What changed in this filing

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Item 1A. Risk Factors

2023-10-12 compared with 2023-07-13 · 67 added, 64 removed, 1345 unchanged (9% of the section changed)

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We expect to incur losses over at least the next several years and may never achieve or maintain profitability.

Our net loss was $ 180.4 million for the fiscal year ended November 30, 2022, and $65.0 million for the six months ended May 31, 2023.

As of May 31, 2023, we had an accumulated deficit of $466.3 million.

Our net loss was $ 180.4 million for the fiscal year ended November 30, 2022, and $102.0 million for the nine months ended August 31, 2023.

As of August 31, 2023, we had an accumulated deficit of $503.2 million.

To date, we have not generated any revenue from product sales and have financed our operations primarily through our collaborations and sales of our equity interests.

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If we are unable to raise capital when needed or on attractive terms, we may be required to delay, limit, reduce or terminate our research, product development programs or any future commercialization efforts or grant rights to develop and market drug candidates that we otherwise would prefer to develop and market ourselves.

We had cash, cash equivalents and marketable securities of $308.6 million as of May 31, 2023.

We had cash, cash equivalents and marketable securities of $268.7 million as of August 31, 2023.

We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements through at least the next 12 months.

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• the scope of, and costs associated with, future advancements to our DELigase platform;

• the success of our collaborations with Sanofi, Gilead and any other collaborations we may establish;

• the success of our collaborations with Gilead, Sanofi, Seagen and any other collaborations we may establish;

• the costs, timing and outcome of regulatory review of our drug candidates;

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Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements.

Although we may receive potential future milestone payments under our collaborations with Sanofi and Gilead, we do not currently have any committed external source of funds.

Although we may receive potential future milestone payments under our collaborations with Gilead, Sanofi and Seagen, we do not currently have any committed external source of funds.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder.

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In addition, several large pharmaceutical companies have disclosed investments in this field, including AbbVie Inc., Amgen Inc., AstraZeneca plc, Bayer AG, Bristol-Myers Squibb Company, Genentech, Inc., GlaxoSmithKline plc and Novartis International AG.

Furthermore, we are aware of at least three other BTK degrader programs in clinical development, including programs from AbbVie Inc., BeiGene, Ltd.

and Haisco Pharmaceutical Group Co., Ltd.

Many of our current or potential competitors, either alone or with their collaboration partners, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do.

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From time to time, we estimate the timing of the anticipated accomplishment of various scientific, clinical, regulatory and other product development goals, which we sometimes refer to as milestones.

These milestones may include the commencement or completion of scientific studies and clinical trials and the submission of regulatory filings and may be associated with payments from third-party collaborators such as Sanofi or Gilead.

From time to time, we may publicly announce the expected timing of some of these milestones.

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We have sought third-party collaborators for the research, development and commercialization of some of our targeted protein degrader programs.

For example, in June 2019 we entered into a collaboration with Gilead and in December 2019 we entered into a collaboration with Sanofi, which was subsequently expanded and amended in January 2021.

Both collaborations require us to conduct certain research activities.

For example, in June 2019 we entered into a collaboration with Gilead;

in December 2019 we entered into a collaboration with Sanofi, which was subsequently expanded and amended in January 2021;

and in September 2023 we entered into a collaboration with Seagen.

Each of the foregoing collaborations requires us to conduct certain research activities.

Our likely collaborators for any other collaboration arrangements include large and mid-size pharmaceutical companies, biotechnology companies and universities.

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We cannot predict the success of any collaboration that we enter into.

Collaborations involving our research programs or any drug candidates we may develop, including our collaborations with Sanofi and Gilead, pose risks to us, including:

Collaborations involving our research programs or any drug candidates we may develop, including our collaborations with Gilead, Sanofi and Seagen, pose risks to us, including:

• Collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations with us.

• Collaborators may not pursue development and commercialization of any drug candidates we may develop or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition or business combination that diverts resources or creates competing priorities.

• Sanofi and Gilead have broad option rights to select up to five targets each for exclusive targeted protein degrader development, so long as not excluded by us under the terms of each collaboration, and may select targets we are considering but have not taken sufficient action to exclude under each collaboration.

• Gilead and Sanofi have broad option rights to select up to five targets each, and Seagen has option rights to multiple targets, for exclusive targeted protein degrader development, so long as not excluded by us under the terms of each collaboration, and may select targets we are considering but have not taken sufficient action to exclude under each collaboration.

• Collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a drug candidate, repeat or conduct new clinical trials or require a new formulation of a drug candidate for clinical testing.

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• Collaborators may not properly obtain, maintain, enforce or defend our intellectual property or proprietary rights or may use our proprietary information in such a way that could jeopardize or invalidate our proprietary information or expose us to potential litigation.

For example, Sanofi and Gilead have the first right to enforce or defend certain intellectual property rights under the applicable collaboration arrangement with respect to particular licensed programs, and although we may have the right to assume the enforcement and defense of such intellectual property rights if the collaborator does not, our ability to do so may be compromised by their actions.

For example, Gilead, Sanofi and Seagen have the first right to enforce or defend certain intellectual property rights under the applicable collaboration arrangement with respect to particular licensed programs, and although we may have the right to assume the enforcement and defense of such intellectual property rights if the collaborator does not, our ability to do so may be compromised by their actions.

• Disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or drug candidates or that result in costly litigation or arbitration that diverts management attention and resources.

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• Collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable drug candidates.

For example, each of Sanofi and Gilead can terminate its agreement with us in its entirety or with respect to a specific target for convenience upon written notice or in connection with a material breach of the agreement by us that remains uncured for a specified period of time.

For example, each of Gilead, Sanofi and Seagen can terminate its agreement with us in its entirety or with respect to a specific target for convenience upon written notice or in connection with a material breach of the agreement by us that remains uncured for a specified period of time.

• Collaboration agreements may not lead to development or commercialization of drug candidates in the most efficient manner, or at all.

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Some of our suppliers may experience disruption to their respective supply chain due to the effects of macroeconomic conditions, which could delay, prevent or impair our development or commercialization efforts.

We obtain certain chemical or biological intermediates in the synthesis of our drug candidates and NHPs for toxicology testing in countries affected by macroeconomic events and conditions, including inflation, increasing interest rates, increasing financial market volatility and uncertainty, the impact of war or military conflict, including the ongoing war in Ukraine, and public health pandemics.

We obtain certain chemical or biological intermediates in the synthesis of our drug candidates and NHPs for toxicology testing in countries affected by macroeconomic events and conditions, including inflation, increasing interest rates, uncertainty with respect to the federal budget and debt ceiling, increasing financial market volatility and uncertainty, the impact of war or military conflict, including regional conflicts around the world, and public health pandemics.

If we are unable to obtain these chemical or biological intermediates or NHPs in sufficient quantity and in a timely manner due to disruptions in the global supply chain caused by macroeconomic events and conditions, the development, testing and clinical trials of that drug candidate may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.

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If any of our drug candidates receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community.

For example, ibrutinib is a well-established current treatment for CLL and other B-cell malignancies, and doctors may continue to rely on this and other treatments.

For example, ibrutinib is a well-established current treatment for CLL, and doctors may continue to rely on this and other treatments.

If our drug candidates do not achieve an adequate level of acceptance, we may not generate sufficient revenue from product sales and we may not become profitable.

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Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

Moreover, we may be subject to a third-party submission of prior art to the USPTO challenging the validity of one or more claims of our owned or licensed pending patent applications, precluding the granting of a patent based on one of our owned or licensed pending patent applications.

Moreover, we may be subject to a third-party submission of prior art to the United States Patent and Trademark Office (USPTO) challenging the validity of one or more claims of our owned or licensed pending patent applications, precluding the granting of a patent based on one of our owned or licensed pending patent applications.

We may become involved in opposition, derivation, reexamination, inter partes review, post-grant review or other post-grant proceedings, in the United States or elsewhere, challenging our or our licensors’ patent rights or the patent rights of others.

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The UK government has introduced the Northern Ireland Protocol Bill which, if enacted into law, would enable the government to unilaterally disapply parts of the NIP which may lead to changes to the regulatory environment in Northern Ireland, and may trigger retaliatory measures against the UK by the EU.

The UK government recently reached a new agreement in principle with the EU, the “Windsor Framework” which aims to replace the Northern Ireland protocol.

If the Windsor Framework becomes law, the same medicines, in the same packs, with the same labels, will be available across the UK.

Medicinal products placed on the market in Northern Ireland will be authorized by the MHRA (the UK regulatory authority) and would not need to be compliant with EU law any longer.

The UK government reached a new agreement with the EU, the “Windsor Framework,” which aims to replace the Northern Ireland protocol.

According to the Windsor Framework, medicinal products intended for the UK market including Northern Ireland will be authorized by the MHRA and will bear a “UK only” label.

This means that medicinal products placed on the market in Northern Ireland will no longer need to be compliant with EU law.

These new measures will be implemented beginning January 1, 2025.

The TCA allows for future deviation from the current regulatory framework and it is not known if and/or when any deviations may occur, which may have an impact on development, manufacture, marketing authorization, commercial sales and distribution of pharmaceutical products.

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

To date, there have been several recent U.S.

To date, there have been several U.S.

congressional inquiries and proposed and enacted state and federal legislation and regulations designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient support programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.

For example, included in the Consolidated Appropriations Act of 2021 were several drug price reporting and transparency measures, such as a new requirement for certain Medicare plans to develop tools to display Medicare Part D prescription drug benefit information in real time and for group and health insurance issuers to report information on pharmacy benefit and drug costs to the Secretary of the Department of Health and Human Services (HHS) and the Secretaries of the Departments of Labor and the Treasury.

On February 2, 2022, the Biden administration signaled its continued commitment to the Cancer Moonshot initiative, which was initially launched in 2016.

In its announcement, the administration noted that its new goals under the initiative include addressing inequities in order to ensure broader access to cutting-edge cancer therapeutics and investing in a robust pipeline for new treatments.

Additionally, on August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (IRA), which, among other provisions, included several measures intended to lower the cost of prescription drugs and related healthcare reforms.

Specifically, the IRA authorizes and directs the HHS to set drug price caps for certain high-cost Medicare Part B and Part D qualified drugs, with the initial list of drugs to be selected by September 1, 2023, and the first year of maximum price applicability to begin in 2026.

Recently, this aspect of the IRA has been challenged in court on the basis that it may violate the Fifth and First Amendments to the U.S.

Constitution, and it is unclear how this litigation may affect the viability of the law moving forward.

The IRA further authorizes the HHS to penalize pharmaceutical manufacturers that increase the price of certain Medicare Part B and Part D drugs faster than the rate of inflation.

The IRA also creates significant changes to the Medicare Part D benefit design by capping Part D beneficiaries’ annual out-of-pocket spending at $2,000 beginning in 2025.

On October 14, 2022, President Biden issued an Executive Order on Lowering Prescription Drug Costs for Americans, which instructed the Secretary of HHS to consider whether to select for testing by the CMS Innovation Center new health care payment and delivery models that would lower drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid programs.

Most notably, the Inflation Reduction Act (IRA), which was signed into law on August 16, 2022, allows Medicare to:

beginning in 2026, establish a “maximum fair price” for a fixed number of pharmaceutical and biological products covered under Medicare Parts B and D following a price negotiation process with the Centers for Medicare and Medicaid Services (CMS);

and, beginning in 2023, penalize drug companies that raise prices for products covered under Medicare Parts B and D faster than inflation, among other reforms.

CMS has recently taken steps to implement the IRA;

first, on June 9, 2023, by releasing a list of 43 Medicare Part B products that had adjusted coinsurance rates based on the inflationary rebate provisions of the IRA for the time period of July 1, 2023 to September 30, 2023;

next, on June 30, 2023, issuing guidance detailing the requirements and parameters of the first round of price negotiations, to take place during 2023 and 2024, for products subject to the “maximum fair price” provision that would become effective in 2026;

and, on August 29, 2023, releasing the initial list of 10 drugs subject to price negotiations.

It is unclear how future regulatory actions to implement the IRA, as well as the outcome of pending litigation against the IRA, may affect our products and future profitability.

On October 14, 2022, President Biden issued an Executive Order on Lowering Prescription Drug Costs for Americans, which instructed the Secretary of the Department of Health and Human Services (HHS) to consider whether to select for testing by the CMS Innovation Center new health care payment and delivery models that would lower drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid programs.

The Executive Order further directed the Secretary of HHS to submit, within 90 days after the date of the Executive Order, a report regarding any models that may lead to lower cost-sharing for commonly used drugs and support value-based payment that promotes high-quality care.

Most recently, on February 14, 2023, the HHS issued a report in response to the October 14, 2022 Executive Order, which, among other things, selects three potential drug affordability and accessibility models to be tested by the CMS Innovation Center.

On February 14, 2023, the HHS issued a report in response to the October 14, 2022 Executive Order, which, among other things, selects three potential drug affordability and accessibility models to be tested by the CMS Innovation Center.

Specifically, the report addresses:

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The HHS has enforcement discretion for HIPAA, and any enforcement activity can result in financial liability and reputational harm, and responses to such enforcement activity can consume significant internal resources.

In addition, Washington state recently passed an the My Health My Data Act, which is focused on the collection of consumer health data.

In addition, states have shown an increased interest in protecting the privacy of health data.

Washington state passed the My Health My Data Act, which is focused on the collection of consumer health data.

The My Health My Data Act has a broader scope than HIPAA and includes a private right of action—depending on whether this law applies to us, there may be substantial regulatory action and litigation associated with this act once it becomes effective.

Furthermore, state attorneys general are authorized to bring civil actions seeking either injunctions or damages in response to violations that threaten the privacy of state residents pursuant to local state laws.

Following Washington, Nevada enacted Senate Bill 370.

Similar to the My Health My Data Act, Senate Bill 370 requires in-scope entities to comply with certain requirements regarding consumer health data.

Notably, Senate Bill 370 does not include a private right of action or apply to entities that are subject to HIPAA.

Connecticut also amended its comprehensive privacy law, the Connecticut Data Privacy Act, to impose obligations aimed at “consumer health data.” Furthermore, state attorneys general are authorized to bring civil actions seeking either injunctions or damages in response to violations that threaten the privacy of state residents pursuant to local state laws.

We cannot be sure how these regulations will be interpreted, enforced or applied to our operations.

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Personal data privacy remains an evolving landscape at both the domestic and international level, with new regulations coming into effect.

For example, the CCPA, which came into effect on January 1, 2020, and was recently amended and expanded by the California Privacy Rights Act (CPRA) as of January 1, 2023, provides California residents expanded privacy rights, including the right to request correction, access, and deletion of their personal information, the right to opt out of certain personal information sharing, and the right to receive detailed information about how their personal information is processed, including by California residents’ employers.

For example, the CCPA, which came into effect on January 1, 2020, and was amended and expanded by the California Privacy Rights Act (CPRA) as of January 1, 2023, provides California residents expanded privacy rights, including the right to request correction, access, and deletion of their personal information, the right to opt out of certain personal information sharing, and the right to receive detailed information about how their personal information is processed, including by California residents’ employers.

Additionally, the CCPA requires companies that process personal information of California residents to make disclosures to consumers about their data collection, use and sharing practices, allow consumers to opt out of certain data sharing with third parties, complete certain audits and assessments when processing higher risk data and provide a private right of action for data breaches, as described above.

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Failure to comply with the CCPA may result in significant civil penalties, injunctive relief, or statutory or actual damages as determined by the California Privacy Protection Agency and California Attorney General through its investigative authority.

Notably, comparable consumer privacy laws are set to take effect in 2023 in other states including the Virginia Consumer Data Protection Act (effective January 1, 2023), the Colorado Privacy Act and the Connecticut Data Privacy Act (both effective July 1, 2023), and the Utah Consumer Privacy Act (effective December 31, 2023).

Several other states have followed suit and passed similar legislation.

Notably, additional consumer privacy laws have or will take effect in 2023 in other states including the Virginia Consumer Data Protection Act (effective January 1, 2023), the Colorado Privacy Act and the Connecticut Data Privacy Act (both effective July 1, 2023), and the Utah Consumer Privacy Act (effective December 31, 2023).

Several other states have followed suit and passed similar legislation that will come into effect at various times in the coming few years.

Compliance with this new privacy legislation adds complexity and may require investment in additional resources for compliance programs, thus potentially result in additional costs and expense of resources to maintain compliance.

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The EU GDPR imposes additional compliance burdens, including by mandating burdensome documentation requirements and granting certain privacy rights to individuals to control how companies collect, use, disclose, retain and otherwise process information about them as well as changes to informed consent practices, the obligation to appoint data protection officers in certain circumstances, the obligation to notify relevant data supervisory authorities of personal data breaches without undue delay (and no later than 72 hours) after becoming aware of the personal data breach, and the requirement for more detailed notices for clinical trial subjects and investigators.

In addition, the EU GDPR increases the scrutiny of transfers of personal data from clinical trial sites and other third parties (e.g.

CROs) located in the EEA to the United States and other jurisdictions that the European Commission does not recognize as having “adequate” data protection laws.

In particular, on July 16, 2020, the Court of Justice of the EU (Court of Justice) in Schrems II invalidated the European Union-United States (EU-U.S.) Privacy Shield as a data transfer mechanism on the grounds that the EU-U.S.

Privacy Shield failed to offer adequate protections to EU personal data transferred to the United States.

While the Court of Justice upheld the use of other data transfer mechanisms, such as the Standard Contractual Clauses, the decision has led to some uncertainty regarding the use of such mechanisms for data transfers to the United States, and the Court of Justice made clear that reliance on Standard Contractual Clauses alone may not necessarily be sufficient in all circumstances.

Use of the data transfer mechanisms must now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals.

The European Data Protection Board issued additional guidance regarding international transfers which may require us to implement supplementary measures to further enhance the security of data transferred out of the EEA, which could increase our compliance costs, expose us to further regulatory scrutiny and liability, and adversely affect our business.

In October 2022, President Biden signed an Executive Order to facilitate a new Trans-Atlantic Data Privacy Framework (TADP Framework) which will act as a successor to the invalidated Privacy Shield.

Moreover, in December 2022, the European Commission released a draft adequacy decision for the United States, reflecting its belief that the Executive Order and TADP Framework addresses the transfer issues raised in Schrems II .

If the draft adequacy decision is approved and implemented, the agreement will facilitate the transatlantic flow of personal data and provide additional safeguards (in addition to Standard Contractual Clauses and Binding Corporate Rules) for companies transferring personal data from the EU to the United States.

However, before parties rely on the new TADP Framework, there are still legislative and regulatory steps that must be taken both in the United States and in the EU.

In the meantime, the European Commission published new versions of the Standard Contractual Clauses in June 2021 which place onerous obligations on the parties and the deadline for the implementation of these new Standard Contractual Clauses was December 27, 2022.

The EU GDPR imposes substantial fines for breaches and violations (up to the greater of €20 million or 4% of annual global turnover of the noncompliant company).

In addition, the EU GDPR allows data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations of the EU GDPR.

In addition, the EU GDPR increases the scrutiny of transfers of personal data from clinical trial sites and other third parties (e.g., CROs) located in the EEA to jurisdictions that the European Commission does not recognize as having “adequate” data protection laws.

After years of uncertainty following the July 16, 2020 decision of the Court of Justice of the European Union invalidating the EU-U.S.

Privacy Shield Framework, on July 10, 2023, the European Commission adopted its adequacy decision for the new EU-U.S.

Data Privacy Framework (DPF).

The DPF creates a path forward for personal data to be transferred from the EU to United States for U.S.

entities that have self-certified with the U.S.

Department of Commerce.

Further, following the end of the Brexit Transition Period (on December 31, 2020) the EU GDPR has been implemented in the UK (as the UK GDPR)—non-compliance with which may lead to similar compliance and operational costs as the EU GDPR with potential fines of up to the greater of £17 million or 4% of annual global turnover.

The UK GDPR sits alongside the UK Data Protection Act 2018 which implements certain derogations in the EU GDPR into English law.

The UK GDPR sits alongside the UK Data Protection Act 2018 which implements certain derogations in the EU GDPR into UK law.

Under the UK GDPR, companies not established in the UK but who process personal data in relation to the offering of goods or services to individuals in the UK, or to the monitoring of their behavior will be subject to the UK GDPR—the requirements of which are largely aligned with those under the EU GDPR.

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However, the UK adequacy decision will automatically expire in June 2025 unless the European Commission reassesses and renews/extends that decision, and remains under review by the European Commission during this period.

Further, on November 17, 2022, the UK Information Commissioner’s Office (ICO) published its proposed draft International Transfer Risk Assessment (TRA) and tool which is the UK equivalent of the EDPB Recommendations and provides for general advice on how to satisfy the Schrems II requirement to carry out a legal assessment for transfers of personal data subject to the UK GDPR.

Further, on November 17, 2022, the UK Information Commissioner’s Office (ICO) published its revised guidance on international transfers along with its own International Transfer Risk Assessment (TRA) and tool which is the UK equivalent of the EDPB Recommendations and provides for general advice on how to satisfy the Schrems II requirement to carry out a legal assessment for transfers of personal data subject to the UK GDPR.

The ICO has clarified that organizations may either follow the ICO’s TRA or EDPB approach when assessing international data transfers.

The UK’s ICO has also recently published:

The UK’s ICO has also published:

(i) its International Data Transfer Agreement to replace the old Standard Contractual Clauses for transfers to outside the UK;

and (ii) a “UK addendum” to the new EU Standard Contractual Clauses which amends the relevant provisions of such clauses to work in a UK context.

In June 2023, the United States and the UK reached a commitment to establish the UK Extension to the TADP Framework, that will create a “data bridge” between the two countries.

As a company, we are in the process of implementing a GDPR compliance program.

This is necessary to ensure we can initiate GDPR-compliant clinical trials in the EU.

Failure to do so would mean we either cannot initiate GDPR-compliant clinical trials in the EU or we may face regulatory investigations, significant fines and penalties, reputational damage or be required to change our business practices, all of which could adversely affect our business, financial condition and results of operations.

As noted above, there is an ongoing UK-U.S.

adequacy process, and in June 2023, the United States and the UK reached a commitment to establish the UK Extension to the DPF that will create a “data bridge” between the two countries.

As a company, we have invested, and expect to continue to invest, significant time and resources in our GDPR compliance program.

This is necessary to ensure we can initiate and maintain GDPR-compliant clinical trials in the EU.

Any failure or perceived failure by us with respect to GDPR compliance could mean we either cannot initiate additional GDPR-compliant clinical trials in the EU or we may face regulatory investigations, significant fines and penalties, reputational damage or be required to change our business practices, all of which could adversely affect our business, financial condition and results of operations.

Some countries also are considering or have passed legislation requiring local storage and processing of data, or similar requirements, which could increase the cost and complexity for conducting preclinical testing and clinical trials or delivering our future products, if any.

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For example, the global financial crisis of 2007-2008 caused extreme volatility and disruptions in the capital and credit markets.

Similarly, the volatility associated with the COVID-19 pandemic caused significant instability and disruptions in the capital and credit markets and, in recent months, the global economy has been impacted by increasing interest rates, inflation, the federal debt ceiling and budget, as well as the possibility of a recession or further economic downturn.

Similarly, the volatility associated with the COVID-19 pandemic caused significant instability and disruptions in the capital and credit markets and, in recent months, the global economy has been impacted by increasing interest rates and inflation, uncertainty with respect to the federal budget and debt ceiling, as well as the possibility of a recession or further economic downturn.

Moreover, there has been recent turmoil in the global banking system.

For example, on March 10, 2023, SVB, which was one of our banking partners, was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver, and on March 27, 2023, First-Citizens Bank & Trust Company assumed all of SVB’s customer deposits and certain other liabilities and acquired substantially all of SVB's loans and certain other assets from the FDIC.

For example, on March 10, 2023, Silicon Valley Bank (SVB), which was one of our banking partners, was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver, and on March 27, 2023, First-Citizens Bank & Trust Company assumed all of SVB’s customer deposits and certain other liabilities and acquired substantially all of SVB’s loans and certain other assets from the FDIC.

While we only had a minimal amount of our cash directly at SVB and, since that date, the FDIC has stated that all depositors of SVB will be made whole, and First-Citizens Bank & Trust Company has assumed our deposits from SVB, there is no guarantee that the federal government would guarantee all depositors as they did with SVB depositors in the event of further bank closures and continued instability in the global banking system may adversely impact our business and financial condition.

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If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, then our ability to access our cash, cash equivalents and marketable securities may be threatened, which could have a material adverse effect on our business and financial condition.

Furthermore, the capital and credit markets may be adversely affected by the ongoing war in Ukraine, and the possibility of a wider European or global conflict, global sanctions imposed in response thereto or an energy crisis.

Furthermore, the capital and credit markets may be adversely affected by regional conflicts around the world and the possibility of a wider global conflict, global sanctions imposed in response to regional conflicts or an energy crisis.

A severe or prolonged economic downturn, such as the global financial crisis, could result in a variety of risks to our business, including a decrease in the demand for our drug candidates and in our ability to raise additional capital when needed on acceptable terms, if at all.

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• regulatory developments affecting our drug candidates or those of our competitors;

• changes in general market and economic conditions, including increasing interest rates, inflation, the federal debt ceiling and budget, instability in the global banking system and the possibility of a recession or further economic downturn.

• changes in general market and economic conditions, including increasing interest rates, inflation, uncertainty with respect to the federal budget and debt ceiling, instability in the global banking system and the possibility of a recession or further economic downturn.

If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially.

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• changes in accounting principles;

• terrorist acts, acts of war or periods of widespread civil unrest, including the increasingly volatile global economic conditions resulting from the ongoing war in Ukraine;

• cybersecurity events;

• terrorist acts, acts of war or periods of widespread civil unrest, including the increasingly volatile global economic conditions resulting from regional conflicts around the world;

• effects of public health crises, pandemics and epidemics;

• natural disasters and other calamities;

• general economic, industry and market conditions, including increasing interest rates, inflation, the federal debt ceiling and budget, instability in the global banking system and the possibility of a recession or further economic downturn.

• general economic, industry and market conditions, including increasing interest rates, inflation, uncertainty with respect to the federal budget and debt ceiling, instability in the global banking system and the possibility of a recession or further economic downturn.

In addition, the stock market in general, and the markets for pharmaceutical, biopharmaceutical and biotechnology stocks in particular, have experienced extreme price and volume fluctuations that often have been unrelated or disproportionate to the operating performance of the issuer.

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In June 2022, we issued and sold 2,000,000 shares of common stock under the Equity Distribution Agreement to Piper Sandler for net proceeds of approximately $19.3 million, after deducting offering commissions and expenses paid by us.

As of May 31, 2023, we had $130.0 million of common stock remaining available for sale pursuant to the Equity Distribution Agreement.

As of August 31, 2023, we had $130.0 million of common stock remaining available for sale pursuant to the Equity Distribution Agreement.

Sales of our common stock under the Equity Distribution Agreement with Piper Sandler could be subject to business, economic or competitive uncertainties and contingencies, many of which may be beyond our control, and which could cause actual results from the sale of our common stock to differ materially from expectations.

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however, any exercise would increase the number of shares eligible for future resale in the public market and result in substantial dilution to our stockholders.

As of May 31, 2023, we have issued pre-funded warrants to purchase a total of 6,814,920 shares of our common stock, of which 6,097,560 were outstanding as of June 30, 2023.

As of August 31, 2023, we have issued pre-funded warrants to purchase a total of 6,814,920 shares of our common stock, of which 6,097,560 were outstanding as of August 31, 2023.

Each pre-funded warrant is exercisable for $0.001 per share of common stock underlying such pre-funded warrant, which may be paid by way of a cashless exercise, meaning that the holder may not pay a cash purchase price upon exercise, but instead would receive upon such exercise the net number of shares of common stock determined according to the formula set forth in the pre-funded warrant.

85 unchanged sentences

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What changed 10-Q

Item 1A. Risk Factors