What changed in this filing

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Item 1A. Risk Factors

2023-11-06 compared with 2023-08-08 · 20 added, 9 removed, 1 unchanged (97% of the section changed)

Risk Factors.

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.

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 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on August 8, 2023.

Our internal computer systems, or those of our third-party collaborators, service providers, contractors or consultants, may fail or suffer security incidents, which could result in a material disruption of our operations or development programs and could have a material adverse effect on our reputation, business, financial condition or results of operations.

Our internal computer systems and those of our current or future third-party collaborators, service providers, contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.

Attacks on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and they are being conducted by increasingly sophisticated and organized groups and individuals with a wide range of motives and expertise.

In addition to extracting sensitive information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means, including ransom demands, to affect service reliability and/or threaten the confidentiality, integrity and availability of information.

The prevalent use of mobile devices also increases the risk of data security incidents.

If such a material event were to occur and cause interruptions in our operations or the operations of third-party collaborators, service providers, contractors and consultants, it could result in a material disruption of our operations or development programs and/or produce significant reputational, financial, legal, regulatory, business or operational harm.

For example, any loss of clinical trial data for our product candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

To the extent that any disruption or security breach results in a loss of or damage to our data or applications or other data or applications relating to our technology or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and the further development of our product candidates could be delayed.

For example, on September 26, 2023, we became aware of unauthorized access to part of our information technology network.

As part of our investigation into this incident, we engaged and consulted with outside cyber-security professionals and notified relevant law enforcement authorities.

We believe, based on our assessment as of the date of this Form 10-Q filing, that:

there has been no interruption to our operations or business;

there is no evidence that the exfiltrated data was publicly released or is at further risk;

and this event had no material adverse effect on the Company.

Although we have taken steps after this event, and will take further steps, to further enhance our cybersecurity protections and minimize the impact of any future event, we cannot provide any assurances that future cyber events will not occur, that these security safeguards will be successful, and that future cyber events, to the extent they occur, will not impact our operations or have any material adverse impact on our business.

As a result, we may not in the future successfully prevent service interruptions, exfiltrations or data security incidents that could materially adversely affect our business including the events and potential ramifications described in the succeeding paragraph.

In addition, our insurance may not cover or be sufficient in type or amount to cover us against claims related to this data exfiltration or any security breaches, cyberattacks and other related breaches, including the costs of responding to and remediating this incident or any other incidents or any other liability that may arise from this incident or any such incident.

Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security breaches that result in the unauthorized access, release or transfer of sensitive information, including personally identifiable information, may result in governmental investigations, litigation, regulatory enforcement actions, fines, sanctions or other penalties, injunctive relief requiring costly compliance measures, required notification and credit monitoring, public statements against us, third parties to lose trust in us, or claims by third parties asserting that we have breached our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations.

Moreover, data security incidents and other security breaches can be difficult to detect, and any delay in identifying them may lead to increased harm.

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