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Item 1A. Risk Factors

2023-02-23 compared with 2022-02-24 · 130 added, 171 removed, 884 unchanged (25% of the section changed)

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The risks and uncertainties described below and in our other filings with the SEC are not the only risks we face.

If one or more of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.

If one or more of the

following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.

In that event, the market price for our common stock could decline, and you may lose your entire investment.

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You should carefully consider the fuller risk factor disclosure set forth in this Annual Report, in addition to the other information herein, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes.

• The coronavirus pandemic has caused interruptions or delays of our business plan and may have a significant adverse effect on our business.

• Our clinical trials could be delayed or suspended as a result of the threatened invasion of Ukraine by Russia.

• The coronavirus pandemic has caused interruptions or delays of our business plan and may continue to have a significant adverse effect on our business.

• Continued inflation and uncertainty in global economic conditions could negatively affect our business, results of operations and financial condition.

• Our clinical trials have been delayed as a result of the ongoing military action by Russia in Ukraine and the continuation of this conflict could have further adverse effects on our business.

• We have a limited operating history with our current business plan, have incurred significant losses since 2016, anticipate that we will continue to incur significant and increasing losses for the foreseeable future and may never achieve or maintain profitability.

The absence of any commercial sales and our limited operating history make it difficult to assess our future viability.

• We currently have no source of product sales revenue and may never be profitable.

• We currently have no source of product sales revenue and may never earn product revenue or be profitable.

• We will require substantial additional funding, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development, other operations or future commercialization efforts.

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Because the results of earlier clinical trials are not necessarily predictive of future results, any product candidate we advance through clinical trials may not have favorable results in later clinical trials or receive marketing approval.

The effect of failure or results different than expectations can result in significant market value decline and possible negative financial results or asset related impairment.

• Our product candidates may cause undesirable adverse effects or have other properties that could delay or prevent their marketing approval, limit the commercial profile of an approved label or result in significant negative consequences following marketing approval, if obtained.

• We are heavily dependent on the success of our product candidates, which are in the early stages of clinical development.

We cannot give any assurance that we will generate data for any of our product candidates sufficient to receive regulatory approval in our planned indications, which will be required before they can be commercialized.

We may not be able to generate data for any of our product candidates sufficient to receive regulatory approval in our planned indications, which will be required before they can be commercialized.

• Due to our limited resources and access to capital, we must decide to prioritize development of our current product candidates for certain indications and at certain doses.

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• We currently have limited marketing and sales experience.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate any revenue.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, if and when regulatory approval is received, we may be unable to generate any revenue.

• If we fail to enter into strategic relationships or collaborations, our business, financial condition, commercialization prospects and results of operations may be materially adversely affected.

• Coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, which could make it difficult for us to sell our products profitably.

• We face substantial competition, which may result in others discovering, developing or commercializing products before, or more successfully than, we do.

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• We incur significant costs and demands upon management as a result of complying with the laws and regulations affecting public companies.

• The market price of our common stock is volatile.

• The market price of our common stock has been and is expected to continue to be volatile.

• We do not anticipate that we will pay any cash dividends in the foreseeable future.

Risks Related to COVID-19

The coronavirus pandemic has caused interruptions or delays of our business plan and may have a significant adverse effect on our business.

In an effort to contain and mitigate the spread of COVID-19, many countries, including the United States (and some states and cities), Canada, the European Union and China, have imposed unprecedented restrictions on travel, quarantines, vaccine mandates and other public health safety measures.

Legal challenges to some of these restrictions have been successful, others are currently pending, with additional challenges expected.

As a result, there is uncertainty about the legality and enforceability of many of these restrictions.

The timing and efficacy of the vaccination programs in the jurisdictions in which we operate, and the actions implemented to contain the impact of COVID-19 by Federal, state and local governments, limit determining the foreseeable resulting economic effects with any level of predictability.

The extent to which the pandemic may continue to impact our business will depend on future developments, which are highly uncertain and cannot be predicted, but the development of clinical supply materials could be delayed and enrollment of patients in our ongoing studies may be delayed or suspended, as hospitals and clinics in areas where we are conducting trials have shifted resources to cope with the COVID-19 pandemic and may limit access or close clinical facilities due to the COVID-19 pandemic.

Additionally, if our trial participants are unable to travel to our clinical study sites as a result of

quarantines, vaccine mandates, travel bans or other restrictions resulting from the COVID-19 pandemic, we may experience higher discontinuation rates or delays in our clinical studies, as occurred in our investigator-sponsored trial of vidofludimus calcium in PSC that was conducted at the Mayo Clinic.

Macroeconomic Risks

The coronavirus pandemic has caused interruptions or delays of our business plan and may continue to have a significant adverse effect on our business.

COVID-19 has had and continues to have a significant impact around the world.

In an effort to contain and mitigate the spread of COVID-19, many countries imposed unprecedented restrictions on travel, quarantines, vaccine mandates and other public health safety measures.

Although some of these restrictions have been loosened or lifted in the United States and other countries, new variants continue to emerge, new outbreaks are periodically reported and significant uncertainty and concern remain.

The extent to which the pandemic may continue to impact our business will depend on future developments, which are highly uncertain and cannot be predicted, but the development of clinical supply materials could be delayed and enrollment of patients in our ongoing studies may be delayed or suspended, if hospitals and clinics in areas where we are conducting trials have to shift resources to cope with the COVID-19 pandemic and may limit access or close clinical facilities due to the COVID-19 pandemic.

Additionally, if our trial participants are unable to travel to our clinical study sites as a result of quarantines, vaccine mandates, travel bans or other restrictions resulting from the COVID-19 pandemic, we may experience higher discontinuation rates or delays in our clinical studies, as occurred in our investigator-sponsored trial of vidofludimus calcium in PSC that was conducted at the Mayo Clinic.

Government-imposed quarantines and restrictions may also require us to temporarily terminate our clinical sites.

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As a result, our expected development timelines for our product candidates may be negatively impacted.

In addition, the COVID-19 pandemic has affected and may continue to affect the operations of the U.S.

Food and Drug Administration and other regulatory authorities, which could result in delays of reviews and approvals with respect to our product candidates.

We cannot predict the continuing impact of the COVID-19 pandemic, as consequences of such an event are highly uncertain and subject to change.

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The COVID-19 pandemic has already adversely affected our operations and may further materially disrupt or delay our business operations, further divert the attention and efforts of the medical community to coping with COVID-19, disrupt the marketplace in which we operate, and/or have continuing material adverse effects on our operations.

Additionally, Phase 1 trials are ongoing for drug candidates IMU-935 and IMU-856 in Australia.

Such Phase 1 trials are customarily conducted in healthy volunteers who have no potential benefits from participation in such trials.

Hence, Phase 1 trials usually are subject to more strict evaluation and assessments during pandemic periods.

Such Phase 1 trials may for that reason be interrupted or delayed.

Moreover, the various precautionary measures taken by many governmental authorities throughout the world in order to limit the spread of COVID-19 have had and may continue to have an adverse effect on the global markets and global economy generally, including on the availability and pricing of employees, resources, materials, manufacturing and delivery efforts and other aspects of the global economy.

There have been business closures and a substantial global reduction in economic activity as a result of COVID-19.

Significant uncertainty remains as to the full impact of the COVID-19 pandemic on the global economy.

We cannot currently predict the duration of the pandemic or its impact on global or regional economic activity.

The COVID-19 pandemic could continue to disrupt our business and operations, interrupt our sources of supply, hamper our ability to raise additional funds or sell our securities, continue to slow down the overall economy or curtail consumer spending.

Our clinical trials could be delayed or suspended as a result of the threatened military action by Russia in the Ukraine.

We are currently conducting several clinical trials of vidofludimus calcium at more than 60 sites in total for both Ukraine and Russia, currently involving a total of approximately 100 participants.

Over 100,000 Russian military troops are reportedly massed on the Ukraine border and prepared for an invasion of Ukraine.

Any invasion or military conflict----or even its threat and continued uncertainty----could materially disrupt our clinical trials, increase our costs and may disrupt future planned clinical development activities in these two countries.

Although the route, length and impact of any military action are highly unpredictable, clinical trial sites in Ukraine could suspend or terminate trials, and patients could be forced to evacuate or voluntarily choose to relocate far from clinical trial sites, making them unavailable for further dosing or necessary follow-up.

The United States and other nations have also threatened to impose economic and other sanctions on Russia for aggression in Ukraine.

Any such sanctions could adversely affect clinical trials we are currently conducting or are planning to be conducted in Russia by delaying or preventing their completion and increasing our costs.

Alternative sites to fully and timely compensate for our clinical trial activities in Ukraine or Russia may not be available.

If our clinical trials are interrupted, we may have insufficient data to support regulatory approvals of vidofludimus calcium, and any commercialization may be delayed, which could limit our potential revenue and hurt the competitive position of our products.

The COVID-19 pandemic could further disrupt our business and operations, interrupt our sources of supply, hamper our ability to raise additional funds or sell our securities, continue to slow down the overall economy or curtail consumer spending.

Continued inflation and uncertainty in global economic conditions could negatively affect our business, results of operations and financial condition.

Adverse macroeconomic conditions, including inflation, slower growth or recession, higher interest rates, currency fluctuations, supply chain delays or shortages, high unemployment or personnel shortages could hurt our business.

We have already seen a general increase in many of our costs as a result of inflation, although inflation has not yet had a material impact on our results of operations.

However, the economies of Germany, the United States, Australia and other countries in which we do business have experienced high rates of inflation during 2022 and, if inflation were to continue for a prolonged period of time or the rate of inflation in our markets were to increase, or if a global recession were to occur, our expenses could increase substantially, resulting in increased losses from operations and net loss.

A downturn in the economic environment can also lead to limitations on our ability to obtain financing, reduced liquidity and declines in our stock price.

Our clinical trials have been delayed as a result of the ongoing military action by Russia in Ukraine and the continuation of this conflict could have further adverse effects on our business.

Our clinical trials of vidofludimus calcium were originally planned to be conducted at more than 60 sites in Ukraine and Russia, but most had to be relocated to other countries because of the invasion of Ukraine by Russia in February 2022 and resulting sanctions imposed on Russia by the United States and other countries.

These disruptions delayed our clinical development program, increased our costs and may disrupt future planned clinical development activities in these two countries.

This military action has continued for more than a year and its future course and effects on our Company are highly unpredictable.

We currently have 19 active sites in western Ukraine and the ongoing conflict could put the data associated with these patients in jeopardy as well as extend patient recruitment timelines.

We anticipate that Ukraine will make up approximately 15%-20% of our ENSURE- 1 and ENSURE-2 phase 3 patient population.

In addition, no clinical sites in Russia have been activated or are intended to be used in the future.

Alternative sites to fully and timely compensate for our clinical trial activities in Ukraine may not continue to be available.

If our clinical trials are further interrupted, our clinical development program could experience further delays and increased costs and we may have insufficient data to support regulatory approvals of vidofludimus calcium, and any commercialization may be delayed or not approved, which could limit our potential revenue and hurt the competitive position of our potential products.

Risks Related to Our Business and Financial Condition

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Our net losses were $120.4 million and $92.9 million for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2021, we had an accumulated deficit of $196.9 million to date and have not generated any revenue from our current product candidates.

As of December 31, 2022, we had an accumulated deficit of $317.3 million and to date and have not generated any revenue from our current product candidates.

Moreover, Immunic AG, the company’s operating subsidiary, has only a limited operating history upon which stockholders can evaluate our business and prospects, is not profitable and has incurred losses in each year since its inception in 2016.

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Failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, expand our business, maintain our development efforts, expand our pipeline of product candidates or continue our operations.

We currently have no source of product sales revenue and may never be profitable.

We currently have no source of product sales revenue and may never earn product revenue or be profitable.

We have not generated any revenues from commercial sales of any of our current product candidates.

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• launch and commercialize any product candidates for which we obtain marketing approval, and if launched independently, successfully establish a sales force and marketing and distribution infrastructure;

• obtain coverage and adequate product reimbursement from third-party payors, including government payors;

• obtain coverage and adequate product reimbursement from insurance companies and other third-party payors, including government payors;

• achieve market acceptance for any approved products;

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In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements through the first quarter of 2023.

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

We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2024.

Our estimate as to how long we expect our existing cash and cash

equivalents to continue to fund our operations is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.

Further, changing circumstances, some of which may be beyond our control, could cause us to consume cash and cash equivalents significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.

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• the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;

• the FDA or comparable foreign regulatory authorities may find the human subject protections for our clinical trials inadequate and place a clinical hold on (i) an IND application at the time of its submission, precluding commencement of any trials, or (ii) one or more clinical trials at any time during the conduct of such trials;

• the FDA or comparable foreign regulatory authorities may find the human subject protections for our clinical trials inadequate and place a clinical hold on (i) an investigational new drug (“IND”) application at the time of its submission, precluding commencement of any trials, or (ii) one or more clinical trials at any time during the conduct of such trials;

• we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication;

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• the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

• the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an application to obtain marketing approval in the United States or elsewhere;

• the FDA or comparable foreign regulatory authorities may find inadequate the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies of our product candidates;

• the data collected from clinical trials of our product candidates may not be sufficient to support the submission of a new drug application “NDA”) to obtain marketing approval in the United States or elsewhere ;

• the FDA or comparable foreign regulatory authorities may find inadequate the manufacturing processes or facilities of manufacturers with which we contract for clinical and commercial supplies of our product candidates;

• the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner that would delay marketing approval.

Before obtaining marketing approval for the commercial sale of any drug product for a target indication, we must demonstrate in preclinical studies and well-controlled clinical trials and, with respect to approval in the United States, to the satisfaction of the FDA, that the product is safe and effective for its intended use and that the manufacturing facilities, processes and controls are adequate to preserve the drug’s identity, strength, quality and purity.

In the United States, it is necessary to submit and obtain approval of a new drug application (“NDA”) from the FDA.

The submission of an NDA is subject to the payment of substantial user fees ($3,117,218 for 2022);

under certain limited circumstances, a waiver of such fees may be

An NDA must include extensive preclinical and clinical data and supporting information to establish the product safety and efficacy for each desired indication.

The NDA must also include significant information regarding the chemistry, manufacturing and controls for the product.

After the submission of an NDA, but before approval of the NDA, the manufacturing facilities used to manufacture a product candidate must be inspected by the FDA to ensure compliance with the applicable current good manufacturing practice (“cGMP”) requirements.

The FDA, the competent authorities of the member states of the European Economic Area, and comparable foreign regulatory authorities may also inspect our clinical trial sites and audit clinical study data to ensure that our studies are properly conducted in accordance with the IND regulations, human subject protection regulations, and current good clinical practice (“cGCP”).

Under the current Prescription Drug User Fee Act (“PDUFA”) guidelines, the FDA goal for acting on the submission of an NDA for a new molecular entity is ten months from the date of “filing.” The FDA conducts a preliminary review of an NDA within 60 days after submission to determine whether it is sufficiently complete to permit substantive review, before accepting the NDA for filing.

This two month preliminary review effectively extends the typical NDA review period to twelve months.

The FDA may request additional information rather than accept an NDA for filing.

In this event, the NDA must be resubmitted with the additional information.

The resubmitted application also is subject to review before the FDA accepts it for filing.

Obtaining approval of an NDA is a lengthy, expensive and uncertain process, and approval may not be obtained.

We cannot be certain that any submissions will be accepted for filing and reviewed by the FDA, or ultimately be approved.

We cannot be certain that any NDA submissions we may make will be accepted for filing and reviewed by the FDA, or ultimately be approved.

If an application is not accepted for review, the FDA may require that we conduct additional clinical studies or preclinical testing, or take other actions before it will reconsider our application.

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In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary between jurisdictions.

Even if our product candidates were to successfully obtain approval from regulatory authorities, any such approval might significantly limit the approved indications for use, including conditioning approval on the requirement of (i) more limited patient populations, (ii) precautions, warnings or contraindications on the product labeling, including “black box” warnings, (iii) expensive and time-consuming post-approval clinical studies, risk evaluation and mitigation strategies ("REMS"), or surveillance, or (iv) limiting the claims that the product label may make, any of which may impede the successful commercialization of our product candidates.

Following any approval for commercial sale of our product candidates, certain changes to the product, such as changes in manufacturing processes and additional labeling claims, as well as new safety information, may require new studies and will be subject to additional FDA notification, or review and approval.

Also, marketing approval for any of our product candidates may be withdrawn.

Even if our product candidates were to successfully obtain approval from regulatory authorities, any such approval might significantly limit the approved indications for use, including conditioning approval on the requirement of (i) more limited patient populations, (ii) precautions, warnings or contraindications on the product labeling, including “black box” warnings of serious risks, (iii) expensive and time-consuming post-approval clinical studies, risk evaluation and mitigation strategies ("REMS"), or surveillance, or (iv) limiting the claims that the product label may make, any of which may impede the successful commercialization of our product candidates.

Following any approval for commercial sale of our product candidates, certain changes to the product, such as changes in manufacturing processes and additional labeling claims, as well as new safety information, may require costly new studies and will be subject to additional FDA notification, or review and approval.

marketing approval for any of our product candidates may be withdrawn.

If we are unable to obtain and maintain marketing approval for our product candidates in one or more jurisdictions, or any approval contains significant limitations, our ability to market our product candidates to our full target market will be reduced and our ability to realize the full market potential of our product candidates will be impaired.

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This could delay or eliminate any potential product revenue by delaying or terminating the potential commercialization of our current product candidates.

Preclinical studies must also be conducted in accordance with FDA and comparable foreign regulatory authorities’ legal requirements, regulations or guidelines, including Good Laboratory Practice ("GLP"), an international standard meant to harmonize the conduct and quality of non-clinical studies and the archiving and reporting of findings.

Preclinical studies, including long-term toxicity studies and carcinogenicity studies in experimental animals, may require further evaluation, which could affect the risk-benefit evaluation of clinical development, or which may even lead the regulatory agencies to delay, prohibit the initiation of or halt clinical trials or delay or deny marketing authorization applications.

Failure to adhere to the applicable GLP standards or misconduct during the course of preclinical studies may invalidate the data and require repeating one or more studies or conducting additional testing.

Clinical trials must also be conducted in accordance with legal requirements, regulations or guidelines of the FDA and comparable foreign regulatory authorities, including human subject protection requirements and GCP.

Clinical trials are subject to further oversight by these governmental agencies and institutional review boards (“IRBs”) at the medical institutions where the clinical trials are conducted.

In addition, clinical trials must be conducted with supplies of our current product candidates produced under cGMP and other requirements.

Our clinical trials are conducted at multiple sites, including some sites in countries outside the United States and the European Union, which may subject us to further delays and expenses as a result of increased shipment costs, additional regulatory requirements and the engagement of foreign and non-European Union contract research organizations ("CROs"), as well as expose us to risks associated with clinical investigators who are unknown to the FDA or European regulatory authorities, and with different standards of diagnosis, screening and medical care.

Most of our clinical trials of vidofludimus calcium planned at sites in Ukraine and Russia had to be delayed, suspended or relocated because of the invasion of Ukraine by Russia in February 2022, which caused disruptions to our clinical development program and increased our costs.

To date, we have not completed all clinical trials required for the approval of any of our current product candidates.

The commencement and completion of clinical trials for our current product candidates may be delayed, suspended or terminated as a result of many factors, including but not limited to:

• the delay or refusal of regulators or IRBs to authorize us to commence a clinical trial at a prospective trial site;

• the delay or refusal of regulators or institutional review boards (“IRBs”) at the medical institutions where the clinical trials are conducted.

to authorize us to commence a clinical trial at a prospective trial site;

• changes in regulatory requirements, policies and guidelines;

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• clinical sites deviating from trial protocols or dropping out of a trial;

• adding new clinical trial sites;

• adding new clinical trial sites or relocating planned or existing clinical trial sites;

• negative or inconclusive results, which may require us to conduct additional preclinical or clinical trials or to abandon projects that we expect to be promising;

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• our third-party research and manufacturing contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

• third-party researchers becoming debarred or otherwise penalized by FDA or other regulatory authorities for violations of regulatory requirements, which could call into question data collected by such researcher and potentially affecting our ability rely on some or all of the data in support of our marketing applications;

• third-party researchers becoming debarred or otherwise penalized by the FDA or other regulatory authorities for violations of regulatory requirements, which could call into question data collected by such researcher and potentially affecting our ability rely on some or all of the data in support of our marketing applications;

• difficulty in maintaining contact with patients after treatment, resulting in incomplete data;

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We cannot ensure that the clinical investigators in our trials will not make mistakes or otherwise compromise the integrity or validity of data, any of which would have a significant negative effect on our ability to obtain marketing approval, our business, and our financial condition.

We could encounter delays if a clinical trial is suspended or terminated by us, the IRBs or ethics committees of the institutions in which such trial is being conducted, the independent steering committee, the data safety monitoring board ("DSMB"), for such trial, or the FDA or comparable foreign regulatory authorities.

We could encounter delays if a clinical trial is suspended or terminated by us, the IRBs or ethics committees of the institutions in which such trial is being conducted, the independent steering committee, the data safety monitoring board for such trial, or the FDA or comparable foreign regulatory authorities.

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

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

Significant clinical trial delays could also allow our competitors to bring products to market before we can, shorten any periods during which we may have the exclusive right to commercialize any approved product candidates, and impair our ability to commercialize any approved product candidates, which may harm our business, financial condition, results of operations and prospects.

Significant clinical trial delays could also allow our competitors to bring products to market before we can, shorten any periods during which we may have the

exclusive right to commercialize any approved product candidates, and impair our ability to commercialize any approved product candidates, which may harm our business, financial condition, results of operations and prospects.

Use of patient-reported outcomes in our clinical trials may delay the development of our product candidates or increase development costs.

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Clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical or preclinical testing.

For example, we announced in October 2022 the analysis of interim group-level data of our Phase 1b clinical trial of IMU-935 in patients with moderate-to-severe psoriasis did not separate from placebo.

Following this announcement, our stock price declined significantly, which caused us to record a full impairment of our goodwill in the quarter ended December 31, 2022.

Data obtained from trials are susceptible to varying interpretations, and regulators may not interpret our data as favorably as we do, which may delay, limit or prevent marketing approval of our product candidates.

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If one of our product candidates is found to be unsafe or lack efficacy, we will not be able to obtain marketing approval for such product candidate and our business would be harmed.

For example, if the results of our clinical trials of our product candidates do not achieve pre-specified endpoints, we are unable to provide primary or secondary endpoint measurements deemed acceptable by the FDA or comparable foreign regulators, or we are unable to demonstrate an acceptable level of safety relative to the efficacy associated with our proposed indications, the prospects for approval of our product candidates would be materially and adversely affected.

If the results of our clinical trials of our product candidates do not achieve pre-specified endpoints, we are unable to provide primary or secondary endpoint measurements deemed acceptable by the FDA or comparable foreign regulators, or we are unable to demonstrate an acceptable level of safety relative to the efficacy associated with our proposed indications, the prospects for approval of our product candidates would be materially and adversely affected.

For example, we announced in June 2022 that a phase 2 clinical trial of our most advanced drug candidate, vidofludimus calcium, did not achieve its primary endpoint in patients with moderate-to-severe ulcerative colitis.

As a result, we do not plan any further drug development activities in ulcerative colitis without a partner.

A number of companies in the pharmaceutical industry, including those with greater resources and experience than we, have suffered significant setbacks in Phase 2 and Phase 3 clinical trials, even after seeing promising results in earlier clinical trials.

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We do not know whether any clinical trials we may conduct will demonstrate consistent and/or adequate efficacy and safety to obtain marketing approval for our product candidates.

Marketing approval may be substantially delayed or may not be obtained for one or all of our product candidates if regulatory authorities require additional or more time-consuming studies to assess the safety and efficacy of our product candidates.

We may be unable to initiate or complete development of our product candidates on schedule, if at all.

The completion of the studies for our product candidates will require additional funding.

In addition, if regulatory authorities require additional or more time-consuming studies to assess the safety or efficacy of our product candidates, we may not have or be able to obtain adequate funding to complete the necessary steps for approval for any or all of our product candidates.

Additional delays may result if the FDA, an FDA advisory committee (if one is convened to review our NDA) or other regulatory authority indicates that the product candidate should not be approved or there should be restrictions on approval, such as the requirement for a REMS, to ensure safe use of the drug.

Delays in marketing approval or rejections of applications for marketing approval in the United States or other markets may result from many factors, including:

• the FDA or comparable foreign regulatory authorities disagreeing with the design or implementation of our clinical trials;

• regulatory requests for additional analyses, reports, data, non-clinical and preclinical studies and clinical trials;

• the FDA or comparable regulatory authorities questioning or disagreeing with our interpretations of data and results;

• the emergence of new information regarding our current or future product candidates or the field of research;

• unfavorable or inconclusive results of clinical trials and supportive non-clinical studies, including unfavorable results regarding safety or efficacy of our product candidates during clinical trials;

• failure to meet the level of statistical significance required for approval;

• inability to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;

• lack of adequate funding to commence or continue our clinical trials due to unforeseen costs or other business decisions;

• regulatory authorities may find inadequate the manufacturing processes or facilities of the third-party manufacturers with which we contract for clinical and commercial supplies;

• we may have insufficient funds to pay the significant user fees required by the FDA upon the filing of an NDA;

• the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner that would delay marketing approval.

The lengthy and unpredictable approval process, as well as the unpredictability of future clinical trial results, may result in our failure to obtain marketing approval to market our product candidates, which would significantly harm our business, results of operations and prospects.

Our product candidates may cause undesirable adverse effects or have other properties that could delay or prevent their marketing approval, limit the commercial profile of an approved label or result in significant negative consequences following marketing approval, if obtained.

Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of marketing approval by the FDA or other comparable foreign regulatory authorities.

Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive “approved use” label or the delay or denial of marketing approval by the

FDA or other comparable foreign regulatory authorities.

If any of our current or future product candidates is associated with serious adverse, undesirable or unacceptable side effects, we may need to abandon such candidate’s development or limit development to certain uses or sub-populations in which such side effects are less prevalent, less severe or more acceptable from a risk-benefit perspective.

Many drug candidates that initially showed promise in early-stage or clinical testing have later been found to cause side effects that prevented their further development.

Results our trials could reveal a high and unacceptable prevalence of these or other side effects.

Results of our trials could reveal a high and unacceptable prevalence of these or other side effects.

In such an event, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications.

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• additional restrictions may be imposed on the marketing of the particular product or the manufacturing process for the product or any component thereof;

• regulatory authorities may require the addition of labeling statements, such as a precaution, “black box” warning or other warnings or a contraindication;

• regulatory authorities may require the addition of labeling statements, such as a precaution, “black box” warning of serious risks or other warnings or a contraindication;

• we or our collaborators may be required to implement a REMS or create a medication guide outlining the risks of such side effect for distribution to patients;

• we or our collaborators could be sued and held liable for harm caused to patients;

• the product may become less competitive;

• the product may become less competitive and revenues could decline substantially;

• our reputation would suffer.

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We currently generate no revenue from sales of any products, and we may never be able to develop or commercialize a product candidate.

Our most advanced product candidate, vidofludimus calcium, had the first patient enrolled in a Phase 3 program for RMS in November 2021.

Our most advanced product candidate, vidofludimus calcium, had the first patient enrolled in a Phase 3 program for relapsing multiple sclerosis (“RMS”) in November 2021 and we do not expect the readout of topline data from this trial until the end of 2025.

We are not permitted to market or promote any of our product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval for any of our product candidates.

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If we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations.

We may use our financial and operational resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.

We may use our limited financial and operational resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and operational resources, we may forego or delay pursuit of opportunities in some programs, product candidates or indications that later prove to have greater commercial potential.

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Our spending on current and future research and development programs and future product candidates for specific indications may not yield any commercially viable products.

We may also enter into additional strategic collaboration agreements to develop and commercialize some of our programs and potential product candidates in indications with potentially large commercial markets.

If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may (i) relinquish valuable rights to that product candidate through strategic collaborations, licensing or other royalty arrangements when it would have been more advantageous to retain sole development and commercialization rights to such product candidate, or (ii) allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a collaborative arrangement.

We may also enter into strategic collaboration agreements to develop and commercialize some of our programs and potential product candidates in indications with potentially large commercial markets.

If we do not accurately evaluate and predict the commercial potential or target market for a particular product candidate, we may (i) relinquish valuable rights to that product candidate through strategic collaborations, licensing or other royalty arrangements when it would have been more advantageous to retain sole development and commercialization rights to such product candidate, or (ii) allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a collaborative arrangement.

We may find it difficult to enroll patients in our clinical trials given the limited number of patients who have the diseases for which our product candidates are being studied.

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If we experience delays in the completion of, or experiences termination of, any clinical trials of our product candidates, the commercial prospects of our product candidates could be harmed, and our ability to generate product revenue from product candidates could be delayed or impaired.

In addition, any delays in initiating or completing clinical trials would likely increase our overall costs, impair product candidate development and impair our ability to obtain regulatory approval.

We have recently experienced delays in our planned clinical trials of vidofludimus calcium at sites in Ukraine and Russia because of the invasion of Ukraine by Russia.

These and other delays we may encounter in initiating or completing clinical trials would likely increase our overall costs, impair product candidate development and impair our ability to obtain regulatory approval.

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

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These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP regulations and GCP for any clinical trials that we conduct post-approval.

Any marketing approvals that we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or subject to conditions of approval, or contain requirements for potentially costly post-approval studies, including Phase 4 clinical trials,

and surveillance to monitor safety and efficacy.

The FDA may also require us to implement a Risk Evaluation and Mitigation Strategy drug safety program as a condition of approval of our product candidates, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools

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The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval and additional or different risks.

We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any market, which would significantly harm our business, results of operations and prospects.

We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in some or all of the international markets in which we intend to market any approved product candidates, which would significantly harm our business, results of operations and prospects.

Agencies like the FDA and national competition regulators in European countries strictly regulate the marketing and promotion of drugs.

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In addition, the FDA requires that promotional claims not be “false or misleading” as such terms are interpreted by the FDA.

For example, the FDA requires substantial evidence, which generally consists of two adequate and well-controlled head-

to-head clinical trials, for a company to make a claim that its product is superior to another product in terms of safety or effectiveness.

For example, the FDA requires substantial evidence, which generally consists of two adequate and well-controlled head-to-head clinical trials, for a company to make a claim that its product is superior to another product in terms of safety or effectiveness.

Generally, unless we perform clinical trials meeting that standard comparing our product candidates to competing products and these claims are approved for our product labeling, we will not be able promote our product candidates as superior to competing products.

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If we are found to have improperly promoted our product, including for an off-label use, we may become subject to significant liability.

Numerous drug manufacturers have been the subject of investigations related to off-label promotion resulting in multi-billion dollar settlements, consent decrees, and on-going monitoring under corporate integrity agreements or deferred prosecution agreements.

deferred prosecution agreements.

In addition, the FDA could also seek permanent injunctions under which specified promotional conduct is monitored, changed or curtailed.

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• Federal civil and criminal false claims laws and civil monetary penalty laws, including the FCA, impose criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or for making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.

FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties (tied to inflation) of $11,803 to $23,607 (after December 13, 2021) per false claim or statement.

FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties (tied to inflation) of $12,537 to $25,076 (after May 9, 2022) per false claim or statement.

• The civil monetary penalties statute imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

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We may not be effective in ensuring our compliance with all applicable anti-corruption laws or other legal requirements, including trade control laws.

If we are not in compliance with applicable anti-corruption laws or trade control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and incur legal expenses, which could have an adverse impact on our business, financial condition, results of operations, stock price and prospects.

If we are not in compliance with applicable anti-corruption laws or trade control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and incur substantial legal expenses, which could have an adverse impact on our business, financial condition, results of operations, stock price and prospects.

Likewise, any investigation of any potential violations of these anti-corruption laws or trade control laws by U.S.

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Among other things, the Affordable Care Act contains provisions that may reduce the profitability of drug products, including, for example, revising the methodology by which rebates owed by manufacturers for covered outpatient drugs under the Medicaid Drug Rebate Program are calculated, extending Medicaid rebates to individuals enrolled in Medicaid managed care plans, imposing mandatory discounts for certain Medicare Part D beneficiaries who fall into a coverage gap, and subjecting drug manufacturers to payment of an annual fee based on its market share of prior year total sales of branded programs to certain federal healthcare programs.

There have been judicial and congressional challenges to the Affordable Care Act, as well as efforts to repeal or replace certain aspects of the Affordable Care Act.

There have been judicial and congressional challenges to the Affordable Care Act, some of which have been successful, as well as efforts to repeal or replace certain aspects of the Affordable Care Act.

If a new law is enacted, or if the Affordable Care Act is overturned, repealed or modified, in whole or in part, by judicial or legislative action, many if not all of the provisions of the Affordable Care Act may no longer apply to prescription drugs.

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We cannot predict the reform initiatives that may be adopted in the future or whether initiatives that have been adopted will be repealed or modified.

The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect:

The continuing efforts of the government, insurance companies,

managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect:

• the demand for any drug products for which we may obtain marketing approval;

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We and our manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, handling, and disposal of these hazardous materials.

In some cases, these hazardous materials and various wastes resulting from their use are stored at facilities of we and our manufacturers, pending their use and disposal.

In some cases, these hazardous materials and various wastes resulting from their use are stored at facilities of ours and our manufacturers, pending their use and disposal.

We cannot eliminate the risk of contamination, which could cause an interruption of our commercialization efforts, research and development efforts and business operations, or the risk of environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling, and disposal of these materials and specified waste products.

Although we believe that the safety procedures utilized by us and our contract manufacturers and suppliers for handling and disposing of these materials generally comply with the standards prescribed by applicable laws and regulations, we cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from these materials.

Although we believe that the safety procedures utilized by us and our contract manufacturers and suppliers for handling and disposing of these materials generally comply with the current standards prescribed by applicable laws and regulations, we cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from these materials.

In the event of contamination of injury, we may be held liable for any resulting damages, which could exceed our resources or result in government-imposed restrictions on our use of specified materials or interruptions of our business operations.

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Other Risks Related to Our Business

If governing bodies in the United States or elsewhere implement a waiver on patents on COVID-19 vaccines, there could be a significant adverse effect on our business.

On May 5, 2021, the Biden Administration announced that it supports a waiver for patents on vaccines protecting against the coronavirus.

The World Trade Organization supports a similar proposal.

Any actions by governments of the United States or other countries or by international governing organizations that limit the ability of companies to enforce their patents or other technology could limit the value of our intellectual property and revenue potential for our product candidates.

Due to our limited resources and access to capital, we must decide to prioritize development of our current product candidates for certain indications and at certain doses.

These decisions may prove to have been wrong and may materially adversely affect our business, financial condition, results of operations and prospects.

Because we has limited resources and access to capital to fund our operations, we must decide which dosages and indications to pursue for the clinical development of our current product candidates and the amount of resources to allocate to each.

Because we have limited resources and access to capital to fund our operations, we must decide which dosages and indications to pursue for the clinical development of our current product candidates and the amount of resources to allocate to each.

Our decisions concerning the allocation of research, collaboration, management and financial resources toward dosages or therapeutic areas may not lead to the development of viable commercial products and may divert resources away from better opportunities.

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Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing our growth.

As we advance our product candidates through clinical trials, we will need to expand our development, regulatory, manufacturing, marketing and sales capabilities or contract with third parties to provide these

capabilities.

As our operations expand, we expect that we will need to manage additional relationships with such third parties, as well as additional collaborators and suppliers.

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Any such breach, loss, or compromise of clinical trial participant personal data may also subject us to civil fines and penalties or claims for damages, either under the General Data Protection Regulation and relevant member state law in the European Union, other foreign laws, and HIPAA, and other relevant state and federal privacy laws in the United States including the California Consumer Privacy Act.

On May 13, 2020, the Federal Bureau of Investigation (“FBI”) and Cybersecurity and Infrastructure Security Agency announced that the FBI is investigating the targeting and compromise of U.S.

organizations conducting COVID-19-related research by People’s Republic of China-affiliated cyber actors.

To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, including but not limited to information related to our vidofludimus calcium product candidate, we could incur liability, our competitive and reputational position could be harmed, and the further development and commercialization of our investigational medicines could be delayed.

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If any approved products are not accepted by the market to the extent that we expect, we may not be able to generate sufficient revenue and our business would suffer.

We currently have limited marketing and sales experience.

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate any revenue.

We currently have no marketing and sales experience.

We have never commercialized a product candidate, and we currently have no marketing and sales organization.

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Therefore, in addition to financing the development of our product candidates through additional equity financings or through debt financings, we may decide to enter into collaborations with pharmaceutical or biopharmaceutical companies for the development and potential commercialization of our product candidates in the United States or foreign markets.

We announced in June 2022 that we do not plan further drug development activities in ulcerative colitis without a partner, following the failure of our phase 2 clinical trial to achieve its primary endpoint.

We face significant competition in seeking appropriate collaborators.

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Any of these contingencies may require us to curtail the development of a particular product, reduce or delay one or more of our development programs, delay our potential commercialization or reduce the scope of our sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense.

If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all.

elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all.

If we do not have sufficient funds, we will not be able to bring any approved product candidates to market and generate product revenue.

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The pricing, coverage, and reimbursement of any of our approved products must be sufficient to support our commercial efforts and other development programs, and the availability and adequacy of coverage and reimbursement by third-party payors, including governmental and private insurers, are essential for most patients to be able to afford expensive treatments.

Sales of any of our approved product candidates will depend substantially, both domestically in other jurisdictions, on the extent to which the costs of any of our approved products will be paid for or reimbursed by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or government payors and private payors.

If coverage and reimbursement are not available, or are available only in limited amounts, we may have to subsidize or provide products for free or we may not be able to successfully commercialize our products.

Sales of any of our approved product candidates will depend substantially, both domestically and in other jurisdictions, on the extent to which the costs of any of our approved products will be paid for or reimbursed by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or government payors and private payors.

If coverage and reimbursement are not available, or are available only in limited amounts, we may have to subsidize or provide products for free, which would harm our potential revenues and profits, or we may not be able to successfully commercialize our products.

In addition, there is significant uncertainty related to the insurance coverage and reimbursement for newly approved products.

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Large pharmaceutical companies in particular have extensive expertise in preclinical and clinical testing and in obtaining regulatory approvals for drugs.

In addition, academic institutions, government agencies, and other public and private organizations

conducting research may seek patent protection with respect to potentially competitive products or technologies.

In addition, academic institutions, government agencies, and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products or technologies.

These organizations may also establish exclusive collaborative or licensing relationships with our competitors.

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If our competitors obtain marketing approval from the FDA or comparable foreign regulatory authorities for their product candidates more rapidly than we do, they could establish a strong market position before we are able to enter the market.

Third-party payors, including governmental and private insurers, also may encourage the use of generic products.

Third-party payors, including governmental and private insurers, also may encourage the use of less expensive generic products.

Failure of any approved product candidates of ours to effectively compete against established treatment options or to compete in the future with new products currently in development would harm our business, financial condition, results of operations and prospects.

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Delays in production by third parties could delay our clinical trials or have an adverse impact on any commercial activities.

In addition, our dependence on third parties for the manufacture of and formulation of our product candidates subjects us to the risk that such products may have manufacturing defects that we has limited ability to prevent or control.

In addition, our dependence on third parties for the manufacture of and formulation of our product candidates subjects us to the risk that such product candidates may have manufacturing defects that we has limited ability to prevent or control.

Although we oversee these activities to ensure compliance with our quality standards, budgets and timelines, we have, and will continue to have, less control over the manufacturing of our product candidates than if we were to manufacture our product candidates.

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In addition, a third party could be acquired by, or enter into an exclusive arrangement with, one of our competitors, which would adversely affect our ability to access the formulations we require for the manufacturing of our product candidates.

The facilities used by our current contract manufacturers and any future manufacturers to manufacture our product candidates must be inspected by the FDA after we submits our NDA.

The facilities used by our current contract manufacturers and any future manufacturers to manufacture our product candidates must be inspected by the FDA after we submit our NDA.

We do not control the manufacturing process of, and are completely dependent on, our contract manufacturers for compliance with the regulatory requirements, known as cGMPs, for manufacture of both active drug substances and finished drug products.

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If we was unable to find adequate replacement or another acceptable solution in time, our clinical trials could be delayed or our commercial activities could be harmed.

Problems with the quality of the work performed by third parties may lead us to seek to terminate our working relationships and use alternative service providers.

Problems with the quality of the work performed by third parties may lead us to seek to terminate our working relationships and seek alternative service providers.

However, making this change may be costly and may substantially delay clinical trials.

In addition, it may be very challenging, and in some cases impossible, to find replacement service providers that can develop and manufacture our drug candidates in an acceptable manner and at an acceptable cost and on a timely basis.

The sale of products containing any defects or any delays in the supply of necessary products or services could adversely affect our business, financial condition, results of operations, and prospects.

sale of products containing any defects or any delays in the supply of necessary products or services could adversely affect our business, financial condition, results of operations, and prospects.

Growth in the costs and expenses of components or raw materials may also adversely affect our business, financial condition, results of operations, and prospects.

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We do not have the ability to independently conduct clinical trials for any of our product candidates.

We rely and expect to continue relying on third parties, such as CROs,

medical institutions, clinical investigators and contract laboratories, to conduct all of our clinical trials of our product candidates;

We rely and expect to continue relying on third parties, such as CROs, medical institutions, clinical investigators and contract laboratories, to conduct all of our clinical trials of our product candidates;

however, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with our investigational plan and protocol.

Moreover, the FDA and other foreign regulatory authorities require us to comply with IND and human subject protection regulations and cGCPs for conducting, monitoring, recording, and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials.

Moreover, the FDA and foreign regulatory authorities require us to comply with IND and human subject protection regulations and cGCPs for conducting, monitoring, recording, and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials.

Our reliance on third parties does not relieve us of these responsibilities and requirements.

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If we or any of our third-party contractors fail to comply with applicable eGCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.

There is no assurance that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with eGCPs.

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

There are significant requirements imposed on us and on clinical investigators who conduct clinical trials that we sponsor.

Although we are responsible for selecting qualified CROs or clinical investigators, providing them with the information they need to conduct the clinical trials properly, ensuring proper monitoring of the clinical trials, and ensuring that the clinical trials are conducted in accordance with the general investigational plan and protocols contained in the IND, we cannot ensure that the CROs or clinical investigators will maintain compliance with all regulatory requirements at all times.

Upon inspection by a given regulatory authority, such regulatory authority may determine that one or more of our clinical trials do not comply with eGCPs.

Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the marketing approval process and increase our expenses.

The pharmaceutical industry has experienced cases where clinical investigators have been found to incorrectly record data, omit data, or even falsify data.

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• any such collaboration may significantly limit our share of potential future profits from the associated program, and may require us to relinquish potentially valuable rights to our current product candidates, potential product candidates or proprietary technologies, or to grant licenses on terms that are not favorable to us;

• collaborators may cease to devote sufficient resources to the development or commercialization of our product candidates if the collaborators view our product candidates as competitive with their own products or product candidates;

• collaborators may cease to devote sufficient resources to the development or commercialization of our product candidates, especially if the collaborators view our product candidates as competitive with their own products or product candidates;

• disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the course of development, might cause delays or termination of the development or commercialization of product candidates, and might result in legal proceedings, which would be time-consuming, distracting and expensive;

• collaborators may be impacted by changes in their strategic focus or available funding, or business combinations involving them, which could cause them to divert resources away from the collaboration;

• collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;

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• collaborations may be terminated, which may require us to raise additional capital to pursue further development or commercialization of the applicable product candidate.

As a result, a collaboration may not result in the successful development or commercialization of our product candidates.

As a result of any of these factors, a collaboration may not result in the successful development or commercialization of our product candidates.

We enter into various contracts in the normal course of our business in which we indemnify the other party to the contract.

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If our contract manufacturers fail to comply with continuing regulations, resulting enforcement action could adversely affect us.

If any of our contract manufacturers fail to comply with regulatory requirements or if previously unknown problems with products, manufacturers or manufacturing processes are discovered, we or the manufacturer could be subject to administrative or judicially imposed sanctions, including restrictions on the products or the manufacturers or manufacturing processes we use, warning letters, untitled letters, civil or criminal penalties, fines, injunctions, product seizures or detentions, import bans, voluntary or mandatory product recalls and publicity requirements, suspension or withdrawal of regulatory approvals, total or partial suspension of production, and refusal to approve pending applications for marketing approval of new products.

If any of our contract manufacturers fail to comply with regulatory requirements or if previously unknown problems with products, manufacturers or manufacturing processes are discovered, we or the manufacturer could be subject to administrative or judicially imposed sanctions, including restrictions on the products or the manufacturers or manufacturing processes we use, warning letters, untitled letters (which the FDA uses as an initial notification of violations), civil or criminal penalties, fines, injunctions, product seizures or detentions, import bans, voluntary or mandatory product recalls and publicity requirements, suspension or withdrawal of regulatory approvals, total or partial suspension of production, and refusal to approve pending applications for marketing approval of new products.

Risks Related to Our Intellectual Property

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Our commercial success will depend in part on our ability to obtain additional patents and protect our existing patent position as well as our ability to maintain adequate protection of other intellectual property for our technologies, product candidates, and any future products in the United States and other countries.

If we do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability.

If we do not adequately protect our intellectual

property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability.

The laws of some foreign countries, in particular China and India, do not protect our proprietary rights to the same extent or in the same manner as U.S.

laws, and we may encounter significant problems in protecting and defending our proprietary rights in these countries.

laws, and we may encounter significant problems in protecting and defending our proprietary rights in these and other countries.

We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies, product candidates and any future products are covered by valid and enforceable patents or are effectively maintained as trade secrets.

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However, trade secrets are difficult to maintain.

While we use reasonable efforts to protect our trade secrets, our or any of our collaborators’ employees, consultants, contractors or scientific and other advisors may unintentionally or willfully disclose our proprietary information to competitors and we may not have adequate remedies in respect of such disclosure.

While we use reasonable efforts to protect our trade secrets, our or any of our collaborators’ employees, consultants, contractors or scientific and other advisors may unintentionally or willfully disclose our proprietary information to competitors or others and we may not have adequate remedies in respect of such disclosure.

Enforcement of claims that a third party has illegally obtained and is using trade secrets is expensive, time consuming and uncertain.

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Consequently, we may not be able to prevent third parties from practicing our technologies in all countries outside the United States, or from selling or importing products made using our technologies in and into the United States or other jurisdictions.

Competitors may use our technologies in jurisdictions where

we have not obtained patent protection, to develop their own products and further, may export otherwise infringing products to territories where we have patent protection but enforcement rights are weaker than in the United States.

Competitors may use our technologies in jurisdictions where we have not obtained patent protection, to develop their own products and further, may export otherwise infringing products to territories where we have patent protection but enforcement rights are weaker than in the United States.

These products may compete with our product candidates in jurisdictions where we do not have any issued patents and our patent claims or other intellectual rights may not be effective or sufficient to prevent such competition.

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If we are unable to obtain patent term extension or restoration, or the term of any such extension is less than we or our collaborators request, the period during which we will have the right to exclusively market our product will be shortened and our competitors may obtain approval of competing products following expiration of our patent, and our potential revenue could be materially reduced.

We may not identify relevant patents or may incorrectly interpret the relevance, scope or expiration of a patent, which could adversely affect our ability to develop and market our product candidates.

We may not identify relevant patents or may incorrectly interpret the relevance, scope or expiration of a patent issued to others, which could adversely affect our ability to develop and market our product candidates.

Our patent searches or analyses (including, but not limited to, the identification of relevant patents, the scope of patent claims or the expiration of relevant patents) might not be accurate, complete or thorough, and could fail to identify each and every patent and pending application in the United States and other jurisdictions that is or may potentially be relevant to or necessary for the commercialization of our product candidates in any jurisdiction.

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

The United States Patent and Trademark Office ("USPTO"), and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent prosecution

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

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and foreign patents.

We may become involved in lawsuits or interference proceedings to protect our patents or other intellectual property rights, which could be expensive, time-consuming and ultimately unsuccessful.

We may become involved in lawsuits or interference proceedings to protect patents held by us or our licensors or other intellectual property rights, which could be expensive, time-consuming and ultimately unsuccessful.

Competitors may infringe our patents or other intellectual property rights.

To counter infringement or unauthorized use, we may be required to file infringement claims, directly or through our licensors, which can be expensive and time-consuming.

In addition, in an infringement proceeding, a court may decide that a patent of our licensor is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.

An adverse result in any litigation or defense proceedings could put one or more of the patents we license at risk of being invalidated or interpreted narrowly and could put our licensors’ patent applications at risk of not issuing.

In addition, in an infringement proceeding, a court may decide that a patent of our licensor is not valid or is unenforceable, or

may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.

An adverse result in any litigation or defense proceedings could put one or more of the patents we own or license at risk of being invalidated or interpreted narrowly and could put our licensors’ patent applications at risk of not issuing.

Interference proceedings brought by the USPTO may be necessary to determine the priority of inventions with respect to patents and patent applications of our licensors or those of our current or future collaborators.

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If a court of competent jurisdiction held that any third-party patents covers aspects of our materials, formulations, methods of manufacture or methods for treatment, the holders of any such patents would be able to block our ability to develop and commercialize the applicable product candidate until such patent expired or unless we obtain a license.

A license may not be available on acceptable terms, if at all.

A license may not be

available on acceptable terms, if at all.

Even if we were able to obtain a license, the rights could be nonexclusive, which could result in our competitors having access to our licensed intellectual property.

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• Issued patents that have been licensed to us 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 does not have license rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets.

• Our competitors might conduct research and development activities in countries where we do not have license rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets.

• Ownership of patents or patent applications licensed to us may be challenged by third parties.

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In the future we may also conduct joint research and development programs that may require us to share trade secrets under the terms of our research and development or similar agreements.

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

Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of our agreements with third parties, independent

development, or publication of information by any of our third-party collaborators.

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

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We incur significant legal, accounting and other expenses that we would not incur as a private company, including costs associated with public company reporting requirements.

We also incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as new rules implemented by the SEC and The Nasdaq Stock Market ("Nasdaq").

We also incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as existing and new rules implemented by the SEC and The Nasdaq Stock Market ("Nasdaq").

These rules and regulations increase the company’s legal and financial compliance costs and make some activities more time-consuming and costly.

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As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers of our company, which may adversely affect investor confidence in us and could cause our business and stock price to suffer.

Effective December 31, 2019, we are no longer an “emerging growth company,” and the reduced disclosure requirements applicable to “emerging growth companies” no longer apply, which will increase our costs as a public company and increase the demands on management.

Effective December 31, 2019, we are no longer an “emerging growth company,” and the reduced disclosure requirements applicable to “emerging growth companies” no longer apply, and we are required to report on internal control over financial reporting, which will increase our costs as a public company and increase the demands on management.

Effective December 31, 2019, the fiscal year-end following the fifth anniversary of the completion of our initial public offering, we are no longer an “emerging growth company” as defined in the Jumpstart Our Business Startups Act.

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Risks Related to Our Common Stock

The market price of our common stock is volatile.

The market price of our common stock has been and is expected to continue to be volatile.

The market price of our common stock has been, and is expected to continue to be, subject to significant fluctuations.

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Some of the factors that may cause the market price of our common stock to fluctuate include:

• reports on or the perception of clinical trial progress, or the lack thereof;

• reports on or the perception of clinical trial progress, or the lack thereof, which we experienced in October 2022 when our stock price and market capitalization decreased significantly after announcing Phase 1b interim analysis of IMU-935 for the first two dose patient cohorts with moderate-to-severe psoriasis;

• our ability to obtain regulatory approvals for our product candidates, and delays or failures to obtain such approvals;

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As a result, any capital appreciation of the common stock of the company will be stockholders’ sole source of any gain for the foreseeable future.

The ownership of our common stock is highly concentrated, which may prevent stockholders from influencing significant corporate decisions and may result in conflicts of interest that could cause our stock price to decline.

Our executive officers and directors and their affiliates and entities that are related to such officers and directors beneficially own or control approximately 16% of the total outstanding shares of common stock of the company.

Accordingly, these executive officers, directors and their affiliates, acting as a group, have substantial influence over the outcome of corporate actions requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or

substantially all of our assets or any other significant corporate transactions.

These stockholders may also delay or prevent a change of control of our company, even if such a change of control would benefit the other stockholders of the company.

The significant concentration of stock ownership also may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise, and may adversely affect the liquidity of our common stock.

General Risk Factors

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Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud.

We must perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Annual Report on Form 10-K for each year, as required by Section 404 of the Sarbanes-Oxley Act ("Section 404").

We must perform system and process evaluation and testing of our internal controls over financial reporting to allow

management to report on the effectiveness of our internal controls over financial reporting in our Annual Report on Form 10-K for each year, as required by Section 404 of the Sarbanes-Oxley Act ("Section 404").

This requires significant management efforts and requires us to incur substantial professional fees and internal costs to expand our accounting and finance functions.

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If we do have equity research analyst coverage, we will not have any control over the analysts or the content and opinions included in their reports.

The price of our common stock could substantially decline immediately if one or more equity research analysts downgrade our stock or issue other unfavorable commentary or research.

If one or more equity research analysts ceases coverage of us or fails to publish reports onus regularly, demand for our common stock could decrease, which in turn could cause our stock price and trading volume to decline.

The price of our common stock could substantially decline immediately if one or more equity research analysts downgrade our stock or issue other

unfavorable commentary or research.

If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which in turn could cause our stock price and trading volume to decline.

If we become profitable, our ability to use our net operating loss carryforwards and other tax attributes to offset future taxable income or taxes may be subject to limitations.

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We have not performed an analysis to determine whether our past issuances of stock and other changes in our stock ownership may have resulted in one or more ownership changes within the meaning of Sections 382 and 383 of the Code.

In addition, we may experience an ownership change in connection with this offering or in the future as a result of subsequent changes in our stock ownership, some of which are outside our control;

In addition, we may experience an ownership change in the future as a result of subsequent changes in our stock ownership, some of which are outside our control;

and we are not intending to take any steps to prohibit any subsequent changes in our stock ownership in order to avoid such an ownership change.

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

What changed 10-K

Item 1A. Risk Factors