Item 1A. Risk Factors
Item 1A.
Risk Factors.
Except as set forth below, there have been no material changes to the risk factors included in detail in the “Risk Factors” sections appearing in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023.
Funds affiliated with Baker Bros. Advisors LP hold a significant portion of our total outstanding shares of common stock (including shares of our common stock issuable upon conversion of shares of our Series A Convertible Preferred Stock and Series B Convertible Preferred Stock), and any sale of such shares into the market, or perception that sales could occur, in the future could cause the market price of our common stock to drop significantly.
Pursuant to a Registration Rights Agreement, dated August 7, 2023, among the Company, 667, L.P. and Baker Brothers Life Sciences, L.P., the Company filed with the SEC on August 8, 2023 a prospectus supplement to the prospectus that forms a part of its effective registration statement on Form S-3 registering for resale up to 3,914,910 shares of our common stock (which includes 1,969,797 shares of common stock issuable upon the conversion of our Series A Convertible Preferred Stock and 400,000 shares of common stock issuable upon the conversion of our Series B Convertible Preferred Stock, each of which are common stock equivalents with no voting rights, that are convertible into shares of common stock on a 1-for-1 basis only to the extent that after giving effect to such conversion the holders thereof and their affiliates and any persons who are members of a Section 13(d) group with the holders or their affiliates would beneficially own (in the aggregate, for purposes of Rule 13d-3 under the Exchange Act) no more than 4.99% of the outstanding common stock, which may be increased or decreased up to 19.99% at the holder’s election on 61 days’ notice and certain limitations) owned by funds affiliated with Baker Bros. Advisors LP (“Baker Bros.”). This represents approximately 18.8% of our total outstanding shares of common stock as of July 31, 2023 on a fully as-converted to common stock basis. Sales of a substantial number of shares of our common stock in the public market by Baker Bros., or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales by Baker Bros., or any perception that sales may occur, may have on the prevailing market price of our common stock.
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