Cuts and Jobs Act of 2017, or TCJA, as modified by the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, the amount of NOLs generated in taxable periods beginning after December 31, 2017, that we are permitted to deduct in any taxable year beginning after December 31, 2020 is limited to 80% of our taxable income in such year, where taxable income is determined without regard to the NOL deduction itself.

The TCJA allows post-2017 unused NOLs to be carried forward indefinitely.

Similar rules may apply under state tax laws.

Investors may find our common stock less a t t ra c tive a s a result of our re l i a nce on th ese exemptio n s.

If some investors f ind our common stock less at t ra c tive a s a result, t here m a y be a l e ss a c tive tr a ding mark e t for our common stock and the m a rket price of o u r common stock may be reduced or more v o l a til e .

We could be subject to additional income tax liabilities.

We are a U.S.-based company subject to tax in the U.S.

and in Korea.

and certain foreign tax jurisdictions.

Significant judgment is required in determining our global provision for income taxes, deferred tax assets or liabilities, and in evaluating our tax positions on a worldwide basis.

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Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.

For example, the Tax Cuts and Jobs Act of 2017, or TCJA, that was approved by Congress on December 20, 2017 significantly changed the U.S.

For example, the Tax Cuts and Jobs Act of 2017, or TCJA, which was approved by Congress on December 20, 2017 significantly changed the U.S.

Internal Revenue Code.

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An “interested stockholder” is a person who, together with affiliates and associates, owns (or, in certain cases, within three years prior, did own) 15% or more of the corporation’s voting stock.

Our decision not to be subject to Section 203 will allow, for example, our Chairman (who with members of his immediate family and entities affiliated with him owned approximately 64.4% of our common stock as of September 30, 2020) to transfer shares in excess of 15% of our voting stock to a third-party free of the restrictions imposed by Section 203.

Our decision not to be subject to Section 203 will allow, for example, our Executive C hairman (who, with members of his immediate family and entities affiliated with him, currently beneficially own, in the aggregate, approximately 81.8% of our common stock as of March 31, 2021) to transfer shares in excess of 15% of our voting stock to a third-party free of the restrictions imposed by Section 203.

This may make us more vulnerable to takeovers that are completed without the approval of our board of directors and/or without giving us the ability to prohibit or delay such takeovers as effectively.

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To the extent that a claim for indemnification is brought by any of our directors or officers, it would reduce the amount of funds available for use in our business.

UNREGISTERED SALES OF EQUI TY SECURITIES AND USE OF PROCEEDS.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(a) Recent Sales of Unregistered Securities

4 unchanged sentences

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

What changed 10-Q

Item 1A. Risk Factors