ICUCW filing — read by section

Item 1A. Risk Factors

Item 1A. Risk Factors. 

 Investing in our securities involves risks. Before you make a decision to buy our securities, in addition to the risks and uncertainties discussed above under “Cautionary Note Regarding Forward-Looking Statements,” you should carefully consider the specific risks set forth herein. If any of these risks actually occur, it may materially harm our business, financial condition, liquidity and results of operations. As a result, the market price of our securities could decline, and you could lose all or part of your investment. Additionally, the risks and uncertainties described herein in any document incorporated by reference herein are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may become material and adversely affect our business. 

 Risk Factor Summary 

 • We have not generated revenue sufficient for positive operating cash flows, have incurred significant losses since our inception and may continue to incur significant losses for the foreseeable future. 

 • If we fail to obtain additional financing, we would be forced to delay, reduce or eliminate our product development program. 

 • We have a limited operating history. 

 • We may not be able to use our net operating losses to offset future taxable income. 

 • We may suffer from a lack of availability of future funds. 

 • We may become a defendant in one or more stockholder derivative, class-action, and other litigation. 

 • We may face challenges in obtaining additional FDA approvals to market our product. 

 • The United States could change tariff, trade, or tax provisions related to the manufacturing and sales of our products in ways that we currently cannot predict. 

 • We may not be able to manage our growth effectively. 

 • Changing priorities within the U.S. government resulting in the loss of government grant funding could adversely impact our future growth plans. 

 • We will initially depend on revenue generated from a single product. 

 • We may fail to comply with extensive regulations of United States and foreign regulatory agencies. 

 • Delays in successfully completing our planned clinical trials could jeopardize our ability to obtain regulatory approval. 

 • Delays, interruptions, or the cessation of production by our third-party suppliers of important materials or delays in qualifying new materials, may prevent or delay our ability to manufacture or process our SCD device. 

 • We have limited experience in identifying and working with large-scale contracts with medical device manufacturers. 

 • Difficulties in manufacturing our SCD could have an adverse effect upon our revenue and expenses. 

 • We face intense competition in the medical device industry and our SCD technology may become obsolete . 

 • If our products, or the malfunction of our products, cause or contribute to a death or a serious injury, we will be subject to medical device reporting regulations. 

 • We outsource many of our operational and development activities for which we may not have full control. 

 • A lack of third-party coverage and reimbursement for our devices could delay or limit their adoption. 

 • Adverse changes in reimbursement policies and procedures by payors may impact our ability to market and sell our products. 

 • We may be subject to enforcement action if we engage in improper marketing or promotion of our products. 

 • We are and will be exposed to product liability risks, and clinical and preclinical liability risks, which could place a substantial financial burden upon us should we be sued. 

 • United States legislative or FDA regulatory reforms may make it more difficult and costly for us to obtain regulatory approval of our product candidates and to manufacture, market and distribute our products after approval is obtained. 

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 • We are subject to stringent and changing privacy laws, regulations and standards 

 • Our business operations will be adversely affected if our security measures, or those maintained on our behalf, are compromised, limited or fails. 

 • We depend on key personnel and our inability to attract and retain qualified personnel could impede our ability to achieve our business objectives. 

 • Our products may in the future be subject to product recalls. 

 • Our estimates of market opportunity, industry projections and forecasts of operating and financial results and market growth may prove to be inaccurate. 

 • We rely upon exclusively licensed patent rights from third parties which are subject to termination or expiration. 

 • If we are unable to obtain and maintain sufficient patent protection for our products, our ability to commercialize such products successfully may be adversely affected. 

 • We may not be able to obtain protection under the Hatch-Waxman Act and similar non-United States legislation for extending the term of patents covering our products. 

 • Issued patents covering one or more of our products could be found invalid or unenforceable if challenged in patent office proceedings, or in court. 

 • If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be adversely and materially affected, and our business could be harmed. 

 • Competitors may develop superior products based on new technologies. 

 • The United States government may exercise certain rights with regard to our inventions, or licensors’ inventions, developed using federal government funding. 

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

 • Intellectual property rights do not necessarily address all potential threats to our competitive advantage. 

 • Obtaining and maintaining our patent protection depends on compliance with various procedural, document submissions, fee payment and other requirements imposed by governmental patent agencies. 

 • We may obtain only limited geographical protection with respect to certain patent rights, 

 • We do not have long-term experience operating as a United States public company. 

 • Our Common Stock may be delisted from Nasdaq if we do not maintain compliance with Nasdaq’s continued listing requirements. If our Common Stock is delisted, it could negatively impact us. 

 • We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless. 

 • The trading price of our Common Stock has been volatile and is likely to be volatile in the future. 

 • If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. 

 • Future sales, or the possibility of future sales, of a substantial number of shares of our Common Stock could adversely affect the price of the shares and dilute stockholders. 

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 Risks Relating to Our Financial Condition 

 We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future. 

 We have incurred significant net losses since our inception and had an accumulated deficit of $139.6 million and $114.7 million as of December 31, 2024 and 2023, respectively. 

 We have devoted most of our financial resources to research and development, including clinical trials and non-clinical development activities, and obtaining regulatory approval of our SCD product candidates. Since the completion of the Business Combination, we relied primarily on the sales of securities to fund our operations and are limited as we need to meet certain conditions before such funding becomes available. The size of our future net losses will depend, in part, on the rate of future expenditures and our ability to generate revenues. If our product candidates are not successfully developed or commercialized, or if revenues are insufficient following marketing approval, it will not achieve profitability and our business may fail. Even if we successfully obtain regulatory approval to market our product candidates in the United States, our revenues are also dependent upon the size of the markets outside of the United States, regulatory approval outside of the United States, and our ability to obtain market approval and achieve commercial success. 

 We expect to continue to incur substantial and increased expenses as we expand research and development activities and advances clinical programs through the regulatory approval process. We also expect an increase in our expenses associated with commercialization of our products and creating additional infrastructure to support operations as a public company. As a result of the foregoing, we expect to continue to incur significant and increasing losses and negative cash flows for the foreseeable future. 

 We have not generated any significant revenue and may never be profitable. 

 Our ability to generate sustainable revenue and achieve profitability depends on our ability, alone or with collaborators, to successfully commercialize our approved pediatric SCD and complete the development, obtain the necessary regulatory approvals of and commercialize our adult SCD. We do not anticipate generating substantial revenue for the foreseeable future. Our ability to generate meaningful future revenue from product sales depends heavily on our success with the following items: 

 • commercializing our pediatric SCD, including securing adoption and increasing awareness; 

 • completing the clinical development of our adult SCD; 

 • obtaining regulatory approval for our adult SCD, including the PMA from the FDA; 

 • scaling our commercial operations, including building a hospital-directed sales force and collaborating with third parties; 

 • obtaining third-party reimbursement status from government agencies and insurance carriers; and 

 • entering into collaboration agreements and partnerships to commercialize our products. 

 Because of the numerous risks and uncertainties associated with medical device commercialization and product development, we are unable to predict the timing or amount of increased expenses, when, or if, we will be able to achieve or maintain profitability. In addition, our expenses could increase beyond expectations if it is required by the FDA to perform additional, unanticipated studies. 

 Even if our product candidates are approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate. In the case of our SCD product candidate for the treatment of pediatric AKI, we will be limited in our ability to sell and distribute our SCD units due to certain restrictions under the HDE requirements that limit the number of units that can be sold on an annual basis, which will further limit the amount of revenue that could be generated by us. Even if we successfully expand sales of our products, we may not become profitable and may need to obtain additional funding to continue operations. 

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 We may suffer from lack of availability of additional funds. 

 We expect to have ongoing needs for working capital in order to fund operations, continue to expand our operations and recruit experienced personnel. To that end, we will be required to raise additional funds through equity or debt financing. However, there can be no assurance that we will be successful in securing additional capital on favorable terms, if at all. If we are successful, whether the terms are favorable or unfavorable, there is a potential that we will fail to comply with the terms of such financing, which could result in severe liability for us. If we are unsuccessful, we may need to (a) initiate cost reductions; (b) forego business development opportunities; (c) seek extensions of time to fund liabilities, or (d) seek protection from creditors. In addition, any future sale of our equity securities would dilute the ownership and control of your shares and could be at prices substantially below prices at which our shares currently trade. Our inability to raise capital could require us to significantly curtail or terminate our operations altogether. We may seek to increase our cash reserves through the sale of additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional and potentially substantial dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties. 

 In addition, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary for us to sell all or a portion of our assets, enter into a business combination, or reduce or eliminate operations. These possibilities, to the extent available, may be on terms that result in significant dilution to our shareholders or that result in our shareholders losing all of their investment in us. 

 If we fail to obtain additional financing, we would be forced to delay, reduce or eliminate our product development program, which may result in the cessation of our operations. 

 Developing medical device products, including conducting preclinical studies and clinical trials, is expensive. We expect our research and development expenses to substantially increase in connection with our ongoing activities, particularly as we advance our clinical programs. As of December 31, 2024 and December 31, 2023, we had negative working capital of $3.0 million and $4.2 million, respectively. We currently do not have sufficient capital to support our operations and complete our planned regulatory approval process. We will need to secure additional capital to continue our operations, and such funding may not be available on acceptable terms, or at all. 

 Even if we receive sufficient capital in the future, we will be required to raise additional funds to support our operations and complete our planned regulatory approval process, and such funding may not be available in sufficient amounts or on acceptable terms to us, or at all. If we are unable to raise additional capital when required or on acceptable terms, we may be required to: 

 • significantly delay, scale back or discontinue the development or commercialization of our product candidates; 

 • seek corporate partners on terms that are less favorable than might otherwise be available; 

 • relinquish or license on unfavorable terms our rights to technologies or product candidates that we otherwise would seek to develop or commercialize ourselves; 

 If we are unable to raise additional capital in sufficient amounts or on acceptable terms, we will be prevented from pursuing development and commercialization efforts, including completing the clinical trials and regulatory approval process for our SCD product candidates, which would have a material adverse impact on our business, results of operations and financial condition. 

 We have a limited operating history, which makes it difficult to forecast our future results of operations. 

 We received HDE approval from the FDA for our pediatric SCD in February 2024 and shipped our first commercial QUELIMMUNE units in July 2024. As a result, we have a limited commercial operating history, making it difficult to accurately forecast future results of our operations and subject to a number of uncertainties and risks, including our ability to plan for and model future growth. Even if we receive regulatory approval to market and sell our 

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 other SCD product candidates, our revenue growth could slow in the future, or our revenue could decline or fluctuate for a number of reasons, including slowing demand for our products, increasing competition, changing demand in the markets, new scientific or technological developments, a decrease in the growth of our overall market, our failure to attract more customers, the inability to obtain reimbursement for our products by government agencies and insurers, or our failure, for any reason, to continue to take advantage of growth opportunities. If our assumptions regarding these risks and uncertainties and our future revenue growth are incorrect or change, or if we do not address these risks successfully or forecast its results accurately, our operating and financial results could differ materially from our expectations, and our business could suffer. 

 Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations. 

 As of December 31, 2024, we had net operating loss (“NOL”) carryforwards for federal and state income tax purposes of $108.2 million and $36.3 million, respectively, which may be available to offset taxable income in the future. Under the Tax Cuts and Jobs Act of 2017, as modified by the Coronavirus Aid, Relief, and Economic Security Act, federal NOLs incurred in tax years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal net operating losses in tax years beginning after December 31, 2020, is limited to 80 percent of taxable income. Federal NOLs incurred before 2018 may be carried forward 20 years but are not subject to the taxable income limitation. Under current law, California NOLs generally may be carried forward 20 years (with a limited extension for California NOLs incurred in 2020-2021) without a taxable income limitation. Our federal NOLs include $55.6 million that can also be carried forward indefinitely, and the remaining $52.8 million of federal NOLs expire in various years beginning in 2027 for federal purposes. The California NOLs expire beginning in 2039 if not utilized. A lack of future taxable income would adversely affect our ability to utilize these NOLs before they expire. 

 In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” (as defined in Section 382 of the Code and applicable Treasury Regulations) is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. We may experience a future ownership change under Section 382 of the Code that could affect our ability to utilize the NOLs to offset our income. We have not completed an ownership change analysis pursuant to IRC Section 382. If ownership changes within the meaning of IRC Section 382 are identified as having occurred, the amount of NOL and research tax credit carryforwards available to offset future taxable income and income tax liabilities in future years may be significantly restricted or eliminated. Further, deferred tax assets associated with such NOLs, and research tax credits could be significantly reduced upon realization of an ownership change within the meaning of IRC Section 382. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that due to legislative or regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to reduce future income tax liabilities, including for state tax purposes. For these reasons, we may not be able to utilize a material portion of the NOLs reflected on our balance sheet, even if we attain profitability, which could potentially result in increased future tax liability to us and could adversely affect our business, results of operations and financial condition. 

 We may become a defendant in one or more stockholder derivative, class-action, and other litigation, and any such lawsuits may adversely affect our business, financial condition, results of operations and cash flows. 

 We may in the future become defendants in one or more stockholder derivative actions or other class-action lawsuits. For example, certain former directors have threatened litigation for purported harm to us in connection with certain allegations made by the former directors against other members of our Board of Directors and management. The former directors have also made demands in connection with certain alleged contractual rights and purported agreements with us. We and the Board of Directors dispute these allegations and believe they are unfounded. 

 In addition, on July 5, 2024, Forrest A K Wells (the “Plaintiff”), a purported stockholder of ours, filed a putative class action complaint in the United States District Court for the State of Colorado (the “Class Action”), alleging that we and our management members made material misstatements or omissions regarding our business and operations, including disclosures relating to FDA approval of our product candidates, allegedly culminating in the restatement of our consolidated financial statements as disclosed in the Form 8-K filed on March 27, 2024. The Class Action asserts claims under Section 10(b) of the Exchange Act against us, our Chief Executive Officer and former Chief Financial Officer (collectively, the “Defendants”), as well as claims under Section 20(a) of the Exchange Act against the 

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 Defendants. Among other remedies, the Class Action seeks to recover compensatory and other damages. On March 4, 2025, the Plaintiff filed an amended complaint. We intend to vigorously defend the action. 

 On December 13, 2024, Jose Lazo, a purported stockholder of ours, filed a putative stockholder derivative action complaint in the United States District Court for the District of Colorado (the “Derivative Action”). The factual allegations of the Derivative Action are substantially similar to the Class Action. On January 30, 2025, upon joint motion of the parties, the Court stayed the Derivative Action pending the Court’s resolution of an anticipated motion to dismiss to be filed in the Class Action. 

 Any such lawsuit could divert our management’s attention and resources from our ordinary business operations, and we would likely incur significant expenses associated with their defense (including, without limitation, substantial attorneys’ fees and other fees of professional advisors and potential obligations to indemnify current and former officers and directors who are or may become parties to such actions). In connection with these lawsuits, we may be required to pay material damages, consent to injunctions on future conduct and/or suffer other penalties, remedies or sanctions, or issue additional shares upon the exercise of certain warrants, which may cause additional dilution. In addition, any such future lawsuits could adversely impact our reputation and/or ability to launch and commercialize our products, thereby harming our ability to generate revenue. Accordingly, the ultimate resolution of these matters and any future matters could have a material adverse effect on our business, financial condition, results of operations and cash flow and, consequently, could negatively impact the trading price of our common stock. 

 Risks Related to Our Business Operations 

 We may face challenges in obtaining additional FDA approvals to market our products in the United States or abroad. 

 We may encounter various challenges and difficulties in our application to seek approval from the FDA to sell and market our SCD product candidates, including the pivotal trial for adult AKI indication. 

 On November 6, 2024, we received BDD for our patented and cell-directed SCD to treat chronic systemic inflammation in end-stage renal disease (ESRD) patients who require chronic hemodialysis, also known as chronic dialysis. While we expect the BDD to expedite the clinical development and regulatory review of the SCD program for use in this patient population, there is no guarantee that we will be able to expedite the clinical development or obtain regulatory approval. 

 While we recently obtained approval from the FDA to conduct the AKI adult pivotal trial for SCD, there is no guarantee that we will be able to complete such trial in a timely manner, or at all, nor will there be any assurance that positive data will be generated from such trials. Even if we are able to generate positive results from this trial, the FDA and other regulatory agencies may require us to conduct additional trials to support the study or disagree with the design of the trial and request changes or improvements to such design. We are also subject to numerous other risks relating to the regulatory approval process, which include but are not limited to: 

 • an inability to secure and obtain support and references from collaborators and suppliers required by the FDA; 

 • a disagreement with the FDA regarding the design of the trial, including the number of clinical study subjects and other data, which may require us to conduct additional testing or increase the size and complexity of our pivotal study; 

 • a failure to obtain a sufficient supply of cartridges to conduct our trial; 

 • an inability to enroll a sufficient number of subjects; 

 • a shortage of necessary raw materials, such as calcium; and 

 • delays and failures to train qualified personnel to operate the SCD therapy. 

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 Even if we obtain approval, the FDA or other regulatory authorities may require expensive or burdensome post-market testing or controls. Any delay in, or failure to receive or maintain, clearance or approval for our future products could prevent us from generating revenue from these products or achieving profitability. Additionally, the FDA and other regulatory authorities have broad enforcement powers. Regulatory enforcement or inquiries, or other increased scrutiny on us, could dissuade some physicians from using our products and adversely affect our reputation and the perceived safety and efficacy of our products. 

 Delays or rejections may occur based on changes in governmental policies for medical devices during the period of product development. The FDA can delay, limit or deny approval of a PMA application for many reasons, including: 

 • our inability to demonstrate the safety or effectiveness of the SCD or any other product we develop to the FDA’s satisfaction; 

 • insufficient data from our preclinical studies and clinical trials, including for our SCD, to support approval; 

 • failure of the facilities of our third-party manufacturers or suppliers to meet applicable requirements; 

 • inadequate compliance with preclinical, clinical or other regulations; 

 • our failure to meet the FDA’s statistical requirements for approval; and 

 • changes in the FDA’s approval policies, or the adoption of new regulations that require additional data or additional clinical studies. 

 If we are not able to obtain regulatory approval of our other product candidates in a timely manner or at all, we may not be able to continue to operate our business and may be forced to shut down our operations. 

 The United States could change tariff, trade, or tax provisions related to the manufacturing and sales of our products in ways that we currently cannot predict. 

 Our business benefits from free trade agreements, and we also rely on various U.S. corporate tax provisions related to international commerce as we develop, market and sell our products within the U.S. and globally. The U.S. presidential administration has instituted or proposed changes in trade policies that include the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S. and other countries where we conduct business. The new tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing trade sanctions on certain U.S. goods. The U.S. presidential administration has indicated a focus on policy reforms that discourage corporations from outsourcing manufacturing and production activities to foreign jurisdictions, including through tariffs or penalties on goods manufactured outside the U.S., which may require us to change the way we conduct business. These changes in U.S. and foreign laws and policies have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry and the demand for our products, and as a result, could have a material adverse effect on our business, financial condition and results of operations. As of March 27, 2025, we do not import materials from Canada or China, but we do source tubing sets from Medtronic that is manufactured in Mexico. Tariffs and other trade restrictions could adversely affect our ability to obtain such materials on a timely basis or cause such components to become more expensive, which could adversely affect our business. 

 We plan to expand our operations and we may not be able to manage our growth effectively, which could strain our resources and delay or derail implementation of our business objectives. 

 We will need to significantly expand our operations to implement our longer-term business plan and growth strategies, including building and expanding our internal organizational infrastructure to complete the regulatory approval process with the FDA. We will also be required to manage and form new relationships with various strategic partners, technology licensors, customers, manufacturers and suppliers, consultants and other third parties. This expansion and these new relationships will require us to significantly improve or replace our existing managerial, operational and financial systems, and procedures and controls; to improve the coordination between our various corporate functions; and to manage, train, motivate and maintain a growing employee base. The time and costs to 

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 effectuate these steps may place a significant strain on our management personnel, systems and resources, particularly if there are limited financial resources and skilled employees available at the time. We cannot assure that we will institute, in a timely manner or at all, the improvements to our managerial, operational and financial systems, procedures and controls necessary to support our anticipated increased levels of operations and to coordinate our various corporate functions, or that we will be able to properly manage, train, motivate and retain our anticipated increased employee base. If we cannot manage our growth initiatives, we will be unable to commercialize our products on a large scale in a timely manner, if at all, and our business could fail. 

 We may pursue government funding in the future. Changing priorities within the U.S. government resulting in the loss of government grant funding could adversely impact our future growth plans. 

 As a commercial-stage medical device company, there are grants and other funding provided by the U.S. government that we could apply for and receive. However, the current U.S. presidential administration has indicated that there will not only be a pause on government funding, but there will also be a change in who is eligible to receive it and for what purpose. These changes are not predictable and may impact our ability to receive government funding in the future. An inability to receive government funding could adversely impact our future growth plans. 

 We will initially depend on revenue generated from a single product and in the foreseeable future will be significantly dependent on a limited number of products. 

 We will initially depend on revenue generated from our pediatric SCD and, if approved, our SCD product candidate for pediatric and adult patients with AKI. Given that, for the foreseeable future, our business will depend on a single or limited number of products, to the extent a particular product is not well-received by the market, our sales volume, prospects, business, results of operations and financial condition could be materially and adversely affected. 

 If we fail to comply with extensive regulations of United States and foreign regulatory agencies, the commercialization of our products could be delayed or prevented entirely. 

 Our SCD product candidate and research and development activities are subject to extensive government regulations related to its development, testing, manufacturing and commercialization in the United States and other countries. The determination of when and whether a product is ready for large-scale purchase and potential use in the United States will be made by the United States government through consultation with a number of governmental agencies, including the FDA, the National Institutes of Health and the Centers for Disease Control and Prevention. We have received approval for our pediatric SCD, but the product has not received regulatory approval from the FDA, or any foreign regulatory agencies, for use with adult patients. The process of obtaining and complying with FDA and other governmental regulatory approvals and regulations in the United States and in foreign countries is costly, time-consuming, uncertain and subject to unanticipated delays. Obtaining such regulatory approvals, if any, can take several years. Despite the time and expense exerted, regulatory approval is never guaranteed. We are also subject to the following risks and obligations, among others: 

 • the FDA may refuse to approve an application if it believes that applicable regulatory criteria are not satisfied; 

 • the FDA may require additional testing for safety and effectiveness; 

 • the FDA may interpret data from pre-clinical testing and clinical trials in different ways than we interpret them; 

 • if regulatory approval of a product is granted, the approval may be limited to specific indications or limited with respect to its distribution; and 

 • the FDA may change its approval policies and/or adopt new regulations. 

 Failure to comply with these or other regulatory requirements of the FDA may subject us to administrative or judicially imposed sanctions, including: 

 • warning letters, untitled letters or other written notice of violations; 

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 • civil penalties; 

 • criminal penalties; 

 • injunctions; 

 • product seizure or detention; 

 • product recalls; and 

 • total or partial suspension of production. 

 Delays in successfully completing our planned clinical trials could jeopardize our ability to obtain regulatory approval. 

 Our business prospects will depend on our ability to complete studies, clinical trials, including our planned pivotal trials of our SCD for adult AKI indication, obtain satisfactory results, obtain required regulatory approvals and successfully commercialize our SCD product candidate. The completion of our clinical trials, the announcement of results of the trials and our ability to obtain regulatory approvals could be delayed for a variety of reasons, including: 

 • slow patient enrollment; 

 • insufficient hospital supplies or staffing; 

 • serious adverse events related to our medical device candidates; 

 • insufficient funding to engage or continue to engage a contract research organization to execute the trials; 

 • unsatisfactory results of any clinical trial; 

 • the failure of principal third-party investigators to perform clinical trials on our anticipated schedules; and 

 • different interpretations of our pre-clinical and clinical data, which could initially lead to inconclusive results. 

 Our development costs will increase if we have material delays in any clinical trial or if we need to perform more or larger clinical trials than planned. If the delays are significant, or if any of our product candidates do not prove to be safe or effective or do not receive regulatory approvals, our financial results and the commercial prospects for our product candidates would be harmed. Furthermore, our inability to complete our clinical trials in a timely manner could jeopardize our ability to obtain regulatory approval. 

 Delays, interruptions, or the cessation of production by our third-party suppliers of important materials or delays in qualifying new materials, may prevent or delay our ability to manufacture or process our SCD device. 

 We currently rely on a single supplier for the cartridges and blood tubing sets used in the SCD device for the pediatric and adult AKI indications pursuant to supply agreements. In the event a current supplier is unable to provide cartridges or blood tubing sets for the SCD device or otherwise fails to meet its obligations under the agreement, we may not be able to obtain a sufficient number of cartridges or blood tubing sets to conduct our trials and commercialize our products. In addition, the supplier may decide to discontinue or terminate the specific type of cartridges or blood tubing sets that are required for our SCD for reasons beyond our control, in which case we will be forced to identify and secure an alternative source that may not be available immediately or at all. FDA review and approval of a new supplier may be required if these materials become unavailable from our current suppliers. Although there may be other suppliers that have equivalent materials that would be available to us, FDA review of any alternate suppliers, if required, could take several months or more to obtain, if it is able to be obtained at all. Any delay, interruption, or cessation of production by our third-party suppliers of important materials, or any delay in qualifying new materials, if necessary, would prevent or delay our ability to manufacture our SCD. 

 We believe we have sufficient access to the SCD inventory to conduct our current and near future clinical trials and commercial needs, but it is possible that the need for our SCD could increase which may require us to acquire more cartridges than we are currently able to purchase under our agreement with our supplier, and we may not be able to 

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 negotiate a new supply agreement successfully. If we are unable to find alternative sources of supply in a timely manner, any such delay could limit our ability to meet demand for the SCD and delay our ongoing clinical trials or limit our sales of QUELIMMUNE, which would have a material adverse impact on our business, results of operations and financial condition. 

 Additionally, use of the SCD in the hospital setting requires the administration of RCA and calcium replacement into CRRT circuitry for safe and effective use. Both components are IV solutions which are commonly stocked by hospital systems. However, there are limited manufacturers/suppliers of these IV solutions nationwide, and any supply chain disruptions may have detrimental effects to the utilization of CRRT, and subsequently use of commercial QUELIMMUNE or the adult SCD in clinical studies. 

 We have limited experience in identifying and working with large-scale contracts with medical device manufacturers. 

 To achieve the levels of production necessary to commercialize our SCD and any other future products, we will need to secure large-scale manufacturing agreements with contract manufacturers that comply with the manufacturing standards prescribed by various federal, state, and local regulatory agencies in the United States and any other country of use. We have limited experience coordinating and overseeing the manufacturing of medical device products on a large-scale. Manufacturing and control problems could arise as we attempt to commercialize our products and manufacturing may not be completed in a timely manner or at a commercially reasonable cost. In addition, we may not be able to adequately finance the manufacturing and distribution of our products on terms acceptable to us, if at all. If we cannot successfully oversee and finance the manufacturing of our products after receiving regulatory approval, we may not generate sufficient revenue to become profitable. 

 Difficulties in manufacturing our SCD could have an adverse effect upon our revenue and expenses. 

 We outsource the manufacturing of component parts of our SCD and complete final assembly of our SCD kits in-house. The outsourced manufacturing of SCD cartridges is complex and specialized. To support our current clinical trial needs, we comply with and intend to continue to comply with current Good Manufacturing Practice (“cGMP”) for outsourced manufacturing and in-house assembly of our products. Our ability to adequately supply our SCD in a timely manner is dependent on the uninterrupted and efficient operation of our third-party manufacturers, and those of the third parties producing raw materials and supplies upon which we rely on for the manufacturing of our products. The manufacturing of our products may be impacted by: 

 • the availability or contamination of raw materials and components used in the manufacturing process, particularly those for which we have no other supplier; 

 • our ability to comply with new regulatory requirements and cGMP; 

 • potential facility contamination by microorganisms or viruses; 

 • updating of our manufacturing specifications; 

 • product quality success rates and yields; and 

 • global viruses and pandemics. 

 If efficient manufacture and supply of the component parts of our SCD are interrupted, we may experience delayed shipments or supply constraints. If we are at any time unable to provide an uninterrupted supply of our SCD, our ongoing clinical trials and commercialization of QUELIMMUNE may be delayed, which could materially and adversely affect our business, results of operations and financial condition. 

 Our SCD technology may become obsolete. 

 Our SCD product candidates may become obsolete prior to commercialization by new scientific or technological developments, or by others with new treatment modalities that are more efficacious and/or more economical than our products. Any one of our competitors could develop a more effective product which would render our technology obsolete. In addition, it is possible that competitors may use similar technologies, equipment or devices, including using 

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 certain “off-the-shelf” cartridges unauthorized by the FDA, to attempt to create a similar treatment mechanism as the SCD. Further, new technological and scientific developments within the hospital setting could cause our SCD product candidates to become obsolete. For example, the SCD relies on the existing footprint of CRRT pump systems in ICUs, as well as the growing use and adoption of regional citrate as an anticoagulant. Further developments in these areas could require us to reconfigure our SCD product candidates, which may not be commercially feasible, or cause them to become obsolete. Lastly, our ability to achieve significant and sustained growth in our key target markets will depend upon our success in hospital penetration, utilization, publication, our SCD’s reimbursement status and medical education. Our products may not remain competitive with products based on new technologies. If we fail to sell products that satisfy our customers’ demands or respond effectively to new product announcements by our competitors, then market acceptance of our products could be reduced and our business, results of operations and financial condition could be adversely affected. 

 We face intense competition in the medical device industry. 

 We compete with numerous United States and foreign companies in the medical device industry, and many of our competitors have greater financial, personnel, operational and research and development resources than us. We believe that multiple competitors are or will be developing competing technologies to address cytokine storms. Progress is constant in the treatment of the immune system, which may reduce opportunities for the SCD. Our commercial opportunities will be reduced or eliminated if our competitors develop and market products for any of the diseases we target that: 

 • are more effective; 

 • have fewer or less severe adverse side effects; 

 • are better tolerated; 

 • are easier to administer; or 

 • are less expensive than our products or our product candidates. 

 Even if we successfully develop the SCD and any other future products and obtain FDA and other regulatory approvals necessary for commercializing them, our products may not compete effectively with other products. Researchers are continually learning more about diseases, which may lead to new technologies for treatment. Our competitors may succeed in developing and marketing products that are either more effective than those that we may develop or that are marketed before any of our products. Our competitors include fully integrated pharmaceutical and medical device companies and biotechnology companies, universities, and public and private research institutions. Many of the organizations competing with us have substantially greater capital resources, larger research and development staffs and facilities, greater experience in product development and in obtaining regulatory approvals, and greater marketing capabilities. If our competitors develop more effective treatments for infectious disease or hyperinflammation or bring those treatments to market before we can commercialize the SCD for such uses, we may be unable to obtain any market traction for our products, or the diseases we seek to treat may be substantially addressed by competing treatments. If we are unable to successfully compete against larger companies in the pharmaceutical industry, we may never generate significant revenue or be profitable. 

 If our products, or the malfunction of our products, cause or contribute to a death or a serious injury, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions. 

 Under the FDA medical device reporting regulations, medical device manufacturers are required to report to the FDA that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to a death or serious injury. If we fail to report these events to the FDA within the required timeframes, or at all, the FDA could take enforcement action against us. Any such adverse event involving our products could also result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending against potential lawsuits, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results. 

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 We outsource many of our operational and development activities for which we may not have full control. 

 We rely on third-party consultants, vendors and distributors to manage and implement much of the day-to-day responsibilities of conducting clinical trials and manufacturing and distribution of our current products and product candidates. Accordingly, we are and will continue to be dependent on the timeliness and effectiveness of the efforts of these third parties. Our dependence on third parties includes key suppliers and third-party service providers supporting the development, manufacturing, distribution and regulatory approval of our SCD, as well as support for our information technology systems and other infrastructure. While our management team oversees these vendors, the failure of any of these third parties to meet their contractual, regulatory, and other obligations, or the development of factors that materially disrupt the performance of these third parties, could have a material adverse effect on our business, results of operations and financial condition. 

 For example, in December 2022, we entered into the Distribution Agreement with Nuwellis, pursuant to which we appointed Nuwellis as our exclusive distributor for the sale and distribution of our pediatric SCD product throughout the United States once we receive from the FDA a written authorization to market such product for pediatric use pursuant to our HDE application. In the event of a material breach if such breach is not cured within ninety (90) days after written notice, we have the right to terminate the Distribution Agreement in accordance with the terms set forth in the Distribution Agreement. In May 2024, we provided notice to Nuwellis that Nuwellis had breached the Distribution Agreement. Nuwellis disputed the validity of the termination and on October 20, 2024, we entered into a confidential settlement agreement and release with Nuwellis, pursuant to which we paid Nuwellis an aggregate of $900,000 payable in three installments through December 31, 2024. 

 A lack of third-party coverage and reimbursement for our devices could delay or limit their adoption. 

 In both the United States and international markets, the use and success of medical devices is dependent in part on the availability of reimbursement from third-party payors, such as government and private insurance plans. Healthcare providers that use medical devices generally rely on third-party payors to pay for all or part of the costs and fees associated with the medical procedures being performed or to compensate them for their patient care services. Should our products under development be approved for commercialization by the FDA, reimbursement may not be available in the United States or other countries or, even if approved, the amount of reimbursement may not be sufficient to allow sales of our future products, including the SCD, on a profitable basis. The coverage decisions of third-party payors will be significantly influenced by the assessment of our future products by health technology assessment bodies. These assessments are outside our control, and any such evaluations may not be conducted or have a favorable outcome. 

 If approved for use in the United States, we expect that any products that we develop, including the SCD, will be purchased primarily by medical institutions through their operations budget. Payors may include the CMS, which administers the Medicare program and works in partnership with state governments to administer Medicaid, other government programs and private insurance plans. The process involved in applying for coverage and incremental reimbursement from CMS is lengthy and expensive. Further, Medicare coverage is based on our ability to demonstrate that the treatment is “reasonable and necessary” for Medicare beneficiaries. Even if products utilizing our SCD technology receive FDA and other regulatory clearance or approval, they may not be granted coverage and reimbursement by any payor, including by CMS. For some governmental programs, such as Medicaid, coverage and adequate reimbursement differ from state to state and some state Medicaid programs may not pay adequate amounts for the procedure products utilizing our technology system, or any payment at all. Moreover, many private payors use coverage decisions and payment amounts determined by CMS as guidelines in setting their coverage and reimbursement policies and amounts. However, no uniform policy for coverage and reimbursement of medical devices exists among third-party payors in the United States. Therefore, coverage and reimbursement can differ significantly from payor to payor. If CMS or other agencies limit coverage or decrease or limit reimbursement payments for doctors and hospitals, this may affect coverage and reimbursement determinations by many private payors for any future products of ours. 

 Adverse changes in reimbursement policies and procedures by payors may impact our ability to market and sell our products. 

 Healthcare costs have risen significantly over the past decade, and there have been and continue to be proposals by legislators, regulators and third-party payors to decrease costs. Third-party payors are increasingly challenging the 

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 prices charged for medical products and services and instituting cost containment measures to control or significantly influence the purchase of medical products and services. Additionally, executive orders have directed governmental agencies to review and reconsider policies that affect healthcare access and reimbursement, which could lead to further changes impacting our business. 

 Furthermore, the healthcare industry in the United States has experienced a trend toward cost containment as government and private insurers seek to control healthcare costs by imposing lower payment rates and negotiating reduced contract rates with service providers. In addition, Congress is considering additional health reform measures. Legislation could be adopted in the future that limits payments for our products from governmental payors. Furthermore, commercial payors such as insurance companies, could adopt similar policies that limit reimbursement for medical device manufacturers’ products. Therefore, it is possible that our products or the procedures or patient care performed using our products will not be reimbursed at a cost-effective level. 

 We face similar risks relating to adverse changes in reimbursement procedures and policies in other countries where we may market our products. Reimbursement and healthcare payment systems vary significantly among international markets. Our inability to obtain international reimbursement approval, or any adverse changes in the reimbursement policies of foreign payors, could negatively affect our ability to sell our products in foreign markets and have a material adverse effect on our business, results of operations and financial condition. However, we currently have no plans to expand sales of QUELIMMUNE outside the U.S. 

 If we or our contractors or service providers fail to comply with laws and regulations, we or they could be subject to regulatory actions, which could affect our ability to develop, market and sell our product candidates and any other future product candidates and may harm our reputation. 

 If we or our manufacturers or other third-party contractors fail to comply with applicable federal, state or foreign laws or regulations, we could be subject to regulatory actions, which could affect our ability to successfully develop, market and sell our SCD product candidate or any future product candidates under development and could harm our reputation and lead to reduced or non-acceptance of our proposed product candidates by the market. Even technical recommendations or evidence by the FDA through letters, site visits, and overall recommendations to academia or biotechnology companies may make the manufacturing of a clinical product extremely labor intensive or expensive, making the product candidate no longer viable to manufacture in a cost-efficient manner. The mode of administration or the required testing of the product candidate may make that candidate no longer commercially viable. The conduct of clinical trials may be critiqued by the FDA, or a clinical trial site’s Institutional Review Board or Institutional Biosafety Committee, which may delay or make impossible the clinical testing of a product candidate. For example, the Institutional Review Board for a clinical trial may stop a trial or deem a product candidate unsafe to continue testing. This would have a material adverse effect on the value of the product candidate and our business, results of operations and financial condition. 

 Even with FDA approval, we may still be subject to enforcement action if we engage in improper marketing or promotion of our products. 

 We are not permitted to promote or market our product candidates until FDA approval is obtained. After approval, our promotional materials and training methods must comply with the FDA and other applicable laws and regulations, including the prohibition of the promotion of unapproved or off-label use. Practitioners may use our products off-label, as the FDA does not restrict or regulate a practitioner’s choice of treatment within the practice of medicine. However, if the FDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine, or criminal penalties. Other federal, state, or foreign enforcement authorities might also take action if they consider our promotional or training materials to constitute promotion of an off-label use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that event, our reputation could be damaged, which may lead to reduced or non-acceptance of our proposed product candidates by the market. In addition, the off-label use of our products may increase the risk of product liability claims. Product liability claims are expensive to defend and could divert the attention of our management, result in substantial damage awards against us, and harm our reputation. 

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 We intend to outsource and rely on third parties for the clinical development and manufacture, sales and marketing of our SCD or any future product candidates that we may develop, and our future success will be dependent on the timeliness and effectiveness of the efforts of these third parties. 

 We do not have the required financial and human resources to carry out on our own all the pre-clinical and clinical development for our SCD product candidate or any other or future product candidates that we may develop, and do not have the capability and resources to manufacture, market or sell our SCD product candidate or any future product candidates that we may develop. Our business model calls for the partial or full outsourcing of the clinical development, manufacturing, sales, and marketing of our product candidates in order to reduce our capital and infrastructure costs as a means of potentially improving our financial position. Our success will depend on the performance of these outsourced providers. If these providers fail to perform adequately, our development of product candidates may be delayed and any delay in the development of our product candidates may have a material and adverse effect on our business, results of operations and financial condition. 

 We are and will be exposed to product liability risks, and clinical and preclinical liability risks, which could place a substantial financial burden upon us should we be sued. 

 Our business exposes us to potential product liability and other liability risks that are inherent in the testing, manufacturing, and marketing of medical devices. A successful liability claim or series of claims brought against us could have a material adverse effect on our business, results of operations and financial condition. We may not be able to continue to obtain or maintain adequate product liability insurance on acceptable terms, if at all, and such insurance may not provide adequate coverage against potential liabilities. Claims or losses in excess of any product liability insurance coverage that we may obtain could have a material adverse effect on our business, results of operations and financial condition. 

 Our SCD product candidate may be used in connection with medical procedures where those products must function with precision and accuracy. If medical personnel or their patients suffer injury as a result of any failure of our products to function as designed, or our products are designed inappropriately, we may be subject to lawsuits seeking significant compensatory and punitive damages. The risk of product liability claims, product recalls and associated adverse publicity is inherent in the testing, manufacturing, marketing, and sale of medical products. We have obtained general clinical trial liability insurance coverage; however, our insurance coverage may not be adequate or available. In addition, we may not be able to obtain or maintain adequate product liability insurance on acceptable terms, if at all, and such insurance may not provide adequate coverage against potential liabilities. Any product recall or lawsuit in excess of any product liability insurance coverage that we may obtain could have a material adverse effect on our business, results of operations and financial condition. Moreover, a product recall could generate substantial negative publicity about our products and business and inhibit or prevent commercialization of other future product candidates. 

 United States legislative or FDA regulatory reforms may make it more difficult and costly for us to obtain regulatory approval of our product candidates and to manufacture, market and distribute our products after approval is obtained. 

 From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulatory approval, manufacture and marketing of regulated products or the reimbursement thereof. In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of future products. It is impossible to predict whether legislative changes will be enacted, or FDA regulations, guidance or interpretations will be changed, and what the impact of such changes, if any, may be on our new product development efforts. 

 We are subject to stringent and changing privacy laws, regulations and standards as well as policies, contracts and other obligations related to data privacy and security. 

 We collect, receive, store, process, use, generate, transfer, disclose, make accessible, protect, and share personal information and other information (“Process” or “Processing”), including information we collect in connection with 

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 clinical trials, as necessary to operate our business, for legal and marketing purposes, and for other business-related purposes. 

 There are numerous federal, state, local and international laws, regulations and guidance regarding privacy, information security and Processing, the number and scope of which is changing, subject to differing applications and interpretations, and which may be inconsistent. We are subject, and may become subject in the future, to certain of these laws, regulations, and guidance, and we are also subject to the terms of our external and internal privacy and security policies, representations, certifications, standards, publications, frameworks, and contractual obligations to third parties related to privacy, information security and Processing. 

 If we fail, or it is perceived we have failed, to address or comply with such obligations, it could: 

 • increase our compliance and operational costs; 

 • expose us to regulatory scrutiny, actions, fines and penalties; 

 • result in reputational harm; interrupt or stop our clinical trials; 

 • result in litigation and liability; result in an inability to process personal data or to operate in certain jurisdictions; or 

 • harm our business operations or financial results or otherwise result in a material harm to our business. 

 Additionally, given that these obligations impose complex and burdensome obligations and that there is substantial uncertainty over the interpretation and application of these obligations, we may be required to incur material costs, divert management attention, and change our business operations, including our clinical trials, in an effort to comply, which could materially adversely affect our business, results of operations and financial condition. 

 The California Consumer Privacy Act of 2018 (“CCPA”) is an example of the increasingly stringent data protection legislation in the United States. The CCPA gives California residents expanded rights to access and require deletion of their personal information, opt-out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA created civil penalties for violations, as well as a private right of action for data breaches and statutory damages ranging from $100 to $750 per violation, which is expected to increase data breach class action litigation and result in significant exposure to costly legal judgments and settlements. Although there are limited exemptions for clinical trial data under the CCPA, the CCPA and other similar laws could impact our business activities depending on how they are interpreted. 

 Our business operations will be adversely affected if our security measures, or those maintained on our behalf, are compromised, limited or fail. 

 In the ordinary course of our business, we handle and processes proprietary, confidential and sensitive information, including personal data, intellectual property, trade secrets, and proprietary business information owned or controlled by us or other third parties, or collectively. We may use and share such sensitive information with service providers and other third parties. If we, our service providers, partners, or other relevant third parties have experienced, or in the future experience, any security incident or incidents that result in any data loss; deletion or destruction; unauthorized access to; loss, unauthorized acquisition, disclosure, or exposure of, confidential and sensitive information, it may adversely affect our business, results of operations and financial condition, including the diversion of funds to address the breach, and interruptions, delays, or outages in our operations and development programs. 

 Cyberattacks, malicious internet-based activity and online and offline fraud are prevalent and continue to increase, including the possibility that the ongoing conflict between Russia and Ukraine could result in cyberattacks or cybersecurity incidents that may have a direct or indirect impact on our operations. In addition to threats from traditional computer “hackers,” threat actors, software bugs, malicious code (such as viruses and worms), employee theft or misuse, denial-of-service attacks (such as credential stuffing) and ransomware attacks, sophisticated nation-state and nation-state supported actors now engage in attacks (including advanced persistent threat intrusions). We may also be the subject of phishing attacks, viruses, malware installation, server malfunction, software or hardware failures, loss of data 

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 or other computer assets, or other similar issues any of which could have a material and adverse effect on our business, results of operations and financial condition. 

 We depend on key personnel and our inability to attract and retain qualified personnel could impede our ability to achieve our business objectives. 

 Our success depends on the continuing service of key employees, especially our Chief Executive Officer, Eric Schlorff. The loss of any of these individuals could have a material and adverse effect on our business, results of operations and financial condition. We will also be required to hire and recruit highly skilled managerial, scientific, and administrative personnel to fully implement our business plan and growth strategies. Due to the specialized scientific nature of our business, we are highly dependent upon our ability to attract and retain qualified scientific, technical and managerial personnel. Competition for these individuals is intense and we may not be able to attract, assimilate or retain additional highly qualified personnel in the future. We may not be able to engage the services of qualified personnel at competitive prices or at all, particularly given the risks of employment attributable to our limited financial resources and lack of an established track record. Also, if we are required to attract personnel from other parts of the United States or abroad, we may have significant difficulty doing so because of the costs associated with moving personnel to the area. If we cannot attract and retain qualified staff and executives, we may be unable to develop our products and achieve regulatory clearance, and our business could fail. 

 Our products may in the future be subject to product recalls. 

 The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in their design or manufacture. For the FDA, the authority to require a recall must be based on a finding that there is reasonable probability that the device would cause serious injury or death. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. The FDA requires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated. A government-mandated or voluntary recall could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our reputation, business, results of operations and financial condition, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands. 

 We may also be subject to liability claims, be required to bear other costs, or take other actions that may have a negative impact on our future sales and our ability to generate profits. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA or the competent authority of another country. We may initiate voluntary recalls involving our products in the future that we determine do not require notification of the FDA or the competent authority of another country. If the FDA disagrees with our determinations, they could require us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect our sales. Moreover, the FDA could take enforcement action for failing to report recalls. We are also required to follow detailed recordkeeping requirements for all firm-initiated medical device corrections and removals. 

 Our business is subject to risks arising from future pandemics. 

 Worldwide pandemics have presented substantial public health and economic challenges and has affected our employees, patients, communities, and business operations, as well as the United States and global economy and financial markets. 

 A future pandemic may directly or indirectly impact the timeline for the launch of our SCD product candidate. We may experience disruptions that could severely impact our business, clinical trials, and manufacturing and supply chains, including: 

 • further delays or difficulties in enrolling patients in our clinical trials; 

 • delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; 

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 • the diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospital staff supporting the conduct of our clinical trials; 

 • the interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints; 

 • the interruption of, or delays in receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems; 

 • delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials and interruptions in global shipping may affect the transport of clinical trial materials; 

 • limitations on employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; 

 • delays in receiving feedback or approvals from the FDA or other regulatory authorities with respect to future clinical trials or regulatory submissions; 

 • changes in local regulations as part of a response to a future pandemic, which may require us to change the ways in which our clinical trials are conducted, resulting in unexpected costs, or discontinuing the clinical trials altogether; 

 • delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations on employee resources or the forced furlough of government employees; 

 • the refusal of the FDA to accept data from clinical trials in affected geographies; and 

 • difficulties launching or commercializing products, including due to reduced access to doctors as a result of social distancing protocols. 

 • In addition, the spread of a future pandemic may negatively impact our ability to raise additional capital on a timely basis or at all. 

 The extent to which a future pandemic may impact our business, including our clinical trials, manufacturing and supply chains and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the continued geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, continued business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. 

 Our forecasted operating and financial results rely in large part upon assumptions and analyses developed by us. If these assumptions and analyses prove to be incorrect, our actual operating and financial results may be significantly below our forecasts. 

 We have previously provided projected financial and operating information that reflected our estimates of future performance. Whether actual operating and financial results and business developments will be consistent with our expectations and assumptions as reflected in our forecast depends on a number of factors, many of which are outside our control, including, but not limited to: 

 • whether we can obtain sufficient capital to develop and commercialize our SCD product candidate and grow our business; 

 • whether we can manage relationships with key suppliers; 

 • the ability to obtain necessary regulatory approvals; 

 • demand for our products; 

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 • the timing and costs of new and existing marketing and promotional efforts; 

 • competition, including from established and future competitors; 

 • our ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel; 

 • the overall strength and stability of the economies in the markets in which it operates or intends to operate in the future; and 

 • regulatory, legislative and political changes. 

 Unfavorable changes in any of these or other factors, most of which are beyond our control, could materially and adversely affect our business, results of operations and financial condition. 

 Our estimates of market opportunity, industry projections and forecasts of market growth may prove to be inaccurate. 

 The market opportunity estimates and growth forecasts included in this Annual Report, including information concerning our industry and the markets in which we intend to operate, are obtained from publicly available information released by independent industry and research organizations and other third-party sources. Although we are responsible for the disclosure provided in this Annual Report and believes such third-party information is reliable, we have not independently verified any such third-party information. In addition, projections, assumptions and estimates of the future performance of the industry in which we operate are subject to uncertainty and risk due to a variety of factors. As a result, inaccuracies in third-party information, or in the projections, may adversely impact the assumptions that are relied upon for our internal business planning and in the analysis of investors. 

 Risks Relating to Our Intellectual Property 

 We rely upon exclusively licensed patent rights from third parties which are subject to termination or expiration. If licensors terminate the licenses or fail to maintain or enforce the underlying patents, our competitive position could be materially harmed. 

 We rely in part upon exclusively licensed patent rights for the development of our SCD technology. For example, we co-own with, and exclusively licenses from, the UOM patents related to the SCD technology. If the UOM were to terminate its license with us, we would no longer have exclusive rights to the co-owned patents and the UOM would be free to license the UOM’s interest in the co-owned patents to a competitor of ours. 

 We may become reliant in the future upon licenses to certain third-party patent rights and proprietary technologies necessary to develop and commercialize our SCD technology or other technologies. If we are unable to timely obtain these licenses on commercially reasonable terms, if at all, our ability to commercially exploit such products may be inhibited or prevented. If these licenses do not provide exclusive rights to use the subject intellectual property in all relevant fields of use and all territories in which we choose to develop or commercialize our technology and products, we may not be able to prevent competitors from developing and commercializing competitive products in such territories. Even if we are able to obtain necessary licenses, we may be required to pay significant licensing fees in order to market our products. 

 Should any of our current or future licenses be prematurely terminated for any reason, or if the patents and intellectual property owned by its licensors are challenged or defeated by third parties, our research and commercialization efforts could be materially and adversely affected. Our licenses may not continue in force for as long as is required to fully develop and market our products. It is possible that if the licenses are terminated or the underlying patents and intellectual property are challenged or defeated, suitable replacements may not be obtained or developed on terms acceptable to us, if at all. There is also the related risk that we may not be able to make the required payments under any patent license, in which case the licensor may terminate the license. 

 Further, our licensors may not successfully prosecute the patent applications which it has licensed and on which our business depends or may prosecute them in a manner not in our best interests. Further, licensors may fail to maintain 

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 licensed patents, may decide not to pursue litigation against third-party infringers, may fail to prove infringement or may fail to defend against counterclaims of patent invalidity or unenforceability. 

 In addition, despite our best efforts, a licensor could claim that we have materially breached a license agreement and terminate the license, thereby removing our ability to obtain regulatory approval for and to market any product covered by such license. If our licenses are terminated, or if the underlying patents fail to provide the intended market exclusivity, competitors would have the freedom to seek regulatory approval of, and to market, identical products. 

 Disputes may arise regarding intellectual property subject to a licensing agreement, including: 

 • the scope of rights granted under the license agreement and other interpretation related issues; 

 • the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; 

 • the sublicensing of patent and other rights under any collaboration relationships we might enter into in the future; 

 • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; 

 • the ownership of inventions and know how resulting from the joint creation or use of intellectual property by us and our licensors; and 

 • the priority of invention of patented technology. 

 If disputes over intellectual property that we have licensed prevents or impairs our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates. 

 If we are unable to obtain and maintain sufficient patent protection for our products, if the scope of the patent protection is not sufficiently broad, or if the combination of patents, trade secrets and contractual provisions upon which we rely to protect our intellectual property are inadequate, our competitors could develop and commercialize similar or identical products, and our ability to commercialize such products successfully may be adversely affected. 

 Our success depends in large part on our ability to protect our proprietary rights to the technologies incorporated into our products, including our ability to obtain and maintain patent protection in the United States and other countries related to our SCD technology and other technologies that we deem important to our business. We rely on a combination of patent protection, trade secret laws and nondisclosure, confidentiality, and other contractual restrictions to protect our proprietary technology. If we do not adequately protect our intellectual property, competitors may be able to erode or negate any competitive advantage we may have, which could harm our business, result of operations and financial condition. To protect our proprietary technologies, we have pursued patent protection in the United States and abroad related to our SCD technology and other technologies that are important to our business. The patent application and approval process are expensive and time-consuming. We may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Failure to protect, obtain, maintain, or extend adequate patent and other intellectual property rights could materially adversely affect our ability to develop and market our products. The enforcement, defense and maintenance of such patents and other intellectual property rights may be challenging and costly. 

 We cannot be certain that any patents that we have been issued or granted will not later be found to be invalid and/or unenforceable. We cannot be certain that pending patent applications will be issued in a form that provides it with adequate protection to prevent competitors from developing competing products. As a medical device technology company, our patent position is uncertain because it involves complex legal and factual considerations. The standards applied by United States Patent and Trademark Office (“USPTO”), and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable as methods of medical treatment. Consequently, patents may not be issued from any applications that are currently pending or that are filed in the future. As such, we do not know the 

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 degree of future protection that we will have for our technology. As a result, the issuance, scope, validity, enforceability, and commercial value of our patent rights are highly uncertain. 

 Only issued patents can be enforced against third parties practicing the technology claimed in such patents. Pending patent applications cannot be enforced unless and until patents get issued from such applications. Assuming the other requirements for patentability are met, currently, patents are granted to the party who was the first to file a patent application. However, prior to March 16, 2013, in the United States, patents were granted to the party who was the first to invent the claimed subject matter. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such inventions. 

 Moreover, because the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, our patents or pending patent applications may be challenged in the courts or by the USPTO or by foreign patent offices. For example, we may be subject to a third-party pre-issuance submission of prior art to the USPTO, or become involved in post-grant review procedures such as oppositions, derivations, reexaminations, inter parties review or interference proceedings, in the United States or elsewhere, challenging our patent rights or the patent rights of third parties. An adverse determination in any such challenges may result in the loss of exclusivity or in patent claims being narrowed, invalidated, or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar products, or limit the duration of our patent protection. In addition, given the amount of time required for the development, testing and regulatory review of medical devices, our patents might expire before or shortly after such products receive FDA approval and are commercialized, or before we receive approval to market our products in a foreign country. 

 Patent applications may not result in patents being issued which protect any current and future product candidates, in whole or in part, or which effectively prevent others from commercializing competitive products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. In addition, the laws of foreign countries may not protect our rights to the same extent or in the same manner as the laws of the United States. For example, European patent law restricts the patentability of methods of treatment of the human body more than United States patent law. 

 Although we believe that certain of our patents and applications, if they are granted, will help protect the proprietary nature of our SCD technology, this protection may not be sufficient to protect us during the development of that technology. Even if our patent applications are issued as patents, they may not be issued in a form that will provide it with any meaningful protection, prevent competitors from competing with it or otherwise provide it with any competitive advantage. Our competitors may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner. Our competitors may also seek approval to market their own products similar to or otherwise competitive with any of our products. Thus, even if we have valid and enforceable patents, these patents still may not provide protection against competing products or technologies sufficient to achieve our business objectives. 

 If we do not obtain protection under the Hatch-Waxman Act and similar non-United States legislation for extending the term of patents covering our products, our business, results of operations and financial condition may be materially harmed. 

 Patents have a limited duration. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest United States non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents related to our products, or their uses are obtained, once the patent life has expired, we may be open to competition from competitive products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting our products might expire before or shortly after such products receive FDA approval and are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing similar or identical products. 

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 Depending upon the timing, duration and requirements of FDA marketing approval of our product candidates, our United States patents, if issued, may be eligible for a limited patent term extension under the Hatch-Waxman Act, or under similar legislation in other countries. However, our patent and patent applications are only eligible for a patent term extension under the Hatch Waxman Act if they relate to a medical device classified by the FDA as a Class III device. Therefore, if our product candidates are not classified as Class III devices, we will not be able to apply for an extension of term for any patents covering such approved products. If eligible, the Hatch-Waxman Act permits a patent term extension of up to five years for a patent covering an approved product as compensation for effective patent term lost during product development and the FDA regulatory review process. The patent term extension cannot extend the remaining term of a patent beyond 14 years from the date of product candidate approval, and only one patent related to an approved product candidate may be extended. However, we may not receive an extension if it fails to apply within applicable deadlines, fails to apply prior to expiration of relevant patents or otherwise fails to satisfy applicable requirements. Moreover, the length of the extension could be less than requested. 

 Accordingly, if we are unable to obtain a patent term extension or the term of any such extension is less than requested, the period during which we can enforce our patent rights for that product will be shortened and competitors may obtain approval to market competing products sooner than expected. As a result, our business, results of operations and financial condition could be adversely and materially affected. 

 We could become involved in intellectual property litigation that could be costly, result in the diversion of management’s time and efforts, require us to pay damages, prevent us from selling our commercially available products and/or reduce the margins we may realize from our products. 

 Our commercial success depends, in part, on our ability to develop and market our SCD technology, as well as any future technologies that we develop, without infringing the intellectual property and other proprietary rights of third parties. 

 The medical device industry is characterized by extensive litigation and administrative proceedings over patent and other intellectual property rights. Whether a product infringes a patent involves complex legal and factual issues, and the determination is often uncertain. There may be existing patents of which we are unaware that our products under development may inadvertently infringe. The likelihood that patent infringement claims may be brought against us increases as the number of competitors increases, as it introduces new products and achieves more visibility in the marketplace. 

 Any infringement claim against us, even if without merit, may cause us to incur substantial costs, and would place a significant strain on our financial resources, divert the attention of management from our core business, and harm our reputation. In some cases, litigation may be threatened or brought by a patent holding company or other adverse patent owner who has no relevant product revenues and against whom our patents may provide little or no deterrence. If we are found to infringe any patents, we could be required to pay substantial damages, including triple damages if an infringement is found to be willful. We also could be forced, including by court order, to cease developing, manufacturing, or commercializing infringing products. We also could be required to pay royalties and could be prevented from selling our products unless we obtain a license or are able to redesign our products to avoid infringement. We may not be able to obtain a license enabling us to sell our products on reasonable terms, or at all. If we fail to obtain any required licenses or make any necessary changes to our technologies or products, we may be unable to commercialize one or more of our products or may have to withdraw products from the market, either of which would have a material adverse effect on our business, results of operations and financial condition. 

 In the event a competitor infringes upon any of our patents or other intellectual property rights, enforcing our rights may be difficult, time consuming and expensive, and would divert management’s attention from managing our business. We may not be successful on the merits in any enforcement effort. In addition, we may not have sufficient resources to litigate, enforce or defend our intellectual property rights. 

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 Issued patents covering one or more of our products could be found invalid or unenforceable if challenged in patent office proceedings, or in court. 

 Competitors may infringe our patents, trademarks, or other intellectual property. To counter infringement or unauthorized use of our intellectual property, we may be required to initiate legal proceedings against a third party to enforce our intellectual property rights. If we were to file a claim against a third party to enforce a patent covering one of our products, the defendant could counterclaim that our patent rights are invalid and/or unenforceable (a common practice in the United States). 

 Grounds for a validity challenge could be an alleged failure to meet one or more statutory requirements for patentability, including, for example, lack of novelty, obviousness, lack of written description or non-enablement. In addition, patent validity challenges may, under certain circumstances, be based upon non-statutory obviousness-type double patenting, which, if successful, could result in a finding that the claims are invalid for obviousness-type double patenting or the loss of patent term, including a patent term adjustment granted by the USPTO, if a terminal disclaimer is filed to obviate a finding of obviousness-type double patenting. Grounds for an unenforceability assertion could be based on an allegation that someone connected with prosecution of the patent intentionally withheld relevant information from the USPTO or made a misleading statement, during prosecution. 

 In any patent infringement proceeding, there is a risk that a court will decide that a company patent is invalid or unenforceable, in whole or in part. There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patent claims do not cover the invention at issue. An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents against those other parties and other competitors, which may curtail or preclude our ability to exclude third parties from selling similar products. Any of these occurrences could adversely and materially affect our business, results of operations and financial condition. 

 Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. 

 Additionally, third parties are able to challenge the validity of issued patents through administrative proceedings in the patent offices of certain countries, including the USPTO and the European Patent Office. 

 Although we believe that we have conducted our patent prosecution in accordance with the duty of candor and in good faith, the outcome following legal assertions of invalidity and unenforceability during patent litigation 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 of during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose some or all of the patent protection for one or more of our products. Such a loss of patent protection could have a material adverse impact on its business, results of operations and financial condition. Further, intellectual property litigation could lead to unfavorable publicity that could harm our reputation. 

 Other parties may challenge certain of the our foreign patent applications. If any such parties are successful in opposing its foreign patent applications, we may not gain the protection afforded by those patent applications in particular jurisdictions and may face additional proceedings with respect to similar patents in other jurisdictions, as well as related patents. The loss of patent protection in one jurisdiction may influence our ability to maintain patent protection for the same technology in other jurisdictions. 

 In addition, the European Unified Patent Court, or the UPC, came into force during 2023. The UPC is a common patent court to hear patent infringement and revocation proceedings effective for member states of the European Union. Although we have decided, and may continue to decide, to opt out certain of our European patents and patent applications from the UPC, if certain formalities and requirements are not met, then our European patents and patent applications could be challenged for non-compliance and brought under the jurisdiction of the UPC. Thus, we cannot be certain that our European patents and patent applications will avoid falling under the jurisdiction of the UPC. This 

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 could enable third parties to seek revocation of our European patents in a single proceeding at the UPC rather than through multiple proceedings in each of the jurisdictions in which the European patent is validated. Any such revocation and loss of patent protection could have a material adverse impact on our business and our ability to commercialize or license our technology and products. Moreover, the controlling laws and regulations of the UPC will develop over time, and may adversely affect our ability to enforce or defend the validity of our European patents. 

 Further, disputes may arise regarding the ownership or inventorship of our patents. While we have entered into assignment of intellectual property agreements with our employees, consultants, and collaborators and believe that we own our patents and applications, the assignment and other ownership agreements that we rely on could be challenged. If a court or administrative body determined that we do not own certain of our patents or patent applications, or that inventorship of certain of its patents is incorrect, our title to our patents could be invalidated and our ability to develop and commercialize our technology could be materially harmed. 

 If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be adversely and materially affected, and our business could be harmed. 

 We have also entered into non-disclosure and confidentiality agreements with all of our employees, advisors, consultants, contract manufacturers, clinical investigators and other third parties involved in the development and commercialization of our technology in order to protect our intellectual property and other proprietary technologies some of which may not be amenable to patent protection. However, these agreements may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements. For example, trade secrets and confidential know-how can be difficult to maintain as confidential. Although we use reasonable efforts to protect our trade secrets, any party with whom we have executed a confidentiality agreement could breach that agreement and disclose our confidential information. 

 Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, time consuming, and the outcome is unpredictable. Accordingly, we may not be able to obtain adequate remedies for such breaches, despite any legal action we might take against persons making such unauthorized disclosure. In addition, courts outside the United States sometimes are less willing than in the United States to protect trade secrets. 

 If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such third party, or those to whom the third party communicates such technology or information, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our business, results of operations and financial condition could be adversely affected. 

 Those with whom we collaborate on research and development related to current and future technologies and products may have rights to publish data and other information to which we have rights. In addition, we sometimes engages individuals or entities to conduct research relevant to our business. The ability of these individuals or entities to publish or otherwise publicly disclose data and other information generated during the course of their research is subject to certain contractual limitations. But these contractual provisions may be insufficient or inadequate to protect our confidential information. If we do not apply for patent protection prior to such publication, or if we cannot otherwise maintain the confidentiality of our proprietary technology and other confidential information, then our ability to obtain patent protection or to protect our trade secret information may be jeopardized. 

 New technology may lead to our competitors developing superior products which would reduce demand for our products regardless of any patent protection we may have. 

 Research into technologies similar to our technologies is proceeding at a rapid pace, and companies and research institutions are actively engaged in the development of products similar to our products. These new technologies may, if successfully developed, offer significant performance or price advantages when compared with our technologies. Our existing patents or our pending and proposed patent applications may not offer meaningful protection if a competitor develops a novel product based on a new technology. 

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 The United States government may exercise certain rights with regard to our inventions, or licensors’ inventions, developed using federal government funding. 

 The United States federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act (as amended, the “Bayh-Dole Act”). Certain of our exclusively owned patents and patent applications and those patents and applications that we co-own with and exclusively license from the University of Michigan were developed using federal funding from the National Institutes of Health, the U.S. Department of Defense, and/or the U.S. Army Medical Research and Materiel Command. Consequently, pursuant to the Bayh-Dole Act, the U.S. government has certain rights in patents and applications that cover our SCD technology, in particular, to those patents and applications identified in the section of this Annual Report titled “ Business – Intellectual Property ” belonging to Patent Families 1-4. 

 The U.S. federal government has certain rights, including so-called “march-in rights,” to any patent rights that were funded in part by the U.S. government and any products or technology developed from such patent rights. When new technologies are developed with U.S. government funding, the U.S. government generally obtains certain rights in any resulting patents, including a non-exclusive license authorizing the U.S. government to use the invention for non-commercial purposes. These rights may permit the U.S. government to disclose our confidential information to third parties and to exercise march-in rights to use or to allow third parties to use our licensed patents, including certain patents relating to SCD product candidates. The U.S. government can exercise its march-in rights if it determines that action is necessary because we fail to achieve the practical application of government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S. industry. In addition, our rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States. Furthermore, the U.S. government may have the right to take title to government-funded inventions if we fail to disclose the inventions to the government in a timely manner or fails to file a patent application within specified time limits. 

 If the U.S. government exercises such march-in rights, we may not be able to develop or commercialize our product candidates effectively or profitably, or at all, which could harm our business, results of operations and financial condition. In addition, if any intellectual property owned or licensed by us becomes subject to any of the rights or remedies available to the U.S. government or third parties pursuant to the Bayh-Dole Act, this could impair the value of our intellectual property and could adversely affect ourbusiness. 

 We also sometimes collaborate with academic institutions to accelerate our research or development. we try to avoid engaging our academic partners in projects in which there is a risk that federal funds may be co-mingled, we cannot be sure that any co-developed intellectual property will be free from government rights pursuant to the Bayh-Dole Act. If, in the future, we co-own or license technology which is critical to our business that is developed in whole or in part with federal funds subject to the Bayh-Dole Act, our ability to enforce or otherwise exploit patents covering such technology may be adversely and materially affected. 

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

 As is the case with other medical device companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the medical device industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act, or the Leahy-Smith Act, signed into law in September 2011, could increase those uncertainties and costs. The Leahy-Smith Act included a number of significant changes to United States patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents, such as through post grant and inter partes review proceedings at the USPTO. In addition, the Leahy-Smith Act transformed the United States patent system into a “first to file” system effective March 2013. The Leahy-Smith Act and its implementation could make it more difficult for us to obtain patent protection for our inventions and 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 harm our business, results of operations and financial condition. 

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 The United States Supreme Court has ruled on several patent cases, either narrowing the scope of patent protection available or weakening the rights of patent owners in certain circumstances. Additionally, there have been proposals for additional changes to the patent laws of the United States and other countries that, if adopted, could impact our ability to enforce our proprietary technology. Depending on future actions by Congress, the United States courts, the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in ways that would weaken our ability to obtain new patents or to enforce our existing and future patents. 

 Intellectual property rights do not necessarily address all potential threats to our competitive advantage. 

 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 maintain our competitive advantage. The following examples are illustrative: 

 • others may be able to make products that are the same as or similar to our products but that are not covered by the claims of patents that we own or have rights to; 

 • we or our licensors or any current or future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by our patents or pending patent applications; 

 • we or our licensors or any future strategic partners might not have been the first to file patent applications covering the inventions in our patents or applications; 

 • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; 

 • our pending patent rights may not lead to issued patents, or the patents, if granted, may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; 

 • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; 

 • third parties manufacturing or testing our products or technologies could use the intellectual property of others without obtaining proper licenses; 

 • we may not develop additional technologies that are patentable; and 

 • third parties may allege that our development and commercialization of our products infringes their intellectual property rights, and the outcome of any related litigation may have an adverse effect on our business, results of operations and financial condition. 

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

 Periodic maintenance fees on any issued patent are owed to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies also require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or the lapse of a patent or patent application, resulting in the partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, 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. If we or our licensors fail to maintain the patents and patent applications covering our products, our competitive position would be adversely affected. 

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 We may obtain only limited geographical protection with respect to certain patent rights, which may diminish the value of our intellectual property rights in those jurisdictions and prevent us from enforcing our intellectual property rights throughout the world. 

 Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be prohibitively expensive. Accordingly, we have not and in the future may not file for patent protection in all national and regional jurisdictions where such protection may be available. In addition, we may decide to abandon national and regional patent applications before grant, or to not pay maintenance fees on granted patents in certain jurisdictions. Finally, the grant proceeding of each national/regional patent office is an independent proceeding that may lead to situations in which applications in some jurisdictions are refused by the relevant patent offices, while other applications are granted. It is also quite common that depending on the country, the scope of patent protection may vary for the same product candidate or technology. 

 Competitors may use our technologies to develop their own products in jurisdictions where we have not obtained patent protection and, further, may export otherwise infringing products to territories where we have patent protection, but where patent enforcement is not as strong as that in the United States. These products may also compete with our products in jurisdictions where we do not have any issued or licensed patents or where our patent or other intellectual property rights are not effective or sufficient to prevent these products from competing with us. 

 Additionally, some countries do not afford intellectual property protection to the same extent as the laws of the United States and Europe. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries do not favor the enforcement of patents and other intellectual property rights. This could make it difficult for us to stop the infringement of our patents or the misappropriation of our other intellectual property rights in these countries. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any of our licensors are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired and our business, results of operations and financial condition may be adversely affected. Consequently, we may not be able to prevent third parties from practicing our inventions in certain countries outside the United States and Europe. Competitors may use our technologies to develop their own products in jurisdictions where we have not obtained patent protection. Furthermore, they may export otherwise infringing products to jurisdictions where we have patent protection, if our ability to enforce our patents to stop the infringing activities in those jurisdictions is inadequate. 

 Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and resources from other aspects of our business. Furthermore, while we intend to protect our intellectual property rights in major markets for our products, we may not be able to initiate or maintain similar efforts in all jurisdictions in which we wish to market our products. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. 

 Risks Related to Being a Public Company 

 We do not have long-term experience operating as a United States public company and may not be able to adequately implement the governance, compliance, risk management and control infrastructure and culture required for a public company, including compliance with the Sarbanes Oxley Act. 

 We are building experience operating as a United States public company, of which, our executive officers have limited experience in managing a United States public company, which makes their ability to comply with applicable laws, rules, and regulations uncertain. Our failure to comply with all laws, rules and regulations applicable to United States public companies could subject us and our management to regulatory scrutiny or sanction, which could harm our reputation and share price. Although we are developing and implementing governance, compliance, risk management and control framework and culture required for a public company, we may not be able to meet the requisite standards expected by the SEC and/or our investors. We may also encounter errors, mistakes, and lapses in processes and controls resulting in failures to meet the requisite standards expected of a public company. 

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 As a United States public reporting company, we incur significant legal, accounting, insurance, compliance, and other expenses. We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. Compliance with reporting, internal control over financial reporting and corporate governance obligations may require members of our management and our finance and accounting staff to divert time and resources from other responsibilities to ensure these new regulatory requirements are fulfilled. 

 If we fail to adequately implement the required governance and control framework, we could be at greater risk of failing to comply with the rules or requirements associated with being a public company. Such failure could result in the loss of investor confidence, could harm our reputation, and cause the market price of our securities to decline. Other challenges in complying with these regulatory requirements may arise because we may not be able to complete our evaluation of compliance and any required remediation in a timely fashion. Furthermore, any current or future controls may be considered as inadequate due to changes or increased complexity in regulations, our operating environment or other reasons. 

 Due to inadequate governance and internal control policies, misstatements, or omissions due to error or fraud may occur and may not be detected, which could result in failures to make required filings in a timely manner and make filings containing incorrect or misleading information. Any of these outcomes could result in SEC enforcement actions, monetary fines, or other penalties, as well as damage to our reputation, business, financial condition, operating results and share price. 

 Our Common Stock may be delisted from Nasdaq if we do not maintain compliance with Nasdaq’s continued listing requirements. If our Common Stock is delisted, it could negatively impact us. 

 Continued listing of a security on Nasdaq is conditioned upon compliance with various continued listing standards. There can be no assurance that we will be able to comply with the applicable listing standards. We have in the past received notifications of noncompliance with Nasdaq’s continued listing standards and there is no guarantee that we will not receive such notifications in the future. 

 For example, on June 24, 2024, we received a written notification from the Listing Qualifications staff of The Nasdaq Stock Market (“Nasdaq”) that we were not in compliance with the requirement to maintain a minimum market value of listed securities of $35 million, as set forth in Nasdaq Listing Rule 5550(b)(2) (the “Rule”), because the market value of our listed securities (the “Securities”) had been below $35 million for 30 consecutive business days. We had an initial 180 days, or until December 23, 2024, to regain compliance with the MVLS Requirement. 

 On December 24, 2024, we received written notification (the “Notification”) from Nasdaq stating that we had not regained compliance with the Rule. Pursuant to the Notification, the Securities were subject to delisting from Nasdaq on January 3, 2025, unless we requested a hearing before the Nasdaq Hearings Panel (the “Panel”) by December 31, 2024. 

 We requested a hearing before the Panel by December 31, 2024. As disclosed to Form 8-K on March 13, 2025, on March 11, 2025, we received a decision letter (the “Letter”) from the Nasdaq Hearings Panel (the “Panel”), granting our request to continue listing our common stock on The Nasdaq Stock Market (“Nasdaq”), subject to certain conditions. The Panel’s decision provides us with an exception until June 22, 2025, to demonstrate compliance with Nasdaq Listing Rule 5550(b)(2) (the “MVLS Rule”), which requires a Market Value of Listed Securities of at least $35 million. The Panel reviewed our compliance plan, which includes the continuation of fundraising efforts that began in 2024 and strategies for achieving long-term compliance with the MVLS Rule. As part of the conditions outlined in the Panel’s decision, we are required to, on or before June 22, 2025: 

 • file a public disclosure describing the transactions undertaken to increase our equity and providing an indication of our equity following those transactions, and 

 • provide the Panel with an update on our fundraising plans and updated income projections for the next 12 months, with all underlying assumptions clearly stated. 

 We are taking steps to address the conditions outlined. 

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 There can be no assurance that we will be successful or that we will be able to regain compliance with the MLVS Rule or maintain compliance with other Nasdaq listing requirements. If we fail to regain compliance with Nasdaq’s continued listing standards during any period granted by the Panel, the Securities could be subject to delisting from Nasdaq, unless another exception is granted by Nasdaq. 

 If our Common Stock ultimately were to be delisted for any reason, it could negatively impact us by (i) reducing the liquidity and market price of our Common Stock; (ii) reducing the number of investors willing to hold or acquire our Common Stock, which could negatively impact our ability to raise equity financing; (iii) limiting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets; and (iv) impairing our ability to provide equity incentives to our employees. 

 If we are unable to develop and maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may materially and adversely affect our business, results of operations and financial condition. 

 Our management is responsible for establishing and maintaining adequate internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP. Our management also evaluates the effectiveness of our internal controls, and we disclose any changes and material weaknesses identified through such evaluation of our internal controls. A material weakness is a deficiency, or a combination of deficiencies, in the internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. 

 As previously disclosed, our management identified material weaknesses in our internal controls over financial reporting, which relate to a deficiency in the design and operation of our financial accounting and reporting controls. Specifically, the material weaknesses resulted from (i) a lack of segregation of duties within the financial accounting and reporting processes, including the absence of an independent review and approval process in recording transactions to the consolidated financial statements, disbursement and payroll systems. and (ii) a lack of resources with the knowledge and experience to identify, analyze and conclude on the accounting for complex financial instruments in accordance with U.S. GAAP. 

 In response to the material weaknesses, we have identified and documented all relevant processes, conducted a corporate-wide risk assessment to address emerging risks, and implemented new entity-level, process-level, and monitoring controls. Additionally, we upgraded IT systems and general controls to mitigate segregation of duty risks. 

 As a result of these efforts, our management concluded that, as of December 31, 2024, the material weaknesses has been remediated. While these material weaknesses have been remediated, other weaknesses in our disclosure controls and procedures and internal control over financial reporting may be discovered in the future. 

 As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (“the Sarbanes-Oxley Act”), and the rules and regulations of the applicable listing standards of Nasdaq. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming, and costly, and place significant strain on our personnel, systems, and resources. 

 The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. However, as an emerging growth company, an attestation of an independent registered public accounting firm will initially not be required. We are continuing to develop and refine our disclosure controls and other procedures. We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs, and significant management oversight. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. We may need to upgrade our legacy information technology systems; implement additional financial and management controls, reporting systems and procedures; and hire additional accounting and finance staff. If we are unable to hire the additional accounting and 

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 finance staff necessary to comply with these requirements, we may need to retain additional outside consultants. If we or, if required, our independent registered public accounting firm, are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting, which could negatively impact the price of our securities. 

 Our management and other personnel will need to devote a substantial amount of time to compliance initiatives applicable to public companies, including compliance with Section 404 and the evaluation of the effectiveness of our internal controls over financial reporting within the prescribed timeframe. We cannot assure you that there will not be additional material weaknesses in our internal control over financial reporting now or in the future and we may discover additional deficiencies in existing systems and controls that we may not be able to remediate in an efficient or timely manner. In the event that we identify additional deficiencies, we may be required to further restate our financial statements and our results of operations and financial condition could be negatively affected. 

 Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines that we have a material weakness in our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our securities could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets. 

 We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless. 

 For those warrants traded on the Nasdaq under the ticker symbol (ICUCW) (herein the “Public Warrants”), we have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of our Common Stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we gave proper notice of such redemption and provided certain other conditions are met. If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Public Warrants could force Public Warrant holders (i) to exercise the Public Warrants and pay the exercise price therefore at a time when it may be disadvantageous for Public Warrant holders to do so, (ii) to sell the Public Warrants at the then-current market price when the Public Warrant holders might otherwise wish to hold the Public Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than the market value of the Public Warrants. None of the private placement or PIPE warrants will be redeemable by us so long as they are held by the Sponsor, original PIPE warrant holders or its permitted transferees. 

 Risks Related to Ownership of Our Common Stock 

 The trading price of our Common Stock has been volatile and is likely to be volatile in the future. 

 Our Common Stock could be subject to wide fluctuation in response to many risk factors listed in this section, and others beyond our control, including: 

 • market acceptance and commercialization of our products; 

 • our being able to timely demonstrate achievement of milestones, including those related to revenue generation, cost control, cost effective source supply and regulatory approvals; 

 • regulatory developments or enforcements in the United States and non-U.S. countries with respect to our products or our competitors’ products; 

 • failure to achieve pricing acceptable to the market; 

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 • actual or anticipated fluctuations in our financial condition and operating results, or our continuing to sustain operating losses; 

 • competition from existing products or new products that may emerge; 

 • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments; 

 • issuance of new or updated research or reports by securities analysts; 

 • announcement or expectation of additional financing efforts, particularly if our cash available for operations significantly decreases; 

 • fluctuations in the valuation of companies perceived by investors to be comparable to us; 

 • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; 

 • additions or departures of key management personnel; 

 • disputes or other developments related to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; 

 • entry by us into any material litigation or other proceedings; 

 • sales of our Common Stock by us, our insiders, or our other stockholders; 

 • market conditions for stocks in general; and 

 • general economic and market conditions unrelated to our performance. 

 Furthermore, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political, and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of shares of our Common Stock. In addition, such fluctuations could subject us to securities class action litigation, which could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business. If the market price of shares of our Common Stock after this offering does not exceed the price at which you obtain shares of our Common Stock, you may not realize any return on your investment in us and may lose some or all your investment. 

 If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. 

 The trading market for our Common Stock is impacted by the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. We cannot assure that analysts will continue to cover us or provide favorable coverage. If one or more of the analysts who cover us downgrade our stock or change their opinions of our stock, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline. 

 Future sales, or the possibility of future sales, of a substantial number of shares of our Common Stock could adversely affect the price of the shares and dilute stockholders. 

 Future sales of a substantial number of shares of our Common Stock, or the perception that such sales will occur, could cause a decline in the market price of our Common Stock. This is particularly true if we sell our stock at a discount. If our stockholders sell substantial amounts of Common Stock in the public market, or the market perceives that such sales may occur, the market price of our Common Stock and our ability to raise capital through an issue of equity securities in the future could be adversely affected. 

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 In addition, in the future, we may issue additional shares of Common Stock or other equity or debt securities convertible into Common Stock in connection with financing, acquisition, litigation settlement, employee arrangements or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and could cause the market price of our Common Stock to decline. 

 We have not paid cash dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our Common Stock. 

 We have never paid cash dividends on our Common Stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our Common Stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors (the “Board”) may consider relevant. Further, the agreements governing our indebtedness limit our ability to make dividends on our Common Stock. If we do not pay dividends, our Common Stock may be less valuable because a return on your investment will only occur if our stock price appreciates. 

 We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 and we intend to continue to take advantage of reduced disclosure and governance requirements applicable to emerging growth companies, which could result in our Common Stock being less attractive to investors and adversely affect the market price of our Common Stock or make it more difficult to raise capital as and when we need it. 

 We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we intend to continue to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved, and exemptions from any rules that the Public Company Accounting Oversight Board may adopt requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements. We currently take advantage of some, but not all, of the reduced regulatory and reporting requirements that are available to us under the JOBS Act and intend to continue to do so if we qualify as an “emerging growth company.” For example, so long as we qualify as an “emerging growth company,” we may elect not to provide you with certain information, including certain financial information and certain information regarding compensation of our executive officers, that we would have otherwise been required to provide in filings we make with the SEC, which may make it more difficult for investors and securities analysts to evaluate us. 

 We cannot predict if investors will find our Common Stock less attractive because we will rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longer an emerging growth company, which in certain circumstances could be for up to five years. 

 Because of the exemptions from various reporting requirements provided to us as an “emerging growth company,” we may be less attractive to investors, and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our business, results of operations, financial condition and cash flows, and prospects may be materially and adversely affected. 

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SeaStar Medical Holding Corp 10-K

Item 1A. Risk Factors
