What changed in this filing

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Item 1A. Risk Factors

2025-05-06 compared with 2024-11-04 · 241 added, 192 removed, 928 unchanged (32% of the section changed)

8 unchanged sentences

Our near-term prospects, including our ability to develop our product candidates and generate revenue, and our future growth is substantially dependent on the commercial success of VYJUVEK.

Although we received approval from the FDA for VYJUVEK for the treatment of DEB on May 19, 2023, we can provide no assurances that we will obtain regulatory approval in any other jurisdiction, which would have an adverse impact on our results of operations.

In addition, the successful commercialization of VYJUVEK will depend on a number of factors, including the risks identified in these “Risk Factors.” One or more of these factors, many of which are beyond our control, could cause significant delays or an inability to successfully commercialize VYJUVEK.

Although we received approval from the FDA and the European Commission for VYJUVEK for the treatment of DEB, we can provide no assurances that we will obtain regulatory approval in any other jurisdiction, which would have an adverse impact on our results of operations.

In addition, the successful commercialization of VYJUVEK will depend on a number of factors and involves risk, including some of the risks identified in these “Risk Factors.” One or more of these factors, many of which are beyond our control could cause significant delays or an inability to successfully commercialize VYJUVEK.

We may not be successful in our efforts to identify, develop and commercialize additional product candidates, which may impair our ability to expand our business and achieve our strategic objectives, and we may fail to capitalize on programs or product candidates that may be a greater commercial opportunity or for which there is a greater likelihood of success.

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VYJUVEK and, if approved, our investigational product candidates regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory pathway.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product.

The Patient Protection and Affordable Care Act (“ACA”) includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product.

Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA.

In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed.

During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a Biologics License Application, or BLA, for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity, and potency of the other company’s product.

During this 12-year period of exclusivity, another company may still market a competing product if the FDA approves a Biologics License Application, or BLA, for the competing product containing that company’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity, and potency of that company’s product.

In addition, a competitor may choose to challenge our patent rights relating to the reference product by initiating litigation during the 12-year period of exclusivity.

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We believe that any of our product candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity.

However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our investigational medicines to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated.

However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our investigational genetic medicines to be reference products for competing products, potentially creating the opportunity for generic competition sooner than anticipated.

Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.

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Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of competitors.

Our commercial opportunities could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, or are less expensive than VYJUVEK or any product candidate that we may develop and commercialize.

Competitors also may obtain FDA or other regulatory approval for their products more rapidly or earlier than we may obtain approval for our product candidates, which could result in our competitors establishing a strong market position before we are able to enter the market.

Additionally, technologies developed by our competitors may render VYJUVEK or any of our product candidates uneconomical or obsolete, and we may not be successful in marketing VYJUVEK or any of our product candidates that obtain regulatory approval against competitors.

Our commercial opportunities could be reduced or eliminated if competitors commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, or are less expensive than VYJUVEK or any product candidate that we may commercialize.

Competitors also may

obtain FDA or other regulatory approval for their products more rapidly or earlier than we may obtain approval for our product candidates, which could result in our competitors establishing a strong market position before we are able to enter the market.

Even if we commercialize a product candidate faster than our competitors, we could also face competition from lower cost biosimilars.

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Regardless of their merit or eventual outcome, liability claims may result in:

• decreased demand for VYJUVEK;

• decreased demand for VYJUVEK or any of our product candidates that are approved for commercial sale in the future;

• injury to our reputation;

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In particular, our success depends upon physicians who specialize in the treatment of DEB or genetic diseases targeted by our product candidates prescribing VYJUVEK or treatments that involve the use of our product candidates that may be in lieu of, or in addition to, existing treatments with which they are familiar and for which greater clinical data may be available.

More restrictive government regulations or negative public opinion would have an adverse effect on our business, financial condition, results of operations and prospects and may delay or impair the development and commercialization of VYJUVEK or our product candidates or demand for VYJUVEK or any product candidates we may develop.

More restrictive government regulations or negative public opinion would have an adverse effect on our business, financial condition,

results of operations, and prospects and may delay or impair the commercialization of VYJUVEK, regulatory approval of our product candidates, or demand for VYJUVEK or any product candidates that are approved for commercial sale.

For example, earlier gene therapy trials led to several well-publicized adverse events, including cases of leukemia and death seen in trials using other vectors.

Serious adverse events in our clinical trials, or other clinical trials involving gene therapy products or our competitors’ products, even if not ultimately attributable to the relevant product candidates, and the resulting publicity, could result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.

Serious adverse events in our clinical trials or other clinical trials involving gene therapy products, even if not ultimately attributable to the relevant product candidates, and the resulting publicity, could result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved, and a decrease in demand for any such product candidates.

Our business operations may subject us to disputes, claims and lawsuits, which may be costly and time-consuming and could materially and adversely impact our financial position and results of operations.

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For example, we may face or initiate claims related to intellectual property matters, employment matters, or commercial matters.

Any dispute, claim or lawsuit may divert management’s attention away from our business, we may incur significant expenses in addressing or defending any dispute, claim, or lawsuit, and we may be required to pay damage awards or settlements or become subject to equitable remedies that could adversely affect our operations and financial results.

Litigation related to these disputes may be costly and time-consuming and could materially and adversely impact our financial position and results of operations if resolved against us.

Any dispute, claim, or lawsuit may divert management’s attention away from our business, we may incur significant expenses in addressing or defending any dispute, claim, or lawsuit, and we may be required to pay damage awards or settlements or become subject to equitable remedies that could materially and adversely affect our operations and financial results.

In addition, the uncertainty associated with litigation could lead to increased volatility in our stock price.

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Social media practices in the biotechnology and biopharmaceutical industries continue to evolve, and regulations and regulatory guidance relating to such use are evolving and not always clear.

This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business, resulting in potential regulatory actions against us, along with the potential for litigation and heightened scrutiny by the FDA, the Securities and Exchange Commission, or the SEC, and other regulators.

This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business, resulting in potential regulatory actions against us, along with the potential for litigation and heightened scrutiny by the FDA, the EMA, the Securities and Exchange Commission, or the SEC, and other regulators.

For example, patients may use social media channels to comment on their experience in an ongoing clinical trial of our product candidates, or to report an alleged adverse event.

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Our future performance and our ability to compete effectively will depend, in part, on our ability to manage our growth effectively.

If we are successful in executing our business strategy, we will need to expand our managerial, operational, financial, and other systems and resources to manage our operations, continue our research and development activities and build a commercial infrastructure to support commercialization of any of our product candidates that are approved for sale, and, depending on demand, may need to scale up the manufacturing process for any approved product, which is subject to risks and uncertainties.

Depending on demand, we may need to scale up the manufacturing process for any approved product, which is subject to risks and uncertainties.

Future growth would impose significant added responsibilities on members of management.

Our management, finance, development personnel, systems, including infrastructure such as IT and facilities, currently in place may not be adequate to support this expected future growth.

Our management, finance, development personnel, and systems (including infrastructure such as IT and facilities) currently in place may not be adequate to support this expected future growth.

Our need to effectively manage our operations, growth, and product candidates requires that we continue to develop more robust business processes and improve our systems and procedures in each of these areas and to attract and retain enough numbers of talented employees.

We may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve our research, development, and growth goals.

unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve our research, development, and growth goals.

Our future success depends on our ability to retain key employees and scientific advisors and to attract, retain, and motivate qualified personnel.

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Our employees and scientific advisors are at-will employees and consultants, and the loss of one or more of them might impede the achievement of our research, development, and commercialization objectives.

Recruiting and retaining other qualified employees and scientific advisors for our business, including scientific and technical personnel, also will be critical to our success .

Recruiting and retaining qualified employees and scientific advisors for our business, including scientific and technical personnel, also will be critical to our success.

Competition for skilled personnel, including in gene therapy research and vector manufacturing, is intense and the turnover rate can be high.

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We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, and advisors.

Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in the European Union, or EU, and other jurisdictions, provide accurate information to the FDA, the European Medicines Agency (“EMA”) and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities.

Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in the EU and other jurisdictions, provide accurate information to the FDA, the EMA, and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities.

Sales, marketing, and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing, and other abusive practices.

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Any changes that reduce, or impede the ability to obtain, reimbursement for VYJUVEK or our product candidates that we intend to commercialize in the United States could adversely affect successful commercialization of VYJUVEK and our plans to introduce our product candidates in the United States.

For example, the Bipartisan Budget Act of 2018, among other things, amended the ACA, effective January 1, 2019, to increase from 50 percent to 70 percent the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.”

Other legislative changes have been proposed and adopted in the United States since the ACA was enacted.

For example, in August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress.

The Budget Control Act of 2011, among other things, created measures for spending reductions by Congress.

A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2012 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.

This includes aggregate reductions of Medicare payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2032 unless additional Congressional action is taken.

In January 2013, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to certain providers, and increased the time for Medicare contractors to recoup Medicare overpayments to providers from three to five years.

In August 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law.

The IRA includes several provisions to lower prescription drug costs for people with Medicare and reduce drug spending by the federal

2013, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to certain providers, and increased the time for Medicare contractors to recoup Medicare overpayments to providers from three to five years.

In August 2022, the Inflation Reduction Act (“IRA”) was signed into law.

The IRA includes several provisions to lower prescription drug costs for people with Medicare and reduce drug spending by the federal government.

In relevant part, the IRA allows Medicare to negotiate prices for certain prescription drugs, requires drug manufacturers to pay a rebate to the federal government if prices for single-source drugs and biologicals covered under Medicare Part B and nearly all covered drugs under Part D increase faster than the rate of inflation, caps out of pocket spending for Medicare Part D enrollees, and makes other benefit design changes to Medicare Part D intended to lower drug costs for enrollees and Medicare.

Implementation of these changes began in 2023 and will continue to be implemented over the next several years.

Beginning January 1, 2025, Medicare Part D enrollees now have a new annual out-of-pocket cap of $2,000 on prescription drugs.

Other 2025 Medicare Part D changes include the elimination of the coverage gap phase and the replacement of the Coverage Gap Discount Program with the Manufacturer Discount Program, which requires drug manufacturers to pay a 10% discount for brand-name drugs and biologics during the initial coverage period and a 20% discount during the catastrophic phase.

Multiple pharmaceutical manufacturers have challenged the law in court, largely on constitutional grounds.

These suits will likely continue and the ultimate effects of such legal challenges are unclear.

On April 15, 2025, President Trump issued an executive order directing the Secretary of the Department of Health and Human Services to take certain actions on drug pricing reform, including working with Congress on amendments to the IRA and rule making to establish new Medicare payment models for so-called “high-cost” prescription drugs and biological products.

At this time, we continue to evaluate the effect of the IRA on our business operations and financial condition and results as the full impact of the IRA remains uncertain.

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Additional changes may affect our business, including those governing enrollment in federal healthcare programs, reimbursement changes, fraud and abuse enforcement, and expansion of new programs, such as Medicare payment for performance initiatives.

In October 2022, President Biden signed Executive Order 14087 on “Lowering Prescription Drug Costs for Americans.” The Executive Order specifically requests that the Center for Medicare and Medicaid Innovation consider “models that may lead to lower cost sharing for commonly used drugs and support value-based payment that supports high-quality care.” The outcomes of the findings made under the Executive Order could lead to further drug pricing initiatives that could affect reimbursement for our product and product candidates.

These initiatives, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product.

Healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

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These laws impact, among other things, our sales, marketing, access assistance, sponsored genetic patient testing, and educational programs.

In addition, we are subject to patient privacy laws by both the federal government and the states in which we conduct our business as well as other jurisdictions.

In addition, we are subject to patient privacy laws by both the federal government and the states in which we conduct our business, as well as by foreign jurisdictions.

The laws that affect our operations include, but are not limited to:

• the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, offering, or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, in return for the purchase, recommendation, leasing, or furnishing of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs.

This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand, and prescribers, purchasers, and formulary managers on the other.

This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand, and

prescribers, purchasers, and formulary managers on the other.

The ACA amended the intent requirement of the federal Anti-Kickback Statute to clarify that a person or entity does not have to have actual knowledge of this statute or specific intent to violate it;

• federal civil and criminal false claims laws and civil monetary penalty laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other government payors that are false or fraudulent.

The ACA provides that a claim

for items or services resulting from an Anti-Kickback Statute violation is a false claim under the federal False Claims Act (“FCA”).

The ACA provides that a claim for items or services resulting from an Anti-Kickback Statute violation is a false claim under the False Claims Act (“FCA”).

Cases against pharmaceutical manufacturers support the view that certain marketing practices, including off-label promotion, may implicate the FCA;

• the federal Health Care Fraud statute imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

• the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations, and as amended again by the final HIPAA omnibus rule (the “Omnibus Rule” and together with HIPAA and HITECH, the HIPAA Rules), which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information by certain entities subject to the HIPAA Rules, such as health plans, health care clearinghouses and health care providers that engage in certain covered transactions;

• federal transparency laws, including the federal Physician Payment Sunshine Act, that require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare and Medicaid Services (“CMS”) information related to:

• the federal Health Care Fraud statute imposes criminal and civil liability for executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

• the Health Insurance Portability and Accountability Actof 1996 (“HIPAA”) Rules, which impose certain requirements relating to the privacy, security, and transmission of individually identifiable health information by certain entities subject to the HIPAA Rules, such as health plans, health care clearinghouses, and health care providers that engage in certain covered transactions, known as covered entities, as well as their business associates that perform certain services that involve the use or disclosure of individually identifiable health information for or on behalf of covered entities;

• federal transparency laws, including the federal Physician Payment Sunshine Act, that require certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the United States Centers for Medicare and Medicaid Services (“CMS”) information related to:

(i) payments or other “transfers of value” made to physicians and teaching hospitals, and (ii) ownership and investment interests held by physicians and their immediate family members;

• state and foreign law equivalents of each of the above federal laws, state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts in certain circumstances, such as specific disease states;

• state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by the HIPAA Rules, thus complicating compliance efforts.

• our operations in Europe may be directly or indirectly subject to European law equivalents of each of the above U.S.

federal laws, some of which may not have been applicable prior to the recent EC approval of VYJUVEK;

state and foreign law equivalents of each of the above federal laws, state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;

• state and foreign laws governing data privacy and security of health information, many of which differ from each other and require attention to frequently changing regulatory requirements, thus complicating compliance efforts in certain circumstances and increasing exposure to liability.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws.

If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Often, to avoid the threat of treble damages and penalties under the FCA, health care providers will resolve allegations in a settlement without admitting liability.

Often, to avoid the threat of treble damages and penalties under the FCA, health care providers and drug manufacturers will resolve allegations in a settlement without admitting liability.

Any such settlement could materially affect our business, financial operations, and reputation.

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We cannot eliminate the risk of contamination or injury from these materials.

In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our

In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources.

Moreover, certain environmental laws may impose liability without regard to fault or legality of the action at the time of its occurrence.

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In our ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “process”) personal information and other sensitive information, including, but not limited to, health information, individuals’ financial information, as well as proprietary and confidential business data, including trade secrets, intellectual property, and sensitive third-party data (collectively, “sensitive data”).

The legislative and regulatory landscape for privacy and data security continues to evolve, and there has been an increasing focus on privacy and data security issues, which may affect our business and is expected to increase our compliance costs and exposure to liability.

Our data processing activities may subject us to numerous privacy and data security obligations, including, but not limited to, domestic and international laws, regulations, guidance, industry standards, external and internal privacy and security policies, and contractual requirements.

In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal information privacy laws, consumer protection laws, and other similar laws.

Notably, HIPAA, as amended by HITECH, imposes requirements on certain entities regarding the privacy, security, and transmission of individually identifiable health information and the California Consumer Privacy Act of 2018 (“CCPA”) requires businesses to provide specific disclosures in their privacy notices and honor California residents’ privacy rights.

Notably, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes requirements on covered entities, as well as their business associates regarding the privacy, security, and transmission of individually identifiable health information.

Further, states continue to adopt new laws or amend existing laws related to data privacy, requiring attention to frequently changing regulatory requirements.

For example, and the California Consumer Privacy Act of 2018 (“CCPA”) requires businesses to provide specific disclosures in their privacy notices and honor residents’ privacy rights.

The CCPA provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages.

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In addition, the California Privacy Rights Act of 2020 (“CPRA”), which came into effect on January 1, 2023, expanded the CCPA’s requirements, extending it to cover personal information of business representatives and employees and the CPRA established a new regulatory agency to implement and enforce the law.

Other states, such as Virginia, Nevada, and Colorado, have also passed comprehensive privacy laws, and similar laws are being considered in several other states, as well as at the federal and local levels.

While these states’ laws, like the CCPA, also exempt some data processed in the context of clinical trials, these developments further complicate our compliance efforts and increase both legal risk and compliance costs for us and the third parties upon whom we rely.

Other states, such as Virginia, Nevada, Connecticut, Utah, Texas, and Colorado, have also passed comprehensive privacy laws, and similar laws are being considered in several other states, as well as at the federal and local levels, which impose similar obligations to those in the CCPA.

Further, other states, such as Nevada and Washington, have enacted privacy laws specifically governing consumer health information, with Washington providing for a private right of action.

Although many of these laws currently exempt certain health-related information, the laws may increase our potential liability related to our data processing activities, complicate our compliance efforts, and increase both legal risk and compliance costs for us and the third parties upon whom we rely.

Outside of the United States, there are an increasing number of laws, regulations, and industry standards regarding privacy and data security.

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Although there are various mechanisms that may be used to transfer personal information from the EEA and UK to the United States in compliance with the law, such as the EEA and UK’s standard contractual clauses, these mechanisms are subject to legal challenges, and we may be unable to rely on these measures to lawfully transfer personal information to the United States in all cases.

substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal information necessary to operate our business.

If there is no lawful manner for us to transfer personal information from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally compliant transfer are too onerous, we could face significant adverse consequences, including increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors, and other third parties, and injunctions against our processing or transferring of personal information necessary to operate our business.

Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal information to recipients outside Europe for allegedly violating the EU GDPR’s cross-border data transfer limitations.

Additionally, companies that transfer personal information to recipients outside of the EEA and/or UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups.

Compliance with applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with new data protection rules.

Failure to comply with any such laws or regulations puts us at risk of facing significant fines and penalties that could adversely affect our business, financial condition, reputation, and results of our operations.

Furthermore, conflicting requirements across applicable privacy and data security laws would complicate our compliance efforts and increase both legal risk and compliance costs for us and the third parties upon whom we rely.

In addition to any applicable privacy and data security laws and regulations, we may be subject to industry standards adopted by industry groups or bound by other contractual obligations related to privacy and data security.

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Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including inflation and interest rates and concerns of a recession in the United States or other major markets due to a number of factors.

For example, inflation and rising interest rates have recently caused volatility and disruptions in the capital and credit markets, and it is unclear how long such volatility will continue.

In addition, Russia’s invasion of Ukraine and/or the Israeli conflicts in the Middle East may lead to a prolonged, adverse impact on global economic, sociopolitical, and market conditions.

A severe or prolonged economic downturn could result in a variety of risks to our business, including our ability to raise additional capital when needed or on acceptable terms, if at all.

due to a number of factors.

In addition, the conflict between Russia and Ukraine and the conflicts in the Middle East may lead to a prolonged, adverse impact on global economic, sociopolitical, and market conditions.

A severe or prolonged economic downturn could result in a variety of risks to our business, including our ability to raise additional capital if needed or on acceptable terms, if at all.

A weak or declining economy, sanctions, trade restrictions, and other global conditions could also strain our suppliers, possibly resulting in supply delays or disruptions.

Any of the foregoing could harm our business, and we cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business, financial condition, results of operations, and prospects.

In addition, we may be impacted by the imposition of tariffs, trade protection measures or other policies adopted by any jurisdiction that favors domestic companies and technologies over foreign competitors.

Any of the foregoing could materially and adversely affect our business, and we cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business, financial condition, results of operations, and prospects.

Our internal computer systems, or those of any third-party with whom we do business may fail or suffer a cyber-security incident, such as a data breach or computer virus, which could harm our business by damaging our reputation, exposing us to liability, adversely impacting our revenue, or materially disrupting our operations, including production of VYJUVEK or our product development programs.

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Despite our robust security measures and our commitment to implementing and continually improving our cybersecurity posture to mitigate the risk of a cybersecurity incident, we cannot guarantee that such incidents will not occur to us or any third-party with whom we do business.

For example, our specialty pharmacy provider was affected by a cybersecurity incident that delayed reimbursement approvals and had a negative impact on our product revenue, net for the first quarter of 2024.

Any cybersecurity incident, even if promptly addressed, may harm our reputation, damage our brand, and erode trust.

Our facilities and systems, and those of any third-party with whom we do business, may also be vulnerable to acts of vandalism, software viruses, misplaced or lost data, programming and/or human errors, or other similar events which may disrupt our operations or expose personal and confidential information.

For example, in 2024, our specialty pharmacy provider was affected by a cybersecurity incident that delayed reimbursement approvals and had a negative impact on our product revenue.

A cybersecurity incident, even if promptly addressed, may harm our reputation, damage our brand, and erode trust.

Our systems, and those of any third-party with whom we do business, may also be vulnerable to software viruses, stolen, misplaced, or lost data, programming and/or human errors, or other similar events which may disrupt our operations or expose personal and confidential information.

Moreover, in the event of a cybersecurity incident, we may face investigations, legal actions, including class action litigation, regulatory inquiries, and regulatory enforcement actions.

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To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed, and the further development and commercialization of our product candidates could be delayed.

Certain data breaches must be reported to affected individuals and various government and/or regulatory agencies, and in some cases to the media, under provisions of HIPAA, as amended by HITECH, other U.S.

federal and state law, and requirements of non-U.S.

jurisdictions, including the EU GDPR and relevant member state law in the European Union and other foreign laws, and financial penalties may also apply.

Our insurance policies may not be adequate to compensate us for the potential losses arising from breaches, failures or disruptions of our infrastructure, catastrophic events and disasters or otherwise.

Certain data breaches must be reported to affected individuals and various government and/or regulatory agencies, and in some cases to the media, under provisions of HIPAA, other U.S.

federal and state laws, and requirements of non-U.S.

jurisdictions, including the EU GDPR and relevant member state law in the European Union and other foreign laws.

Although we maintain cyber-security and other customary insurance, our insurance policies may not be adequate to compensate us for the potential losses arising from breaches, failures, or disruptions of our infrastructure.

In addition, such insurance may not be available to us in the future on economically reasonable terms, or at all.

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or (iii) expose us to liability to third parties or government authorities.

Notifications and follow-up actions related to a data security incident could impact our reputation and cause us to incur significant costs, including significant legal expenses and remediation costs.

We expect to incur significant costs in an effort to detect and prevent security incidents, and we may face increased costs and requirements to expend substantial resources in the event of an actual or perceived security incident.

However, we cannot guarantee that we will be able to detect or prevent any such incidents, or that we can remediate any such incidents in an effective or timely manner.

Our efforts to improve security and protect data from compromise may also identify previously undiscovered instances of data breaches or other cybersecurity incidents.

To the extent that any data breach, disruption or security incident were to result in any loss, destruction, or alteration

of, damage, unauthorized access to or inappropriate or unauthorized disclosure or dissemination of, our data, including personal data, or other information that is processed or maintained on our behalf, we could be exposed to litigation and governmental investigations and inquiries, the further development and commercialization of our product candidates could be delayed, and we could be subject to significant fines or penalties for any noncompliance with applicable state, federal, and foreign privacy and security laws, rules, regulations, and standards.

Artificial intelligence presents risks and challenges that could negatively impact our business.

Artificial intelligence (“AI”)-based platforms and tools are increasingly being used in the biopharmaceutical industry, and we have adopted and integrated in limited situations artificial intelligence platforms for limited specific business uses and may adopt and integrate additional artificial intelligence platforms and/or tools into our business.

As with many technological innovations, artificial intelligence presents opportunities, risks and challenges that could impact our business.

Harnessing AI’s potential may enable us to speed up the discovery and development of new product candidates, optimize our manufacturing processes, and drive efficiencies.

However, AI may exacerbate existing risks, including risks associated with data privacy, cybersecurity, intellectual property, healthcare fraud and abuse, product development and manufacturing, and risks to subjects in clinical trials.

If the models underlying AI technologies that we may use are incorrectly designed or implemented, trained, or reliant on incomplete, inadequate, inaccurate, biased, or otherwise poor quality data, or on data to which we do not have sufficient rights or in relation to which we and/or the providers of such data have not implemented sufficient legal compliance measures, used without sufficient oversight and governance to ensure their responsible use, misused, or used outside of scope of applicable regulatory authorizations, and/or adversely impacted by unforeseen defects, technical challenges, cybersecurity threats, or material performance issues, the performance of our products and business, as well as our reputation, could suffer or we could incur liability resulting from the violation of laws or contracts to which we are a party, regulatory enforcement actions, or civil claims.

Additionally, the use of AI solutions by us or third parties on which we rely could lead to (i) the public disclosure of confidential information (including personal data of our employees, clinical trial participants, or other third parties) in contravention of our internal policies, data protection laws, other applicable laws, or contractual requirements, and/or (ii) the loss of proprietary information, trade secrets, or other intellectual property.

In addition to existing risks, AI also introduces new risks, due to the autonomous nature of the technology, which, in some cases, may be deployed to perform tasks, inform decisions, automate decisions, and make predictions.

AI may amplify biased and discriminatory decision making, perform unreliably and malfunction, generate insights which are difficult to interpret and explain, and cause direct harm to individuals or groups.

Our failure to use AI technologies in a way that maintains trust, quality and control in our business activities and to capitalize on opportunities presented by AI may place us at a competitive disadvantage.

Furthermore, uncertainties regarding developing legal and regulatory requirements and standards may require significant resources to modify and maintain business practices to comply with such laws and regulations concerning the use of AI.

Failure to address AI risks could reduce our ability to deliver on our strategic objectives, result in reputational harm, and have a material adverse effect on our business, prospects, operating results, and financial condition.

The regulatory framework for AI is rapidly evolving as many federal, state, and foreign government bodies and agencies have introduced or are currently considering additional laws and regulations.

Evolving AI-related regulations, particularly in the United States, may impact our ability to develop, use, and commercialize AI technologies in the future.

It is possible that further new laws and regulations will be adopted in the United States and in other non-U.S.

jurisdictions, or that existing laws and regulations may be interpreted in ways that would limit our ability to use AI for our business, or require us to change the way we use AI in a manner that negatively affects the performance of our system and business and the way in which we use AI.

We may need to expend resources to adjust our system in certain jurisdictions if the laws, regulations, or decisions are not consistent across jurisdictions.

Further, the cost to comply with such laws, regulations or decisions and/or guidance interpreting existing laws, could be significant and would increase our operating expenses (such as by imposing additional reporting obligations regarding our use of AI).

Such an increase in operating expenses, as well as any actual or perceived failure to comply with such laws and regulations, could materially and adversely affect our business, financial condition, results of operations, and prospects.

Our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

Natural disasters could severely disrupt our operations or the operations of third-party suppliers or service providers and have a material adverse effect on our business, financial condition, results of operations and prospects.

The severity and frequency of weather-related natural disasters have been amplified, and are expected to continue to be amplified by, global climate change.

Such natural disasters may cause damage to and/or disrupt our operations, which may result in a material adverse effect on our VYJUVEK sales, our other product candidates, business, and results of operations.

Moreover, climate change may also result in various chronic physical changes, such as changes in temperature or precipitation patterns or sea-level rise, that could have an adverse impact on our operations.

Our suppliers, vendors and business partners also face similar risks, and any disruption to their operations could have an adverse effect on our supply chain and manufacturing operations.

Natural or technological disasters could severely disrupt our operations or the operations of third-party suppliers or service providers and have a material adverse effect on our business, financial condition, results of operations, and prospects.

The severity and frequency of information technology system failures and cyberattacks continue to increase.

Additionally, the severity and frequency of weather-related natural disasters have been amplified, and are expected to continue to be amplified by, global climate change.

Such natural and technological disasters may cause damage to and/or disrupt our operations, which may result in a material adverse effect on our VYJUVEK sales, our other product candidates, business, and results of operations.

Moreover, climate change may also result in various chronic physical changes, such as changes in temperature or

precipitation patterns or sea-level rise, that could have an adverse impact on our operations.

Our suppliers, vendors, and business partners also face similar risks, and any disruption to their operations could have an adverse effect on our supply chain, manufacturing operations, or our commercial operations.

If a natural disaster, power outage, or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our manufacturing facilities and IT systems, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.

The disaster recovery and business continuity plans that we have in place currently are limited and may not prove adequate in the event of a serious disaster or similar event.

A significant portion of our current supply of materials necessary for production of VYJUVEK and our product candidates, as well as finished VYJUVEK and product candidates, is located at our

manufacturing facilities in Pittsburgh, Pennsylvania.

A significant portion of our current supply of materials necessary for production of VYJUVEK and our product candidates, as well as finished VYJUVEK and product candidates, is located at our manufacturing facilities in Pittsburgh, Pennsylvania.

We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

Increased attention to, and evolving expectations for, environmental, social, and governance (“ESG”) initiatives could increase our costs, harm our reputation, or otherwise adversely impact our business.

Companies across industries are facing increasing scrutiny from a variety of stakeholders related to their ESG and sustainability practices.

Companies across industries are facing increasing scrutiny from a variety of stakeholders related to their ESG, including diversity, equity, and inclusion (“DEI”), and sustainability practices.

Investor advocacy groups, certain institutional investors, investment funds, and other influential investors have increasingly focused on ESG practices and have placed increasing importance on the non-financial impacts of their investments.

Expectations regarding voluntary ESG initiatives and disclosures may result in increased costs (including but not limited to increased costs related to compliance, stakeholder engagement, contracting, and insurance), enhanced compliance or disclosure obligations, or other adverse impacts to our business, financial condition, or results of operations.

While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to improve the ESG profile of our company and/or VYJUVEK and our product candidates, such initiatives may be costly and may not have the desired effect.

Moreover, we may not be able to successfully complete such initiatives due to factors that are within or outside of our control.

Moreover, we may not be able to successfully complete such voluntary initiatives due to factors that are within or outside of our control.

Even if this is not the case, our actions may subsequently be determined to be insufficient by various stakeholders, and we may be subject to investor or regulator engagement on our ESG efforts, even if such initiatives are currently voluntary.

Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and scores to assess companies’ ESG profiles in making investment or voting decisions.

Unfavorable ESG ratings could lead to increased negative investor sentiment towards us or our industry, which could negatively impact the price of our common stock, as well as our access to and cost of capital.

Furthermore, certain investors and others have been engaged in “anti-ESG” campaigns, and, to the extent we take actions that are seen as positive to some investors, other investors may take issue with such actions.

To the extent ESG matters negatively impact our reputation, it may also impede our ability to compete as effectively to attract and retain employees or customers, which may adversely impact our operations.

In addition, we expect there will likely be increasing levels of regulation, disclosure-related and otherwise, with respect to ESG matters.

For example, the SEC recently adopted new rules that require companies to provide significantly expanded climate-related disclosures in their periodic reporting.

Unfavorable ESG ratings could lead to increased negative investor sentiment towards us or our industry, which could negatively impact the price of our common stock.

In addition, in recent years “anti-ESG” sentiment has gained momentum across the United States, with several states and Congress having proposed or enacted “anti-ESG” policies, legislation, or initiatives or issued related legal opinions, and the President having recently issued an executive order opposing DEI initiatives in the private sector.

Such anti-ESG and anti-DEI-related policies, legislation, initiatives, litigation, legal opinions, and scrutiny could result in us facing additional compliance obligations, becoming the subject of investigations and enforcement actions, or sustaining reputational harm.

Therefore, to the extent we take actions that are seen as positive to some investors, other investors may take issue with such actions or face regulatory pressure to refrain from investing in, or divest from, our business.

To the extent ESG matters negatively impact our reputation, it may also impede our ability to compete as effectively to attract and retain employees, customers, or business partners which may adversely impact our operations.

In addition, there may be increasing levels of regulation, disclosure-related and otherwise, with respect to ESG matters.

For example, in 2024 the SEC adopted new rules that require companies to provide significantly expanded climate-related disclosures in their periodic reporting.

The new climate disclosure rules were the subject of multiple legal challenges, and the SEC voluntarily stayed the climate disclosure rules pending the completion of judicial review.

In March 2025, the SEC voted to cease defending the climate disclosure rules in court, and in April 2025, the U.S.

Court of Appeals for the Eighth Circuit ordered the litigation challenging the SEC’s climate disclosure rules to be held in abeyance.

The court directed the SEC to file a status report by July 23, 2025, indicating whether it intends to review or reconsider the rules.

Therefore, it is unknown whether the new rules will go into effect and if they do, whether there will be significant changes.

If the new rules go into effect and are not substantially different than the rules adopted by the SEC, we may be required to incur significant additional costs to comply, including the implementation of significant additional internal controls processes and procedures regarding matters that have not been subject to such controls in the past, and impose increased oversight obligations on our management and board of directors.

Even if the SEC rules are not adopted, states or ex-U.S.

jurisdictions in which we currently or may in the future operate may also have or adopt ESG or climate-related disclosure rules requiring similar or broader disclosure obligations.

These and other changes in stakeholder expectations will likely lead to increased costs as well as scrutiny that could heighten all of the risks identified in this risk factor.

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Our international operations may expose us to business, regulatory, political, operational, financial, pricing and reimbursement, and economic risks associated with doing business outside of the United States.

On April 23, 2025, the EC granted marketing authorization to VYJUVEK, and we are planning for our first European launch in Germany in mid-2025.

We currently have operations and employees located outside the United States and our business strategy incorporates potential additional international expansion to target patient populations outside the United States.

Doing business internationally involves a number of risks, including, but not limited to:

• multiple, conflicting, and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements, and other governmental approvals, permits, and licenses;

• compliance with multiple, conflicting, and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements, and other governmental approvals, permits, and licenses;

• failure by us to obtain and maintain regulatory approvals for the use of our product candidates in various countries;

• additional potentially relevant third-party patent rights;

• complexities and difficulties in obtaining protection and enforcing our intellectual property;

• difficulties in staffing and managing foreign operations;

• complexities and difficulties in obtaining protection and enforcing our intellectual property, and additional potentially relevant third-party patent rights;

• difficulties in staffing and managing foreign operations, including language barriers and translation;

• complexities associated with managing multiple payor reimbursement regimes, government payors, or patient self-pay systems;

• limits in our ability to penetrate international markets;

• financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products that are approved for sale, and exposure to foreign currency exchange rate fluctuations;

• natural disasters, political and economic instability, including wars, terrorism, and political unrest, outbreak of disease, boycotts, curtailment of trade, and other business restrictions;

• certain expenses including, among others, expenses for travel, translation, and insurance;

• financial risks, such as longer payment cycles, increased expenses for travel, translation, and insurance, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products that are approved for sale, and exposure to foreign currency exchange rate fluctuations;

• risks from or relating to natural disasters, political and economic instability, including wars, terrorism, and political unrest, outbreak of disease, boycotts, curtailment of trade, and other business restrictions;

• regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the U.S.

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Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors and other collaborators and partners from authorizing, promising, offering, providing, soliciting, or receiving, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector.

We may engage third parties to sell VYJUVEK or our product candidates, if approved, abroad and/or to obtain necessary marketing authorizations, permits, licenses, patent registrations and other regulatory approvals.

We engage third parties to sell VYJUVEK and may engage third parties to sell our product candidates, if approved, abroad and/or to obtain necessary marketing authorizations, permits, licenses, patent registrations, and other regulatory approvals.

We may have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations.

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Pandemics, epidemics, outbreaks of infectious diseases, or similar public health crises could adversely disrupt or impact our operations or those of our customers, suppliers, third-party partners, and regulators.

In response to a pandemic or public health crisis, authorities may impose, and businesses and individuals may implement, numerous measures to try to contain the pandemic or public health crisis or treat its impact, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, shutdowns, and vaccine requirements.

In response to a pandemic or public health crisis, authorities may impose, and businesses and individuals may implement, numerous measures to try to

contain the pandemic or public health crisis or treat its impact, such as travel bans and restrictions, quarantines, shelter-in-place/stay-at-home and social distancing orders, shutdowns, and vaccine requirements.

In the event that such measures or similar measures or restrictions are implemented as a result of a pandemic or public health crisis, our employees conducting research and development or manufacturing activities may not be able to access our laboratory or manufacturing spaces, and our core activities may be significantly limited or curtailed, possibly for an extended period of time.

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If we fail in one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business.

If we do not receive regulatory approvals for our product candidates or changes to our manufacturing processes, our business, financial condition, results of operations and prospects could be materially and adversely affected.

If we do not receive regulatory approvals for our product candidates or required changes to our manufacturing processes, our business, financial condition, results of operations and prospects could be materially and adversely affected.

Our gene therapy platform is based on a novel technology, which makes it difficult to predict the time and cost of obtaining regulatory approvals for our product candidates.

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Regulatory requirements and policy governing gene and cell therapy products have changed frequently and may continue to change in the future.

In 2016, the FDA established the Office of Tissues and Advanced Therapies (“OTAT”) within

its Center for Biologics Evaluation and Research to consolidate the review of gene therapy and related products, and has established the Cellular, Tissue and Gene Therapies Advisory Committee, among others, to advise this review.

In September 2022, the FDA announced retitling of OTAT to the Office of Therapeutic Products (“OTP”) and elevation of OTP to a “Super Office” to meet its growing cell and gene therapy workload.

If we engage a National Institutes of Health funded institution to conduct a clinical trial, that institution’s Institutional Biosafety Committee as well as its Institutional Review Board (“IRB”), would need to review the proposed clinical trial to assess the safety of the trial.

In 2016, the FDA established the Office of Tissues and Advanced Therapies (“OTAT”) within its Center for Biologics Evaluation and Research to consolidate the review of gene therapy and related products, and has established the Cellular, Tissue and Gene Therapies Advisory Committee, among others, to advise this review.

In September 2022, the FDA announced retitling of OTAT to the Office of Therapeutic Products, or OTP, and elevation of OTP to a “Super Office” to meet its growing cell and gene therapy workload.

If we engage a National Institutes of Health funded institution to conduct a clinical trial, that institution’s Institutional Biosafety Committee as well as its Institutional Review Board would need to review the proposed clinical trial to assess the safety and ethics of the trial.

Similarly, the EMA may issue new guidelines concerning the development and marketing authorization for gene therapy medicinal products and require that we comply with these new guidelines.

These regulatory review committees and advisory groups and the new guidelines they promulgate may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates, or lead to significant post-approval limitations or restrictions.

These additional processes may result in a review and approval process that are longer than we otherwise would have expected.

These additional processes may result in a review and approval process that is longer than we otherwise would have expected.

Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficient product revenue, and our business, financial condition, results of operations, and prospects would be materially and adversely affected.

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There also is the potential risk of delayed adverse events following exposure to gene therapy products due to persistent biologic activity of the genetic material or other components of products used to carry the genetic material.

In addition to side effects caused by our product candidates, the administration process or related procedures also can cause adverse side effects.

In addition to side effects caused by our product or product candidates, the administration process or related procedures also can cause adverse side effects.

If any such adverse events occur, our clinical trials could be suspended or terminated.

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Any of these occurrences may harm our ability to develop product candidates, and may harm our business, financial condition, and prospects significantly.

Additionally, if a product candidate receives marketing approval, the FDA could require us to adopt a post-approval safety monitoring program to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners.

Additionally, if a product candidate receives marketing approval, the FDA or a foreign regulatory authority could require us to adopt a post-approval safety monitoring program to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners.

Furthermore, if we or others later identify undesirable side effects caused by VYJUVEK or our product candidates, several potentially significant negative consequences could result, including:

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Any of these events could prevent us from achieving or maintaining market acceptance of VYJUVEK or our product candidates and could significantly harm our business, financial condition, results of operations, and prospects.

We may encounter substantial delays in our clinical trials, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

Our product candidates that are in preclinical stages of development may never advance to clinical development and for those product candidates that do progress to clinical development, we may encounter substantial delays in our clinical trials, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

Preclinical studies, which are also known as nonclinical studies, refer to a stage of research that begins before clinical trials (testing in humans) can begin, and during which important feasibility, iterative testing, and safety data are collected.

Because of their early nature, preclinical product candidates tend to carry a higher risk of failure as compared with clinical-stage assets.

Preclinical product candidates must generate sufficient safety and efficacy data through in vitro studies and a variety of tests before they can be considered appropriate for testing in humans.

The development risks, timeline, and cost of preclinical assets can be high because of the unknowns and absence of data.

It can be difficult to identify relevant tests and animal models for preclinical studies.

If preclinical studies of our product candidates do not generate strong data, our preclinical stage programs may never progress to clinical development and may prove to be worthless.

In addition, the results of preclinical studies may not be predictive of the results of clinical trials.

For example, we utilize animal models to ascertain the predicted safety and efficacy profile of our product candidates, but animal models are imperfect predictors of a product candidate’s effect/interactions in humans.

As such, positive data from animal models may not be predictive of positive human results, patients may have side effects that were not observed in animals, and a product candidate may pose significant and unexpected safety risks to humans.

Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidate for its intended indications.

Obtaining marketing approval is an extensive, lengthy, expensive, and inherently uncertain process, and regulatory authorities may delay, limit, or deny approval of our product candidates for many reasons.

We cannot guarantee that any clinical trials will

be conducted as planned or completed on schedule, if at all.

We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all.

A failure of one or more clinical trials can occur at any stage of testing.

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If we make manufacturing processes or formulation changes to our product or product candidates, we may need to conduct additional studies to bridge our modified product or product candidate to earlier versions and obtain regulatory approvals.

Clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize our approved products or allow our competitors to bring products to market before we do, which could limit our potential revenue or impair our ability to successfully commercialize our approved products and may harm our business, financial condition, results of operations and prospects.

condition, results of operations, and prospects.

Any delays, setbacks or failures in our clinical trials could materially and adversely affect our business, financial condition, results of operations, and prospects.

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Further, we, the FDA or an IRB, may suspend our clinical trials at any time if it appears that we or our collaborators are failing to conduct a trial in accordance with regulatory requirements, including the FDA’s Current Good Clinical Practice, or CGCP, regulations, that we are exposing participants to unacceptable health risks, or if the FDA finds deficiencies in our investigational new drug, or IND, applications or the conduct of these trials.

Therefore, we cannot predict with any certainty the

schedule for commencement and completion of future clinical trials.

Therefore, we cannot predict with any certainty the schedule for commencement and completion of future clinical trials.

If we experience delays in the commencement or completion of our clinical trials, or if we terminate a clinical trial prior to completion, the commercial prospects of our product candidates could be negatively impacted, and our ability to generate revenue from our product candidates may be eliminated or delayed.

We rely on third parties to conduct certain of our preclinical studies or aspects of our preclinical studies and clinical trials.

We rely on third parties to conduct certain of our preclinical studies and clinical trials.

If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with regulatory requirements, we may not be able to obtain regulatory approval for, or commercialize, our product candidates.

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We negotiate budgets and contracts with such third parties, which may result in delays to our development timelines and increased costs.

We rely on third party contract research organizations (“CROs”) to conduct our preclinical animal studies to support product candidate development and related regulatory submissions.

Use of CROs for our animal studies subjects us to a number of risks, including a CRO going out of business, failing to meet deadlines or appropriately performing an animal study, or altering their internal practices that prevent future collaboration (e.g., change the types or biosafety levels of materials they are willing to handle).

In addition, our use of CROs located outside of the United States is subject to changes in import/export regulations that could delay or prevent timely shipping/receiving of our product candidates for animal studies.

If any such adverse events occur, the development of our product candidates or the acceptability of nonclinical data packages for regulatory agencies could be significantly and adversely impacted.

We rely on third parties over the course of our clinical trials, and, as a result, may have limited control over the clinical principal investigators and limited visibility into their day-to-day activities, including with respect to their compliance with the approved clinical protocol.

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We and these third parties are required to comply with CGCP requirements, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for product candidates in clinical development.

Regulatory authorities enforce these CGCP requirements through periodic inspections of clinical trial sponsors, clinical investigators, and clinical trial sites.

Regulatory authorities enforce these CGCP requirements through periodic

inspections of clinical trial sponsors, clinical investigators, and clinical trial sites.

If we or any of these third parties fail to comply with applicable CGCP requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to suspend or terminate these clinical trials or perform additional preclinical studies or clinical trials before approving our marketing applications.

We cannot be certain that, upon inspection, such regulatory authorities will determine that any of our clinical trials comply with CGCP requirements.

In addition, our later-stage clinical trials must be conducted with product produced under Current Good Manufacturing Practice, or CGMP, requirements and may require a large number of study subjects.

In addition, our later-stage clinical trials must be conducted with product produced under Current Good Manufacturing Practice, or CGMP, requirements (and comparable quality regulations in foreign countries) and may require a large number of study subjects.

Our failure or any failure by these third parties to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process.

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From time to time, we may publish interim, “top-line,” or preliminary data from our clinical trials.

Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as study subject enrollment continues and more data becomes available.

Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as study subject enrollment continues and more data becomes available.

Preliminary or “top-line” data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published.

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We will continue to incur costs related to regulatory compliance and are subject to risks related to non-compliance with or changes to applicable laws and regulations, which could cause VYJUVEK or any of our product candidates that obtain regulatory approval to lose that approval.

VYJUVEK, our first FDA-approved product, and any other product candidates that obtain regulatory approval in the future, will remain subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information.

VYJUVEK, our first FDA and EMA-approved product, and any other product candidates that obtain regulatory approval in the future, will remain subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, and submission of safety and other post-market information.

Any regulatory approvals that we receive for our product candidates may also be subject to a post-approval safety monitoring program, limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the quality, safety, and efficacy of the product.

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If we, or a regulatory authority, discover previously unknown problems with an approved product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured or a regulatory authority disagrees with the promotion, marketing, or labeling of that product, a regulatory authority may impose restrictions relative to that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

If we fail to comply with applicable regulatory requirements, a regulatory authority may:

If we fail to comply with applicable regulatory requirements, a regulatory authority may, among other actions:

• issue a warning letter asserting that we are in violation of the law;

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Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity.

The occurrence of any event or penalty described above may inhibit our ability to commercialize our approved product, VYJUVEK, and product candidates and adversely affect our business, financial condition, results of operations, and prospects.

The occurrence of any event or penalty described above may inhibit our ability to commercialize our approved product, VYJUVEK, and any product candidates that obtain regulatory approval and adversely affect our business, financial condition, results of operations, and prospects.

The FDA’s policies, and those of equivalent foreign regulatory agencies, may change and additional government regulations may be enacted that could negatively impact the existing marketing approval for VYJUVEK and prevent, limit, or delay regulatory approval of our product candidates.

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If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which would materially and adversely affect our business, financial condition, results of operations, and prospects.

While we have obtained orphan drug exclusivity for VYJUVEK in the U.S., and orphan drug designation for certain of our product candidates in the U.S.

and other jurisdictions, it may not effectively protect us from competition, and we may be unable to obtain orphan drug designation for other product candidates.

While we have obtained orphan drug exclusivity for VYJUVEK in the United States, and orphan drug designation for certain product candidates in the United States and other jurisdictions, it may not effectively protect us from competition, and we may be unable to obtain orphan drug designation for other product candidates.

If our competitors are able to obtain orphan drug exclusivity before us, we may not be able to have competing products approved by the applicable regulatory authority for a significant period of time.

Regulatory authorities in some jurisdictions, including the United States, the European Union, and Japan may designate drugs for relatively small patient populations as orphan drugs.

Under the Orphan Drug Act of 1983, as amended, the FDA may designate a product candidate as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States.

Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process, but it can lead to financial incentives, such as opportunities for grant funding toward clinical trial costs, tax advantages and user-fee waivers.

Orphan drug designation itself does not convey any advantage in or shorten the duration of the regulatory review and approval process, but it can lead to financial incentives, such as opportunities for grant funding toward clinical trial costs, tax advantages, and user-fee waivers.

In addition, if a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the drug is entitled to orphan drug marketing exclusivity for a period of seven years.

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The period of market exclusivity is extended by two years for orphan medicinal products that have also complied with an agreed Pediatric Investigation Plan.

The ten-year market exclusivity in the European Union may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for

which it received orphan designation, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity, or where the prevalence of the condition has increased above the threshold.

The ten-year market exclusivity in the European Union may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for which it received orphan designation, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity, or where the prevalence of the condition has increased above the threshold.

Additionally granting of an authorization for another similar orphan medicinal product where another product has market exclusivity can happen at any time:

(i) the second applicant can establish that its product, although similar, is safer, more effective, or otherwise clinically superior;

(ii) the applicant cannot supply enough orphan medicinal product, or (iii) where the applicant consents to a second orphan medicinal product application.

(i) that the second applicant can establish that its product, although similar, is safer, more effective, or otherwise clinically superior, (ii) that the first applicant cannot supply enough orphan medicinal product, or (iii) where the first applicant consents to a second orphan medicinal product application.

Additionally, a recent legislative initiative that is still under discussion in the European Parliament, may introduce a variable duration of market exclusivity based on the type of orphan medicinal product (between four and 11 years) in the upcoming years.

The orphan drug designation system in Japan aims to support the development of drugs for diseases that affect fewer than 50,000 patients in Japan, for which significant unmet medical need exists.

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orphan drug designation for KB105 and KB407 in the United States and the European Union;

and orphan drug designation for KB408 in the United States, we cannot assure you that we will be able to obtain or maintain orphan drug exclusivity and if we are able to maintain the orphan drug exclusivity, the exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition.

Further, we cannot assure you that any of our other product candidates will be approved for any orphan-designated use in any jurisdiction, in a timely manner or at all, or that a competitor will not obtain orphan drug exclusivity that could block the regulatory approval of any of our drug candidates for several years.

and orphan drug designation for KB408 in the United States, we may not be able to maintain orphan drug

exclusivity, and if we are able to maintain the orphan drug exclusivity, the exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition.

Further, we cannot assure you that any of our other product candidates will be approved for any orphan-designated use in any jurisdiction, in a timely manner, or at all, or that a competitor will not obtain orphan drug exclusivity that could block the regulatory approval of any of our product candidates for several years.

If we are unable to maintain or obtain orphan drug exclusivity, our ability to generate sufficient revenue may be negatively affected.

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This pathway may not lead to a faster development, regulatory review, or approval process and does not increase the likelihood that our product candidates will receive marketing approval.

A product may be eligible for accelerated approval if it treats a serious or life-threatening condition, generally provides a meaningful advantage over available therapies, and demonstrates an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit.

A product may be eligible for accelerated approval if it treats a serious or life-threatening condition, generally provides a meaningful advantage over available therapies, and demonstrates an effect on a surrogate endpoint or an intermediate clinical endpoint that is reasonably likely to predict clinical benefit.

As a condition of approval, the FDA may require that a sponsor of a product receiving accelerated approval perform adequate and well-controlled post-marketing confirmatory clinical trials.

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There can be no assurance that the FDA would allow any of our product candidates to proceed on an accelerated approval pathway, and even if the FDA did allow such pathway, there can be no assurance that any expedited development, review, or approval will be granted on a timely basis, or at all.

Breakthrough Therapy Designation, Fast Track Designation, Regenerative Medicine Advanced Therapy Designation, or Priority Review by the FDA, or PRIME Scheme by the EMA, even if granted for any of our product candidates, may not lead to a faster development, regulatory review or approval process, and such designations may not increase the likelihood that any of our product candidates will receive marketing approval.

Breakthrough Therapy Designation, Fast Track Designation, Regenerative Medicine Advanced Therapy (“RMAT”) Designation, or Priority Review by the FDA, or PRIority MEdicines (“PRIME”) Scheme by the EMA, even if granted for any of our product candidates, may not lead to a faster development, regulatory review, or approval process, and such designations may not increase the likelihood that any of our product candidates will receive marketing approval.

We may seek a Breakthrough Therapy Designation for some of our product candidates.

A breakthrough therapy is defined as a therapy that is intended, alone or in combination with one or more other therapies, to treat a serious or life-

threatening disease or condition, and preliminary clinical evidence indicates that the therapy may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

A breakthrough therapy is defined as a therapy that is intended, alone or in combination with one or more other therapies, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the therapy may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

For therapies that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens.

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If a therapy is intended for the treatment of a serious or life-threatening condition and the therapy demonstrates the potential to address unmet medical needs for this condition, the sponsor may apply for Fast Track Designation.

The FDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it.

The FDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation, we cannot assure you that the

FDA would decide to grant it.

Even if we do receive Fast Track Designation, we may not experience a faster development process, review, or approval compared to conventional FDA procedures.

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Fast Track Designation alone does not guarantee qualification for the FDA’s priority review procedures.

We were granted Regenerative Medicine Advanced Therapy (“RMAT”) designation for B-VEC from the FDA, and we may seek RMAT designation for some of our product candidates.

We were granted RMAT designation for B-VEC from the FDA, and we may seek RMAT designation for some of our product candidates.

In 2017, the FDA established the RMAT designation as part of its implementation of the 21st Century Cures Act to expedite review of any drug that meets the following criteria:

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Like Breakthrough Therapy Designation, RMAT designation provides potential benefits that include more frequent meetings with the FDA to discuss the development plan for the product candidate, and eligibility for rolling review and priority review.

Products granted RMAT designation may also be eligible for accelerated approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites.

Products granted RMAT designation may also be eligible for accelerated approval based on surrogate or intermediate endpoints reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites.

RMAT-designated products that receive accelerated approval may, as appropriate, fulfill their post-approval requirements through the submission of clinical evidence, clinical trials, patient registries, or other sources of real-world evidence, such as electronic health records;

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Receiving priority review from the FDA does not guarantee approval within the six-month review cycle, or at all.

We have obtained and may seek to qualify our product candidates under the PRIority MEdicines (“PRIME”) scheme from the EMA.

For instance, VYJUVEK was granted PRIME designation.

The PRIME scheme is open to medicines under

development and for which the applicant intends to apply for an initial MAA through the centralized procedure.

Eligible products must target conditions for which where is an unmet medical need (there is no satisfactory method of diagnosis, prevention or treatment in the European Union or, if there is, the new medicine will bring a major therapeutic advantage) and they must demonstrate the potential to address the unmet medical need by introducing new methods or therapy or improving existing ones.

We have obtained and may seek to qualify our product candidates under the PRIME scheme from the EMA.

For instance, B-VEC was granted PRIME designation.

The PRIME scheme is open to medicines under development and for which the applicant intends to apply for an initial MAA through the centralized procedure.

Eligible products must target conditions for which there is an unmet medical need (there is no satisfactory method of diagnosis, prevention, or treatment in the European Union or, if there is, the new medicine will bring a major therapeutic advantage) and they must demonstrate the potential to address the unmet medical need by introducing new methods or therapy or improving existing ones.

There is no assurance that we will be able to obtain PRIME qualification for our product candidates.

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The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application.

The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the United States within one year following the date of approval.

The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the

voucher was awarded is not marketed in the United States within one year following the date of approval.

We received rare pediatric disease designation for VYJUVEK and were awarded a priority review voucher following FDA approval of VYJUVEK in May 2023.

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We have also obtained a rare pediatric disease designation for KB105, KB104, and for KB407.

In addition, in May 2024, inhaled KB707 was granted rare pediatric disease designation by the FDA for the treatment of osteosarcoma, and in August 2024, intratumoral KB707 was granted rare pediatric disease designation by the FDA for the treatment of rhabdoymyosarcoma.

However, there is no guarantee that we will be able to obtain a priority review voucher if these product candidates are approved by the FDA.

Congress included a sunset provision in the statute authorizing the rare pediatric disease priority review voucher program.

Under the current statutory sunset provisions, after September 30, 2024, the FDA may only award a voucher for an approved rare pediatric disease product application if the sponsor has rare pediatric disease designation for the product candidate, and that designation was granted by September 30, 2024.

Under the current statutory sunset provisions, since December 20, 2024, the FDA is only able to award a voucher for an approved rare pediatric disease product application if the sponsor has rare pediatric disease designation for the product candidate, and that designation was granted by September 30, 2026.

After September 30, 2026, the FDA may not award any rare pediatric disease priority review vouchers.

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Before we can begin to commercially manufacture our product candidates, we must pass a pre-approval inspection of our manufacturing facilities by the FDA.

A manufacturing authorization must also be obtained from the appropriate EU

regulatory authorities.

A manufacturing authorization must also be obtained from the appropriate EU regulatory authorities.

The timeframe required for us to obtain such approvals is uncertain.

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In complying with CGMP, we are obligated to expend time, money, and effort in production, record keeping and quality control to assure that the product meets applicable specifications and other requirements.

If we fail to comply with these requirements, we will be subject to possible regulatory action and may not be permitted to sell any approved product that we may develop.

In addition, the manufacturing process used to produce VYJUVEK and our product candidates is complex and novel and demand for an approved product may require the need for us to change the manufacturing process, which may require regulatory approval before we are able to sell the product manufactured by the changed process.

The production of VYJUVEK and our product candidates require processing steps that are more complex than those required for most chemical pharmaceuticals.

Moreover, unlike chemical pharmaceuticals, the physical and chemical properties of a biologic such as ours generally cannot be fully characterized.

If we fail to comply with these requirements, we will be subject to possible regulatory action and may not be permitted to sell any approved product.

In addition, the manufacturing process used to produce VYJUVEK and our product candidates is complex and novel and demand for an approved product may require us to change the manufacturing process, which may require regulatory approval before we are able to sell the product manufactured by the changed process.

The production of VYJUVEK and our product candidates require processing steps that are more complex than those required for most pharmaceuticals.

Moreover, the physical and chemical properties of a biologic such as ours generally cannot be fully characterized.

As a result, assays of the finished product may not be sufficient to ensure that the product will perform in the intended manner.

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Problems with an approved manufacturing process, even minor deviations from the normal process, could result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims, or insufficient inventory.

In addition to the potential impacts of problems with an approved manufacturing process, changes to an approved manufacturing process may result in problems with the process design, process reproducibility, stability, or batch consistency, and may require regulatory approval before we are permitted to sell products manufactured with the changed manufacturing process, which could potentially delay commercial availability of an approved product.

In addition, changes to an approved

manufacturing process may result in problems with the process design, process reproducibility, stability, or batch consistency, and may require regulatory approval before we are permitted to sell products manufactured with the changed manufacturing process, which could potentially delay commercial availability of an approved product.

We may encounter problems achieving adequate quantities and quality of materials that meet FDA, EMA, or other applicable standards or specifications with consistent and acceptable production yields and costs, which could materially and adversely affect our business, financial condition, results of operations, and prospects.

Although we have established our own manufacturing facilities for VYJUVEK and our product candidates, we may also utilize third parties to conduct our product manufacturing or components thereof.

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Our ability to commercially supply VYJUVEK depends, in part, on the ability of third parties to supply and manufacture the raw materials and other important components related to our manufacture of VYJUVEK.

For some materials and components related to our manufacture of VYJUVEK and our product candidates, there are, in general, relatively few alternative sources of supply, and our use of a limited number of suppliers for some of the components and materials used in manufacturing VYJUVEK and our product candidates and commercially supplying VYJUVEK exposes us to several risks, including disruptions in supply, price increases, late deliveries, and an inability to meet demand.

Potential changes in export/import and trade laws, regulations, and policies of the United States and other countries, including any increased trade restrictions or tariffs, may impact prices and availability of raw material and other components used in the manufacture of VYJUVEK, cause supply chain volatility, and harm the development of our product candidates, any of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

For some materials and components related to our manufacture of VYJUVEK and our product candidates, there are, in general, relatively few alternative sources of supply.

Our use of a limited number of suppliers for some of the components and materials used in manufacturing VYJUVEK and our product candidates and commercially supplying VYJUVEK exposes us to several risks, including disruptions in supply, price increases, late deliveries, and an inability to meet demand.

If we fail to develop and maintain supply relationships with these third parties, we may be unable to successfully commercialize VYJUVEK or any approved product candidate.

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We seek to maintain a robust quality management program which includes the following broad pillars of quality:

• monitoring and assuring regulatory compliance for clinical trials, manufacturing, and testing of good applicable practice (“GxP”) (e.g., CGCP and CGMP regulated) products;

• monitoring and assuring regulatory compliance for clinical trials, manufacturing, and testing of good applicable practice (“GxP”) for regulated products (e.g., CGCP and CGMP);

• monitoring and providing oversight of all GxP suppliers;

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Any change to an approved manufacturing process will put strain on our quality management program.

A quality or safety issue may result in adverse inspection reports, warning letters, monetary sanctions, injunctions to halt manufacture and distribution of VYJUVEK or our product candidates, if approved, civil or criminal sanctions, costly litigation, refusal of a government to grant approvals and licenses, restrictions on operations, or withdrawal, suspension or variation of existing approvals and licenses.

A quality or safety issue may result in adverse inspection reports, warning letters, monetary sanctions, injunctions to halt manufacture and distribution of VYJUVEK or our product candidates, civil or criminal sanctions, costly litigation, refusal of a government to grant approvals and licenses, restrictions on operations, or withdrawal, suspension or variation of existing approvals and licenses.

An inability to address a quality or safety issue in an effective and timely manner may also cause negative publicity, or a loss of patient confidence in us or VYJUVEK or our product candidates, which may result in difficulty in successfully launching products and the loss of potential future sales, which could have an adverse effect on our business, financial condition, and results of operations.

If VYJUVEK demand increases more than previously estimated or we wish to improve manufacturing efficiencies or to lower cost of production, we may need or choose to scale up the current FDA-approved VYJUVEK commercial manufacturing process, which is subject to risks and uncertainties and will require us to submit a Prior Approval Supplement (“PAS”) to the FDA and obtain the agency’s approval for the manufacturing process changes before they can be implemented.

If demand for VYJUVEK or any product for which we obtain marketing approval increases more than previously estimated or we wish to improve manufacturing efficiencies to lower cost of production, we may need or choose to scale up or change a current FDA-approved commercial manufacturing process, which is subject to risks and uncertainties and could require us to submit a Prior Approval Supplement (“PAS”) to the FDA and obtain the agency’s approval for the manufacturing process changes before they can be implemented.

We may desire or need to make manufacturing process changes to scale-up manufacturing to meet increased demand, to improve efficiencies or costs, or otherwise.

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For example, as a result of the strong and increasing commercial demand for VYJUVEK, we designed a revised commercial manufacturing process that should more than quadruple the output of each production batch.

We have validated the revised commercial manufacturing process and submitted a PAS to the FDA, which must be approved by the FDA before we can commercially sell VYJUVEK manufactured with the revised commercial manufacturing process.

We validated the revised commercial manufacturing process and submitted a PAS to the FDA, which was approved by the FDA.

Receipt of FDA approval was required before we could commercially sell VYJUVEK manufactured with the revised commercial manufacturing process.

In addition to requiring FDA approval of a PAS, there are risks associated with scaling up a manufacturing process, including, among others, cost overruns, potential problems with the process scale-up design, process reproducibility, stability issues, and batch consistency.

Furthermore, studies or tests to demonstrate comparability of product manufactured under an existing and under a revised manufacturing process, or any other studies on a revised process, such as validation studies, may uncover findings that result in the FDA delaying or refusing to approve a new process.

We cannot guarantee when the FDA will approve the PAS for the scaled-up VYJUVEK manufacturing process.

Until an enhanced VYJUVEK manufacturing process is approved by the FDA, we will need to meet any additional demand for VYJUVEK from batches manufactured with our existing FDA-approved commercial manufacturing process, which could potentially delay the commercial availability of VYJUVEK and adversely affect our business, results of operations, and financial condition.

revised process.

We cannot guarantee if or when the FDA may approve a PAS for any manufacturing process change(s), and failure to obtain FDA approval or other risks associated with manufacturing processes changes could impact commercial availability of VYJUVEK or an approved product candidate, which could result in the loss of sales and adversely affect our business, results of operations, and financial condition.

We may need or desire to transfer VYJUVEK or an approved product candidate manufacturing from ANCORIS, our commercial scale CGMP-compliant manufacturing facility where VYJUVEK is currently manufactured to ASTRA, our recently completed and qualified state-of-the-art CGMP manufacturing facility, or transfer an approved product manufacturing from ASTRA to ANCORIS, and technical transfer of a manufacturing process is subject to risks and uncertainties and requires FDA inspection and approval of the facility where manufacturing is planned to be transferred.

We plan to complete a technical transfer process to allow us to commercially manufacture VYJUVEK at ASTRA, our recently completed and qualified state-of-the-art CGMP manufacturing facility, in addition to ANCORIS.

This process may be time consuming and will require an FDA inspection of ASTRA.

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We have limited experience as a commercial company and the sales, marketing, and distribution of VYJUVEK or any future approved products may be unsuccessful or less successful than anticipated.

We received FDA approval of VYJUVEK in May 2023 and initiated a commercial launch of VYJUVEK in the United States in the second quarter of 2023.

We received FDA approval of VYJUVEK in May 2023 and European Commission approval of VYJUVEK in April 2025 and initiated a commercial launch of VYJUVEK in the United States in the second quarter of 2023.

As a company, we have no prior experience commercializing a biologic.

The success of our commercialization efforts is difficult to predict and subject to the effective execution of our business plan, including, among other things, the continued development of our internal sales, marketing, manufacturing, and distribution capabilities and our ability to navigate the significant expenses and risks involved with the development and management of such capabilities.

For example, our commercial launch of VYJUVEK may not develop as planned or anticipated, which may require us to, among others, adjust or amend our business plan, including scale up of our manufacturing process, and incur significant expenses.

For example, our commercial launch of VYJUVEK in the United States and the EU may not develop as planned or anticipated, which may require us to, among others, adjust or amend our business plan and incur significant expenses.

Further, given our lack of experience commercializing products, we do not have a track record of successfully executing a commercial launch.

There is a risk that we underestimate the level of demand for a product, which could require us to change a manufacturing process to increase production yields and changes to a manufacturing process are time consuming and subject to regulatory, financial, and operational risks.

If we are unsuccessful in accomplishing our objectives and executing on our business plan, or if our commercialization efforts do not develop as planned, we may not be able to successfully commercialize VYJUVEK and any future approved products, we may require significant additional capital and financial resources, we may not become profitable on a consistent basis, and we may not be able to compete against more established companies in our industry.

If we are unsuccessful in accomplishing our objectives and executing on our business plan, or if our commercialization efforts do not develop as planned, we may not be able to successfully commercialize VYJUVEK and any future approved products, we may require significant additional capital and financial resources, we may not be profitable on a consistent basis, and we may not be able to compete against more established companies in our industry.

If we are unable to maintain our agreements with third parties to distribute VYJUVEK to patients in the United States, our results of operations and business could be adversely affected.

We rely on a small number of third parties to commercially distribute VYJUVEK to patients in the United States.

We have contracted with a third-party packaging company to package VYJUVEK, a third-party logistics company to warehouse,

process, and ship VYJUVEK to a limited number of specialty pharmacies that mix the medication and administer it to patients in the patient’s home by a healthcare professional and to a limited number of hospitals and distributors where patients are administered the medication in a hospital or clinic.

We have contracted with a third-party packaging company to package VYJUVEK, a third-party logistics company to warehouse, process, and ship VYJUVEK to a limited number of specialty pharmacies that mix the medication and administer it to patients in the patient’s home by a healthcare professional and to a limited number of hospitals and distributors where patients are administered the medication in a hospital or clinic.

This distribution network requires significant coordination with our sales and marketing and finance organizations.

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In addition, if we were required to replace such third parties, it could take time to locate an appropriate replacement third-party on acceptable terms, which could cause delays in our distribution network and increased expenses, and thereby adversely impact our commercial sales of VYJUVEK in the United States and result in a material adverse effect on our business, financial condition, results of operations, and prospects.

We plan on using local distributors to market and sell VYJUVEK in certain jurisdictions outside of the U.S., the U.K., certain EU countries, and Japan, which subjects us to certain risks.

We plan on using local distributors to market and sell VYJUVEK outside of the U.S., the U.K., certain EU countries, and Japan.

Using specialty distributors to market and sell VYJUVEK in certain jurisdictions outside of the United States, the United Kingdom, certain EU countries, and Japan subjects us to certain risks.

Outside of the United States, major European markets and Japan, we intend to and have started entering into distribution agreements with specialty distributors to commercialize VYJUVEK.

We may be unable to enter into appropriate supply, marketing, and distribution arrangements on favorable terms, if at all.

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We also face competition in our search for third parties to assist us with the sales and marketing efforts.

If any future collaborators do not commit sufficient resources to commercialize our product candidates, if approved, or we are unable to develop the necessary capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business.

If any future collaborators do not commit sufficient resources to commercialize

our product candidates, if approved, or we are unable to develop the necessary capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business.

Our efforts to educate the medical community and third-party payors on the benefits of VYJUVEK or our product candidates, if approved, may require significant resources and may never be successful.

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If the market opportunities for VYJUVEK or our product candidates are smaller than we believe they are, our product revenue may be adversely impacted, and our business may suffer.

We focus our research and product development primarily on genetic medicines for patients with debilitating diseases.

We focus our research and product development primarily on genetic medicines to treat diseases with high unmet medical needs.

We base our market opportunity estimates on a variety of factors, including our estimates of the number of people who have these diseases, the potential scope of our approved product labels, the subset of people with these diseases who have the potential to benefit from treatment with VYJUVEK or our product candidates, various pricing scenarios, and our understanding of reimbursement policies in particular countries.

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Incorrect demand estimates could adversely impact our business, financial condition, results of operations, and prospects.

For example, if product demand is higher than we initially estimate, we may need to spend time and money on increasing our manufacturing capabilities and/or changing our manufacturing processes, which could require greater capital expenditures than initially forecasted and potentially delay commercial availability of an approved product, which could adversely affect our business, financial condition, and results of operations.

For example, if product demand is higher than we initially estimate, we may need to spend time and money increasing our manufacturing capabilities and/or changing our manufacturing processes.

This could require greater capital expenditures than initially forecasted and potentially delay commercial availability of an approved product, which could adversely affect our business, financial condition, and results of operations.

The commercial success of VYJUVEK and our product candidates will depend upon their degree of market acceptance by physicians, patients, third-party payors, and others in the medical community.

Even with the requisite approvals from the FDA in the United States, potential approvals of VYJUVEK from the EMA in the European Union, PMDA in Japan, and other regulatory authorities internationally (and potential approvals of any of our product candidates by regulatory authorities), the commercial success of VYJUVEK and our product candidates will depend, in part, on the acceptance of physicians, patients, and health care payors of gene therapy products in general, and VYJUVEK and our product candidates, in particular, as medically necessary, cost-effective, and safe.

Even with the requisite approvals from the FDA in the United States, from the European Commission in the European Union, and potential approval from the PMDA in Japan, and other regulatory authorities internationally (and potential approvals of any of our product candidates by regulatory authorities), the commercial success of VYJUVEK and our product candidates will depend, in part, on the acceptance of physicians, patients, and health care payors of gene therapy products in general, and VYJUVEK and our product candidates, in particular, as medically necessary, cost-effective, and safe.

VYJUVEK and any product candidate that we commercialize may not gain acceptance by physicians, patients, health care payors, and others in the medical community.

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We cannot predict the extent to which our business may be affected by proposed health care reforms and cost reductions or potential future legislative or regulatory developments.

However, future price controls or other changes in pricing regulation or negative publicity related to the pricing of drugs or biologics generally could restrict the amount that we are able

to charge for VYJUVEK or our product candidates, if approved, which would adversely affect our anticipated revenue and results of operations.

However, future price controls or other changes in pricing regulation or negative publicity related to the pricing of drugs or biologics generally could restrict the amount that we are able to charge for VYJUVEK or our product candidates, if approved, which would adversely affect our anticipated revenue and results of operations.

The insurance coverage and reimbursement status of newly approved products is uncertain.

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The existing data for reimbursement based on some of these metrics is relatively limited, although certain states have begun to survey acquisition cost data for the purpose of setting Medicaid reimbursement rates, and CMS has begun making pharmacy National Average Drug Acquisition Cost and National Average Retail Price data publicly available on at least a monthly basis.

Therefore, it may be difficult to project the impact of these evolving reimbursement metrics on the

willingness of payors to cover product candidates that we are able to commercialize.

Therefore, it may be difficult to project the impact of these evolving reimbursement metrics on the willingness of payors to cover product candidates that we are able to commercialize.

We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, additional legislative changes, statements by elected officials, and administrative changes.

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This could lead to governmental authorities restricting genetic testing or calling for additional regulation of genetic testing, particularly for diseases for which there is no known cure.

For example, on May 6, 2024, the FDA released a final rule clarifying that in vitro diagnostic tests (IVDs) manufactured by laboratories are medical devices.

If the rule withstands recent court challenges, such tests will be required to undergo premarket

review and will be subject to other medical device regulations.

Any of these scenarios could decrease demand for VYJUVEK and our product candidates, if approved.

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If we experience a similar social media campaign regarding our decision to provide or not provide our product candidates under an expanded access corporate policy, our reputation may be negatively affected, and our business may be harmed.

Recent media attention to individual patients’ expanded access requests has resulted in the introduction of legislation at the local and national level referred to as “Right to Try” laws, such as the Right to Try Act, which are intended to give patients access to unapproved therapies.

In 2018, the Right to Try Law was enacted, allowing eligible patients to request access to certain investigation drugs, including biologics, that have not been FDA approved.

New and emerging legislation regarding expanded access to unapproved drugs for life-threatening illnesses could negatively impact our business in the future.

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Our competitors, or other third parties, may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner.

Moreover, our patent

estate does not preclude third parties from having intellectual property rights that could interfere with our freedom to use our platform, including for our intended indications.

Moreover, our patent estate does not preclude third parties from having intellectual property rights that could interfere with our freedom to use our platform, including for our intended indications.

Even assuming patents issue from our pending and future patent applications, changes in either the patent laws or interpretation of the patent laws in the United States and foreign jurisdictions may diminish the value of our patents or narrow their scope of protection.

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We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting, and defending patents on VYJUVEK, each and every one of our product candidates, and current and future innovations related to our vector platform, in all countries throughout the world would be prohibitively expensive, and intellectual property rights in some countries outside the United States may differ in scope from those eventually granted in the United States.

Filing, prosecuting, and defending patents on VYJUVEK, our product candidates, and current and future innovations related to our vector platform, in all countries throughout the world would be prohibitively expensive, and intellectual property

rights in some countries outside the United States may differ in scope from those eventually granted in the United States.

Thus, in some cases, we may not have the opportunity to obtain patent protection for certain technologies in some jurisdictions outside the United States.

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Even if we believe such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable, and infringed, which could materially and adversely affect our ability to commercialize VYJUVEK or any of our product candidates, if approved.

In order to successfully challenge

the validity of any such U.S.

In order to successfully challenge the validity of any such U.S.

patent in federal court, we would need to overcome a presumption of validity.

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We could be forced, including by court order, to cease developing, manufacturing, and commercializing the infringing product or technologies.

We also could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right.

We also could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully

infringed a patent or other intellectual property right.

A finding of infringement could prevent us from manufacturing and commercializing our products and technologies or force us to cease some or all our business operations.

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Although we endeavor to observe the terms of agreements under which we obtain access to third-party intellectual property and to ensure that our employees and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these individuals, or we, have used or disclosed intellectual property, including trade secrets or other proprietary information, of third parties or the current or former employers of employees or advisors.

For instance, as described in Note 7 of the Notes to Condensed Consolidated Financial Statements (unaudited) included in Part I, Item 1 of this Quarterly Report on Form 10-Q, in April of 2022, we entered into a settlement agreement with PeriphaGen, Inc., which had alleged breach of contract and misappropriation of trade secrets.

For instance, as described in Note 6 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, we entered into a settlement agreement with PeriphaGen, Inc., which had alleged breach of contract and misappropriation of trade secrets.

If we fail to successfully defend any such claims, in addition to paying monetary damages, we may be subject to an injunction and may lose valuable intellectual property rights or personnel.

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Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents.

For example, in September 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law.

For example, in September 2011, the Leahy-Smith America Invents Act, or

the Leahy-Smith Act, was signed into law.

The Leahy-Smith Act included several significant changes to U.S.

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Although we generated net income starting with the year ended December 31, 2023, we previously incurred recurring losses and negative cash flows from operations since our inception.

Our transition to operating profitability depends on our ability to (i) successfully commercialize VYJUVEK in the U.S.

and obtain the necessary regulatory approvals to commercialize VYJUVEK outside of the U.S.

and then successfully commercialize VYJUVEK outside the U.S., and (ii) complete the development of, and obtain the regulatory approvals necessary to successfully commercialize our product candidates with significant market potential.

We have devoted substantially all our efforts to date to (i) research and development of our gene therapy platform, product candidates and our manufacturing infrastructure, and, more recently, (ii) commercializing VYJUVEK in the U.S.

Our transition to consistent operating profitability depends on our ability to (i) successfully commercialize VYJUVEK in the United States and obtain the necessary regulatory approvals to commercialize VYJUVEK outside of the United States and then successfully commercialize VYJUVEK outside the United States, and (ii) complete the development of, and obtain the regulatory approvals necessary to successfully commercialize our product candidates with significant market potential.

We expect to continue to incur significant expenses for the foreseeable future and our operating results may fluctuate significantly from quarter to quarter.

We anticipate that our expenses will increase substantially if, and as, we:

• manufacture, market, and sell our lead product, VYJUVEK, in the U.S.

and prepare for regulatory approvals outside of the U.S.

and if such approvals are received, commercialize VYJUVEK in those geographies;

• manufacture, market, and sell our lead product, VYJUVEK, in the United States, market and sell VYJUVEK in the EU, and prepare for regulatory approval in Japan and if such approval is received, commercialize VYJUVEK in Japan;

• continue our research, preclinical studies, and the clinical development of our current product candidates, including our current clinical trials and planned clinical trials;

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To remain profitable, we must be successful in a range of challenging activities, including designing, initiating, and completing clinical trials for our product candidates, developing, validating, and maintaining commercial scale manufacturing processes, obtaining marketing approvals, manufacturing, marketing, and selling VYJUVEK and any product candidates for which we may obtain marketing approval, and satisfying any post-marketing requirements.

If we were required to discontinue

development of any of our product candidates, if VYJUVEK does not receive regulatory approvals outside the U.S., or any of our product candidates do not receive regulatory approvals, or if VYJUVEK or any of our product candidates, if approved, fails to achieve sufficient market acceptance for any indication, our ability to remain profitable and our business prospects and financial condition could be materially adversely affected.

If we were required to discontinue development of any of our product candidates, if VYJUVEK does not receive regulatory approvals outside the United States or the EU, or any of our product candidates do not receive regulatory approvals, or if VYJUVEK or any of our product candidates, if approved, fails to achieve sufficient market acceptance for any indication, our ability to remain profitable and our business prospects and financial condition could be materially adversely affected.

Moreover, if we decide to leverage any success with VYJUVEK or any of our current product candidates to develop other product opportunities, we may not be successful in such efforts.

In any such event, our business may be materially adversely affected.

We currently have one product, VYJUVEK, approved by the FDA and several product candidates in the clinical trials stages.

We currently have one product, VYJUVEK, approved by the FDA and the EMA and several product candidates in the clinical trials stages.

However, we may never develop, acquire or in-license additional product candidates.

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• the costs of product sales, medical affairs, marketing, manufacturing, and distribution for VYJUVEK;

• the outcome, timing and costs of seeking regulatory approvals for VYJUVEK outside the U.S.;

• the outcome, timing and costs of seeking regulatory approvals for VYJUVEK outside the United States and the EU;

• the progress, timing, results, and costs of our current and planned clinical trials;

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Accordingly, we may need to continue to rely on additional financing to achieve our business objectives.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.

Any additional fundraising efforts may

divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.

Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline.

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The terms of additional financing may be impacted by, among other things, general market conditions, the market’s perception of our approved product, VYJUVEK, and product candidates, our growth potential, and the market price per share of our common stock.

See “Raising additional capital could cause the price of our common stock to decline and cause dilution to our stockholders, restrict our operations or require us to relinquish rights.”

See “Raising additional capital could cause the price of our common stock to decline and cause dilution to our stockholders, restrict our operations or require us to relinquish rights.” Failure to obtain necessary capital when needed could force us to delay, limit, or terminate certain of our product development efforts or other operations, which could significantly harm our business, financial condition, results of operations, and prospects.

Changes in tax law may adversely affect our business and financial condition

We are subject to evolving and complex tax laws in the U.S.

and the foreign jurisdictions in which we operate.

We are subject to evolving and complex tax laws in the United States and the foreign jurisdictions in which we operate.

New income, sales, use or other tax laws, statutes, rules, regulations, or ordinances could be enacted at any time, or interpreted, changed, modified, or applied adversely to us, any of which could adversely affect our business operations and financial performance.

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Any such limitation may significantly reduce our ability to utilize our net operating loss carryforwards and tax credit carryforwards before they expire and could have a material adverse effect on our results of operations in future years.

Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

We commenced operations in 2016.

Our efforts to date have been primarily related to organizing and staffing our company, business planning, raising capital, developing our vector platform and related technologies, identifying potential gene therapy product candidates, undertaking preclinical studies and clinical trials, scaling our manufacturing capabilities, obtaining FDA approval for VYJUVEK, and commercializing VYJUVEK.

Consequently, any predictions you make about our future success, performance or viability may not be as accurate as they could be if we had more experience developing and commercializing gene therapy products.

We expect our financial condition and operating results to continue to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control.

We are transitioning from a company with a research and

development focus to a company undertaking commercial activities.

We may encounter unforeseen expenses, difficulties, complications, and delays and may not be successful in such a transition.

Accordingly, you should not rely upon the results of any particular quarterly or annual period as indications of future operating performance.

Risks Related to Ownership of Our Common Stock

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Until such time as we can generate substantial and consistent product revenue, we may need to finance our cash needs through a combination of private and public equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements.

We may issue additional common stock or restricted securities as part of such financing activities and any such issuances may have a dilutive effect on our then-existing stockholders.

We may issue additional common stock or restricted securities as part of such financing activities and any such

issuances may have a dilutive effect on our then-existing stockholders.

Sales of substantial amounts of our common stock in the open market, or the availability of such shares for sale, could adversely affect the price of our common stock.

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If we fail to maintain effective internal control over financial reporting, we may not be able to accurately report our financial results, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and is required to have an independent auditor assess the effectiveness of our internal control over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”).

Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”).

We cannot give any assurances that material weaknesses will not be identified in the future in connection with our compliance with the provisions of Section 404 of the Sarbanes-Oxley Act.

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We have never declared or paid cash dividends on our common stock.

We currently intend to retain all our future earnings to finance the growth and development of our business.

In addition, the terms of any future debt agreements may preclude us from paying dividends.

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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-Q

Item 1A. Risk Factors