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The principal risks and uncertainties affecting our business include, but are not limited to, the following:
−Removed: • We have incurred losses on an as-reported basis for the last several years, and we may not be able to generate sufficient revenue to achieve and maintain profitability.
−Removed: • Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
+Added: • Our partners may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, which could have an adverse impact on our business and could cause the price of our common stock to decline.
• Our commercial success depends on the quality of our antibody discovery platform and technological capabilities and their acceptance by new and existing partners in our market.
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• If we cannot maintain and expand current partnerships and enter into new partnerships, our future operating results would be adversely affected.
−Removed: • Our partners may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, which could have an adverse impact on our business and could cause the price of our common stock to decline.
+Added: • We have incurred losses on an as-reported basis for the last several years, and we may not be able to generate sufficient revenue to achieve and maintain profitability.
+Added: • Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
• The life sciences and biotech platform technology market is highly competitive, and if we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue, or sustain profitability.
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Risks Related to Our Business
−Removed: We have incurred losses on an as-reported basis for the last three years, and we may not be able to generate sufficient revenue to achieve and maintain profitability.
−Removed: Historically, we have incurred net losses, as reported on a combined basis.
−Removed: For the years ended December 31, 2023 and 2022, our revenue was $34.2 million and $59.1 million, respectively.
−Removed: For the years ended December 31, 2023 and 2022, our net loss was $50.6 million and $22.3 million, respectively.
−Removed: We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will increase substantially as we invest in research and development activities to improve our OmniAb technology platform, market and sell our technologies to existing and new partners, add operational, financial and management information systems and personnel to support our operations and incur additional costs associated with operating as a public company.
−Removed: Our expenses could increase beyond expectations for a variety of reasons, including as a result of our growth strategy and the expansion of our operations.
−Removed: We will need to generate significant additional revenue to achieve and sustain profitability and even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
−Removed: We may never be able to generate sufficient revenue to achieve or sustain profitability and our recent and historical growth should not be considered indicative of our future performance.
−Removed: Our failure to become and remain profitable may have an adverse effect on the value of our company and could impair our ability to raise capital, expand our business and maintain our research and development efforts.
−Removed: A decline in the value of our company could also cause you to lose all or part of your investment.
−Removed: Our revenue has fluctuated from period to period, and our revenue for any historical period may not be indicative of results that may be expected for any future period.
−Removed: Service and license revenue are generated by research activities that we perform for our partners and technology access fees, the timing and nature of which are dictated by the commencement of discovery campaigns selected by our partners.
−Removed: We also generate milestone payments upon the achievement of development milestones by our partners with respect to the antibodies discovered using our platform and royalties based on the net sales of any products commercialized by our partners.
−Removed: As a result, we will be prone to fluctuations in our revenue depending on the timing of our entry into license agreements with our partners, our partners initiating discovery programs, and our partners achieving development milestones or commercial sales with respect to therapeutic candidates utilizing antibodies discovered using our platform.
−Removed: The timing and likelihood of payments to us under these agreements is dependent on our partners’ successful utilization of the antibodies discovered using our platform, which is outside of our control.
−Removed: Because of these factors, our revenue could vary materially from quarter to quarter from our forecasts.
−Removed: Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
−Removed: Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results.
−Removed: These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to:
−Removed: • the level of demand for our technology platform and solutions, which may vary significantly;
−Removed: • the timing and cost of, and level of investment in, research, development and commercialization activities relating to our platform and technology and any of our internal development programs, which may change from time to time;
−Removed: • the start and completion of programs in which our platform is utilized;
−Removed: • the timing of and the degree to which our partners successfully develop, secure marketing approvals for and commercialize any therapeutic candidates based on the antibodies discovered using our platform;
−Removed: • the introduction of new technologies, platform features or software, by us or others in our industry;
−Removed: • expenditures that we may incur to acquire, develop or commercialize additional platform technologies;
−Removed: • the degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners;
−Removed: • the level of demand for any products commercialized by our partners, which may vary significantly;
−Removed: • natural disasters, outbreaks of disease or public health crises;
−Removed: • the timing and nature of any future acquisitions or strategic partnerships;
−Removed: • future accounting pronouncements or changes in our accounting policies;
−Removed: • changes in general market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk.
−Removed: The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results and revenues.
−Removed: This variability and unpredictability could result in our failing to meet the expectations of industry or financial analysts or investors for any period.
−Removed: If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially.
−Removed: Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings guidance we may provide.
+Added: Biopharmaceutical development is inherently uncertain, and it is possible that none, or very few, of the therapeutic candidates discovered using our platform that are further developed by our partners will become viable commercial products, on a timely basis or at all.
+Added: We use our platform to offer antibody drug-discovery programs to partners who are engaged in drug research and development.
+Added: These partners include pharmaceutical and biotechnology companies of all sizes.
+Added: While we receive upfront payments generated through our receipt of service revenue and technology access fees, we expect that the vast majority of the economic value of the agreements we enter into with our partners is in the downstream payments that we may receive upon achievement of development milestones and royalties on sales of any approved products.
+Added: As a result, our future growth is dependent on the ability of our partners to successfully develop and commercialize therapies based on antibodies discovered using our platform.
+Added: Due to our reliance on our partners, the risks relating to product development, regulatory clearance, authorization or approval and commercialization apply to us derivatively through the activities of our partners.
+Added: While we believe our platform is capable of identifying high-quality antibodies, there can be no assurance that our partners will successfully develop, secure marketing approvals for and commercialize any therapeutic candidates based on the antibodies discovered using our platform.
+Added: As a result, we may not realize the intended benefits of our partnerships.
+Added: Neither we nor our partners are permitted to market any therapeutic candidate until we or they receive regulatory approval of a New Drug Application (“NDA”) or Biologics License Application (“BLA”) from the FDA in the United States or until we or they receive regulatory approval from foreign regulatory authorities in other countries.
+Added: Prior to obtaining such approval to commercialize a therapeutic candidate in the United States or abroad, our partners must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA, EMA or comparable foreign regulatory agencies, that such therapeutic candidates are safe and effective, or in the case of biologics in the U.S., safe, pure, and potent, for their intended uses.
+Added: Results from nonclinical studies and clinical trials can be interpreted in different ways.
+Added: Even if we or our partners believe the nonclinical or clinical data for any therapeutic candidates are promising, such data may not be sufficient to support approval by the FDA and other comparable regulatory authorities.
+Added: The time required to obtain approval by the FDA and comparable foreign authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities.
+Added: In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a therapeutic candidate’s clinical development and may vary among jurisdictions.
+Added: If we or our partners are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, development plans may be impacted.
+Added: The FDA or comparable foreign regulatory bodies can delay, limit or deny approval of therapeutic candidates or could require our partners to conduct additional nonclinical or clinical testing or abandon a program for a number of reasons.
+Added: Due to the uncertain, time-consuming and costly clinical development and regulatory approval process, our partners may not successfully develop any therapeutic candidates with the antibodies discovered using our platform, or our partners may choose to discontinue the development of these therapeutic candidates for a variety of reasons, including due to safety, risk versus benefit profile, exclusivity, competitive landscape, commercialization potential, production limitations or prioritization of their resources.
+Added: It is possible that substantially all of these therapeutic candidates will never receive regulatory approval and, even if approved, such therapeutic candidates may never be successfully commercialized.
+Added: In addition, even if these therapeutic candidates receive regulatory approval in the United States, our partners may never obtain approval or commercialize such therapeutic candidates outside of the United States, which would limit their full market potential and therefore our ability to realize their potential downstream value.
+Added: Furthermore, approved therapeutic candidates may not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, in which case revenue generated from their sales would be limited.
+Added: Likewise, our partners have to make decisions about which clinical stage and preclinical therapeutic candidates to develop and advance, and our partners may not have the resources to invest in all of the therapeutic candidates that contain antibodies discovered using our platform, or clinical data and other development considerations may not support the advancement of one or more therapeutic candidates.
+Added: Decision-making about which therapeutic candidates to prioritize involves inherent uncertainty, and our partners’ development program decision-making and resource prioritization decisions, which are outside of our control, may adversely affect the potential value of those partnerships.
+Added: Additionally, subject to its contractual obligations to us, if one more of our partners is involved in a business combination, the partner might deemphasize or terminate the development or commercialization of any drug candidate that utilizes an OmniAb-derived antibody.
+Added: If one of our strategic partners terminates its agreement with us, we may find it more difficult to attract new partners.
+Added: Our partners’ failure to effectively advance, market and sell suitable therapeutic candidates with the antibodies that are discovered using our platform could have a material adverse effect on our business, financial condition, results of operations and prospects, and cause the market price of our common stock to decline.
+Added: In addition to the inherent uncertainty in drug development addresses above, our ability to forecast our future revenues may be limited.
+Added: Our partners may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, which could have an adverse impact on our business and could cause the price of our common stock to decline.
+Added: From time to time, we may make public statements regarding the expected timing of certain milestones and key events, as well as regarding developments and milestones under our partnerships, to the extent that our partners have publicly disclosed such information or permit us to make such disclosures.
+Added: Our partners may from time to time make statements about their goals and expectations for partnerships with us.
+Added: The actual timing of these events can vary dramatically due to a number of factors such as delays or failures in our or our current and future partners’ discovery and development programs, the amount of time, effort, and resources committed by us and our current and future partners, and the numerous uncertainties inherent in the development of therapeutics.
+Added: As a result, there can be no assurance that our partners’ current and future programs will advance or be completed in the time frames we or they expect.
+Added: If our partners fail to achieve one or more of these milestones or other key events as planned, our business could be materially and adversely affected and the price of our common stock could decline.
+Added: The failure of our partners to meet their contractual obligations to us could adversely affect our business.
+Added: Our reliance on our partners poses a number of additional risks, including the risk that they may not perform their contractual obligations to us, in compliance with applicable legal or contractual requirements, in a timely manner or at all;
+Added: they may not maintain the confidentiality of our proprietary information;
+Added: and disagreements or disputes could arise that could cause delays in, or termination of, the research, development or commercialization of products using our antibodies or result in litigation or arbitration.
+Added: In addition, certain of our partners are large, multinational organizations that run many programs concurrently, and we are dependent on their ability to accurately track and make milestone payments to us pursuant to the terms of our agreements with them.
+Added: Any failure by them to inform us when milestones are reached and make related payments to us could adversely affect our results of operations.
+Added: Moreover, some of our partners are located in markets subject to political and social risk, corruption, infrastructure problems and natural disasters, and are often subject to country-specific privacy and data security risk, as well as burdensome legal and regulatory requirements.
+Added: Any of these factors could adversely impact their financial condition and results of operations, which could impair their ability to meet their contractual obligations to us, which may have a material adverse effect on our business, financial condition and results of operations.
+Added: Our partners have significant discretion in determining when and whether to make announcements, if any, about the status of our partnerships or programs, including about clinical developments and timelines for advancement, and the price of our common stock may decline as a result of announcements of unexpected results or developments.
+Added: Our partners have significant discretion in determining when and whether to make announcements about the status of our partnerships, including about preclinical and clinical developments and timelines for advancing antibodies discovered using our platform.
+Added: Based on contractual obligations, we may not be permitted to disclose the development status and progress of individual therapeutic candidates of our partners, unless and until those partners do so first.
+Added: Our partners may wish to report such information more or less frequently than we desire to or may not wish to report such information at all, in which case we would not report that information either.
+Added: In addition, if partners choose to announce a collaboration with us, there is no guarantee that we will recognize revenue in that quarter or even the following quarter, as fees are not necessarily payable to us until our partner begins discovery activities.
+Added: The price of our common stock may decline as a result of the public announcement of unexpected results or developments in our partnerships, or as a result of our partners withholding such information.
Our commercial success depends on the quality of our antibody discovery platform and technological capabilities and their acceptance by new and existing partners in our market.
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Our stock price may also decline as a result of negative clinical trial results, including adverse safety events involving any drug candidate that is subject to one of our partnerships.
+Added: If we cannot maintain and expand current partnerships and enter into new partnerships, our future operating results would be adversely affected.
+Added: We primarily focus our efforts on the discovery of antibodies for our partners, who can select a target and define the antibody properties needed for therapeutic development or use our technology directly in their own labs.
+Added: As a result, our success depends on our ability to maintain and expand the number and scope of our partnerships.
+Added: Many factors may impact the success of these partnerships, including our ability to perform our obligations, our partners’ satisfaction with our solutions and technologies, our partners’ ability to successfully develop, secure regulatory approval for and commercialize therapeutic candidates using antibodies discovered using our platform, our partners’ internal priorities (including fluctuations in research and developments budgets), our partners’ resource allocation decisions and competitive opportunities, disagreements with partners, the costs required of either party to the partnerships and related financing needs, and operating, legal and other risks in any relevant jurisdiction.
+Added: Our existing partners may cease to use our technologies depending on their own technological developments, availability of other competing technologies and internal decisions regarding allocation of time and resources to the discovery and development of therapeutic candidates, over which we have no control.
+Added: Our existing and future partners may have limited bandwidth to initiate new programs, which could limit their adoption or scale of application of our technologies.
+Added: We engage in conversations with companies regarding potential partnerships on an ongoing basis.
+Added: These conversations may not result in a commercial agreement.
+Added: Even if an agreement is reached, the resulting relationship may not be successful, including due to our inability to discover any usable antibodies for the selected targets or the antibodies that we do discover may not be successfully developed or commercialized by our partners.
+Added: In such circumstances, we would not generate any substantial revenues from such a partnership in the form of technology access fees, service fees, milestone payments, royalties or otherwise.
+Added: Speculation in the industry about our existing or potential partnerships may be a catalyst for adverse speculation about us, or our platform, which can adversely affect our reputation and our business.
+Added: We cannot assure investors that we will be able to maintain or expand our existing partnerships or that our technologies will achieve adequate market adoption among new partners.
+Added: Any failure to increase penetration in our existing markets or new markets would adversely affect our ability to improve our operating results.
We may need to raise additional capital to fund our existing operations and achieve our goals.
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For example, in December 2023, we entered into an Open Market Sale Agreement (the “Sales Agreement”), with Jefferies LLC (the “Sales Agent”) under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $100.0 million through the Sales Agent (the “ATM Offering”).
−Removed: Sales of our common stock made pursuant to the Sales Agreement, if any, will be made under our shelf registration statement on Form S‐3 which was filed on December 8, 2023 and declared effective by the SEC on December 18, 2023.
+Added: Sales of our common stock made pursuant to the Sales Agreement, are made under our shelf registration statement on Form S‐3 which was filed on December 8, 2023 and declared effective by the SEC on December 18, 2023.
However, there can be no assurance that the Agent will be successful in consummating future sales based on prevailing market conditions or in the quantities or at the prices that we deem appropriate.
In addition, the Sales Agreement may be terminated by the Sales Agent or us at any time.
−Removed: For the year ended December 31, 2023, we did not sell any shares of our common stock under the ATM Offering.
+Added: For the year ended December 31, 2024, we sold 2,771,192 shares of our common stock under the ATM Offering, for net proceeds of $11.4 million, after deducting commissions.
In any event, we may consider raising additional capital in the future to expand our business, to pursue strategic investments or acquisitions, to take advantage of favorable market conditions or financing opportunities or for other reasons, even if we believe we have sufficient funds for our current or future operating plans.
−Removed: Our future capital requirements will depend on many factors, including, but not limited to:
−Removed: • our ability to achieve revenue growth, which is dependent on ability of our partners to successfully develop and commercialize therapies based on antibodies discovered using our platform;
−Removed: • the costs of expanding our operations, including our business development and marketing efforts;
−Removed: • our rate of progress in selling access to our platform and marketing activities associated therewith;
−Removed: • our rate of progress in, and cost of research and development activities associated with, our platform technologies and our internal development programs to the extent we pursue any such programs;
−Removed: • the effect of competing technological and market developments;
−Removed: • the impact of any pandemic or epidemic diseases on global social, political and economic conditions;
−Removed: • the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patents and other intellectual property and proprietary rights;
−Removed: • the costs associated with any technologies that we may in-license or acquire.
+Added: Our future capital requirements will depend on many factors, including, but not limited to those set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”
The various ways we could raise additional capital carry potential risks.
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If we are unable to obtain adequate financing, if we require it, when needed or on terms acceptable to us, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and could have a material adverse effect on our business, financial condition, results of operations and prospects.
−Removed: If we cannot maintain and expand current partnerships and enter into new partnerships, our future operating results would be adversely affected.
−Removed: We primarily focus our efforts on the discovery of antibodies for our partners, who can select a target and define the antibody properties needed for therapeutic development or use our technology directly in their own labs.
−Removed: As a result, our success depends on our ability to maintain and expand the number and scope of our partnerships.
−Removed: Many factors may impact the success of these partnerships, including our ability to perform our obligations, our partners’ satisfaction with our solutions and technologies, our partners’ ability to successfully develop, secure regulatory approval for and commercialize therapeutic candidates using antibodies discovered using our platform, our partners’ internal priorities (including fluctuations in research and developments budgets), our partners’ resource allocation decisions and competitive opportunities, disagreements with partners, the costs required of either party to the partnerships and related financing needs, and operating, legal and other risks in any relevant jurisdiction.
−Removed: Our existing partners may cease to use our technologies depending on their own technological developments, availability of other competing technologies and internal decisions regarding allocation of time and resources to the discovery and development of therapeutic candidates, over which we have no control.
−Removed: Our existing and future partners may have limited bandwidth to initiate new programs, which could limit their adoption or scale of application of our technologies.
−Removed: We engage in conversations with companies regarding potential partnerships on an ongoing basis.
−Removed: These conversations may not result in a commercial agreement.
−Removed: Even if an agreement is reached, the resulting relationship may not be successful, including due to our inability to discover any usable antibodies for the selected targets or the antibodies that we do discover may not be successfully developed or commercialized by our partners.
−Removed: In such circumstances, we would not generate any substantial revenues from such a partnership in the form of technology access fees, service fees, milestone payments, royalties or otherwise.
−Removed: Speculation in the industry about our existing or potential partnerships may be a catalyst for adverse speculation about us, or our platform, which can adversely affect our reputation and our business.
−Removed: We cannot assure investors that we will be able to maintain or expand our existing partnerships or that our technologies will achieve adequate market adoption among new partners.
−Removed: Any failure to increase penetration in our existing markets or new markets would adversely affect our ability to improve our operating results.
In recent periods, we have depended on a limited number of partners for our revenue, the loss of any of which could have an adverse impact on our business.
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As a result, if we fail to maintain our relationships with these partners or if these partners discontinue their programs, our future results of operations could be materially and adversely affected.
−Removed: Biopharmaceutical development is inherently uncertain, and it is possible that none of the therapeutic candidates discovered using our platform that are further developed by our partners will become viable commercial products, on a timely basis or at all.
−Removed: We use our platform to offer antibody drug-discovery programs to partners who are engaged in drug research and development.
−Removed: These partners include pharmaceutical and biotechnology companies of all sizes.
−Removed: While we receive upfront payments generated through our receipt of service revenue and technology access fees, we expect that the vast majority of the economic value of the agreements we enter into with our partners is in the downstream payments that we may receive upon achievement of development milestones and royalties on sales of any approved products.
−Removed: As a result, our future growth is dependent on the ability of our partners to successfully develop and commercialize therapies based on antibodies discovered using our platform.
−Removed: Due to our reliance on our partners, the risks relating to product development, regulatory clearance, authorization or approval and commercialization apply to us derivatively through the activities of our partners.
−Removed: While we believe our platform is capable of identifying high quality antibodies, there can be no assurance that our partners will successfully develop, secure marketing approvals for and commercialize any therapeutic candidates based on the antibodies discovered using our platform.
−Removed: As a result, we may not realize the intended benefits of our partnerships.
−Removed: Neither we nor our partners are permitted to market any therapeutic candidate until we or they receive regulatory approval of a New Drug Application (“NDA”) or Biologics License Application (“BLA”) from the FDA in the United States or until we or they receive regulatory approval from foreign regulatory authorities in other countries.
−Removed: The time required to obtain approval by the FDA and comparable foreign authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities.
−Removed: In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a therapeutic candidate’s clinical development and may vary among jurisdictions.
−Removed: For instance, the regulatory landscape related to clinical trials in the European Union (the “EU”) recently evolved.
−Removed: The EU Clinical Trials Regulation (“CTR”) which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022.
−Removed: While the Clinical Trials Directive required a separate clinical trial application (“CTA”) to be submitted in each member state in which the clinical trial takes place, to both the competent national health authority and an independent ethics committee, the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials.
−Removed: The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each member state, leading to a single decision per member state.
−Removed: The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states concerned, and a separate assessment by each member state with respect to specific requirements related to its own territory, including ethics rules.
−Removed: Each member state’s decision is communicated to the sponsor via the centralized EU portal.
−Removed: Once the CTA is approved, clinical study development may proceed.
−Removed: The CTR foresees a three-year transition period.
−Removed: The extent to which ongoing and new clinical trials will be governed by the CTR varies.
−Removed: Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted for the application of the EU Clinical Trials Directive remain governed by said Directive until January 31, 2025.
−Removed: After this date, all clinical trials (including those which are ongoing) will become subject to the provisions of the CTR.
−Removed: It is currently unclear to what extent the United Kingdom (“UK”) will seek to align its regulations with the EU.
−Removed: The UK regulatory framework in relation to clinical trials is derived from the EU Clinical Trials Directive (as implemented into UK law, through secondary legislation).
−Removed: On January 17, 2022, the UK Medicines and Healthcare products Regulatory Agency (“MHRA”) launched an eight-week consultation on reframing the UK legislation for clinical trials which aimed to streamline clinical trials approvals, enable innovation, enhance clinical trials transparency, enable greater risk proportionality, and promote patient and public involvement in clinical trials.
−Removed: The MHRA published its consultation outcome on March 21, 2023 in which it confirmed that it would update the existing legislation.
−Removed: The resulting legislative changes will ultimately determine the extent to which the UK regulations align with the CTR.
−Removed: Under the terms of the Protocol on Ireland/Northern Ireland, provisions of the CTR which relate to the manufacture and import of investigational medicinal products and auxiliary medicinal products apply in Northern Ireland.
−Removed: A decision by the UK Government not to closely align its regulations with the new approach that has been adopted in the EU may have an effect on the cost of conducting clinical trials in the UK as opposed to other countries.
−Removed: Further, the EU pharmaceutical legislation is currently undergoing a complete review process, in the context of the Pharmaceutical Strategy for Europe initiative, launched by the European Commission in November 2020.
−Removed: The European Commission’s proposal for revision of several legislative instruments related to medicinal products (potentially reducing the duration of regulatory data protection, revising the eligibility for expedited pathways, etc.) was published on April 26, 2023.
−Removed: The proposed revisions remain to be agreed and adopted by the European Parliament and European Council and the proposals may therefore be substantially revised before adoption, which is not anticipated before early 2026.
−Removed: The revisions may, however, have a significant impact on the biopharmaceutical industry in the long term.
−Removed: If we or our partners are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, development plans may be impacted.
−Removed: Prior to obtaining approval to commercialize a therapeutic candidate in the United States or abroad, our partners must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA, EMA or comparable foreign regulatory agencies, that such therapeutic candidates are safe and effective, or in the case of biologics in the U.S., safe, pure, and potent, for their intended uses.
−Removed: Results from nonclinical studies and clinical trials can be interpreted in different ways.
−Removed: Even if we or our partners believe the nonclinical or clinical data for any therapeutic candidates are promising, such data may not be sufficient to support approval by the FDA and other comparable regulatory authorities.
−Removed: The FDA or comparable foreign regulatory bodies can delay, limit or deny approval of therapeutic candidates or could require our partners to conduct additional nonclinical or clinical testing or abandon a program for a number of reasons.
−Removed: Due to the uncertain, time-consuming and costly clinical development and regulatory approval process, our partners may not successfully develop any therapeutic candidates with the antibodies discovered using our platform, or our partners may choose to discontinue the development of these therapeutic candidates for a variety of reasons, including due to safety, risk versus benefit profile, exclusivity, competitive landscape, commercialization potential, production limitations or prioritization of their resources.
−Removed: It is possible that substantially all of these therapeutic candidates will never receive regulatory approval and, even if approved, such therapeutic candidates may never be successfully commercialized.
−Removed: In addition, even if these therapeutic candidates receive regulatory approval in the United States, our partners may never obtain approval or commercialize such therapeutic candidates outside of the United States, which would limit their full market potential and therefore our ability to realize their potential downstream value.
−Removed: Furthermore, approved therapeutic candidates may not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, in which case revenue generated from their sales would be limited.
−Removed: Likewise, our partners have to make decisions about which clinical stage and preclinical therapeutic candidates to develop and advance, and our partners may not have the resources to invest in all of the therapeutic candidates that contain antibodies discovered using our platform, or clinical data and other development considerations may not support the advancement of one or more therapeutic candidates.
−Removed: Decision-making about which therapeutic candidates to prioritize involves inherent uncertainty, and our partners’ development program decision-making and resource prioritization decisions, which are outside of our control, may adversely affect the potential value of those partnerships.
−Removed: Additionally, subject to its contractual obligations to us, if one more of our partners is involved in a business combination, the partner might deemphasize or terminate the development or commercialization of any drug candidate that utilizes an OmniAb-derived antibody.
−Removed: If one of our strategic partners terminates its agreement with us, we may find it more difficult to attract new partners.
−Removed: We and our partners are also subject to industry-wide FDA and other regulatory risk.
−Removed: The number of BLAs and NDAs approved by the FDA varies significantly over time and if there were to be an extended reduction in the number of BLAs or NDAs approved by the FDA, the industry would contract and our business would be materially harmed.
−Removed: Our partners’ failure to effectively advance, market and sell suitable therapeutic candidates with the antibodies that discovered using our platform could have a material adverse effect on our business, financial condition, results of operations and prospects, and cause the market price of our common stock to decline.
−Removed: In addition to the inherent uncertainty in drug development addresses above, our ability to forecast our future revenues may be limited.
−Removed: The failure of our partners to meet their contractual obligations to us could adversely affect our business.
−Removed: Our reliance on our partners poses a number of additional risks, including the risk that they may not perform their contractual obligations to us, in compliance with applicable legal or contractual requirements, in a timely manner or at all;
−Removed: they may not maintain the confidentiality of our proprietary information;
−Removed: and disagreements or disputes could arise that could cause delays in, or termination of, the research, development or commercialization of products using our antibodies or result in litigation or arbitration.
−Removed: In addition, certain of our partners are large, multinational organizations that run many programs concurrently, and we are dependent on their ability to accurately track and make milestone payments to us pursuant to the terms of our agreements with them.
−Removed: Any failure by them to inform us when milestones are reached and make related payments to us could adversely affect our results of operations.
−Removed: Moreover, some of our partners are located in markets subject to political and social risk, corruption, infrastructure problems and natural disasters, and are often subject to country-specific privacy and data security risk, as well as burdensome legal and regulatory requirements.
−Removed: Any of these factors could adversely impact their financial condition and results of operations, which could impair their ability to meet their contractual obligations to us, which may have a material adverse effect on our business, financial condition and results of operations.
−Removed: Our partners have significant discretion in determining when and whether to make announcements, if any, about the status of our partnerships, including about clinical developments and timelines for advancing collaborative programs, and the price of our common stock may decline as a result of announcements of unexpected results or developments.
−Removed: Our partners have significant discretion in determining when and whether to make announcements about the status of our partnerships, including about preclinical and clinical developments and timelines for advancing antibodies discovered using our platform.
−Removed: Based on contractual obligations, we may not be permitted to disclose the development status and progress of individual therapeutic candidates of our partners, unless and until those partners do so first.
−Removed: Our partners may wish to report such information more or less frequently than we desire to or may not wish to report such information at all, in which case we would not report that information either.
−Removed: In addition, if partners choose to announce a collaboration with us, there is no guarantee that we will recognize revenue in that quarter or even the following quarter, as fees are not necessarily payable to us until our partner begins discovery activities.
−Removed: The price of our common stock may decline as a result of the public announcement of unexpected results or developments in our partnerships, or as a result of our partners withholding such information.
−Removed: Our partners may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, which could have an adverse impact on our business and could cause the price of our common stock to decline.
−Removed: From time to time, we may make public statements regarding the expected timing of certain milestones and key events, as well as regarding developments and milestones under our partnerships, to the extent that our partners have publicly disclosed such information or permit us to make such disclosures.
−Removed: Our partners may from time to time make statements about their goals and expectations for partnerships with us.
−Removed: The actual timing of these events can vary dramatically due to a number of factors such as delays or failures in our or our current and future partners’ discovery and development programs, the amount of time, effort, and resources committed by us and our current and future partners, and the numerous uncertainties inherent in the development of therapeutics.
−Removed: As a result, there can be no assurance that our partners’ current and future programs will advance or be completed in the time frames we or they expect.
−Removed: If our partners fail to achieve one or more of these milestones or other key events as planned, our business could be materially and adversely affected and the price of our common stock could decline.
+Added: Our revenue has fluctuated from period to period, and our revenue for any historical period may not be indicative of results that may be expected for any future period.
+Added: Service and license revenue are generated by research activities that we perform for our partners and technology access fees, the timing and nature of which are dictated by the commencement of discovery campaigns selected by our partners.
+Added: We also generate milestone payments upon the achievement of development milestones by our partners with respect to the antibodies discovered using our platform and royalties based on the net sales of any products commercialized by our partners.
+Added: As a result, we will be prone to fluctuations in our revenue depending on the timing of our entry into license agreements with our partners, our partners initiating discovery programs, and our partners achieving development milestones or commercial sales with respect to therapeutic candidates utilizing antibodies discovered using our platform.
+Added: The timing and likelihood of payments to us under these agreements is dependent on our partners’ successful utilization of the antibodies discovered using our platform, which is outside of our control.
+Added: Because of these factors, our revenue could vary materially from quarter to quarter from our forecasts.
+Added: We have incurred losses on an as-reported basis for the last several years, and we may not be able to generate sufficient revenue to achieve and maintain profitability.
+Added: Historically, we have incurred net losses, as reported on a consolidated basis.
+Added: For the years ended December 31, 2024 and 2023, our revenue was $26.4 million and $34.2 million, respectively.
+Added: For the years ended December 31, 2024 and 2023, our net loss was $62.0 million and $50.6 million, respectively.
+Added: We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will increase substantially as we invest in research and development activities to improve our OmniAb technology platform, market and sell our technologies to existing and new partners, add operational, financial and management information systems and personnel to support our operations and incur costs associated with operating as a public company.
+Added: Our expenses could increase beyond expectations for a variety of reasons, including as a result of our growth strategy and the expansion of our operations.
+Added: We will need to generate significant additional revenue to achieve and sustain profitability and even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
+Added: We may never be able to generate sufficient revenue to achieve or sustain profitability and our recent and historical growth should not be considered indicative of our future performance.
+Added: Our failure to become and remain profitable may have an adverse effect on the value of our company and could impair our ability to raise capital, expand our business and maintain our research and development efforts.
+Added: A decline in the value of our company could also cause you to lose all or part of your investment.
+Added: Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
+Added: Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results.
+Added: These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to:
+Added: • the level of demand for our technology platform and solutions, which may vary significantly;
+Added: • the timing and cost of, and level of investment in, research, development and commercialization activities relating to our platform and technology and any of our internal development programs, which may change from time to time;
+Added: • the start and completion of programs in which our platform is utilized;
+Added: • the timing of and the degree to which our partners successfully develop, secure marketing approvals for and commercialize any therapeutic candidates based on the antibodies discovered using our platform;
+Added: • the introduction of new technologies, platform features or software, by us or others in our industry;
+Added: • expenditures that we may incur to acquire, develop or commercialize additional platform technologies;
+Added: • the degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners;
+Added: • the level of demand for any products commercialized by our partners, which may vary significantly;
+Added: • natural disasters, outbreaks of disease or public health crises;
+Added: • the timing and nature of any future acquisitions or strategic partnerships;
+Added: • future accounting pronouncements or changes in our accounting policies;
+Added: • changes in general market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk.
+Added: The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results and revenues.
+Added: This variability and unpredictability could result in our failing to meet the expectations of industry or financial analysts or investors for any period.
+Added: If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially.
+Added: Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings guidance we may provide.
+Added: Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
+Added: Our ability to utilize our net operating loss and credit carryovers depends on generating future federal and state taxable income.
+Added: Consequently, certain net operating loss and tax credit carryforwards presented in our financial statements could be limited and may expire unused.
+Added: Additionally, under Sections 382 and 383 of Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation’s ability to utilize its pre-change net operating losses and other pre-change tax attributes, such as research tax credits, to offset its future post-change taxable income and taxes may be limited.
+Added: In general, an “ownership change” occurs if there is a cumulative change in ownership by “5% shareholders” that exceeds 50 percentage points over a rolling three-year period.
+Added: Similar rules may apply under state tax laws.
+Added: We have not experienced such “ownership changes” in the past, but may experience them in the future due to subsequent shifts in our stock ownership.
+Added: Our management uses certain key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions, and such metrics may not accurately reflect all of the aspects of our business needed to make such evaluations and decisions, in particular as our business continues to grow.
+Added: In addition to our financial results, our management regularly reviews a number of operating and financial metrics, including the number of active partners, the number of active programs, the number and progress of active clinical programs, and the number and commercial progress of approved products, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.
+Added: We believe that these metrics are representative of our current business;
+Added: however, these metrics may not accurately reflect all aspects of our business, and we anticipate that these metrics may change or may be substituted for additional or different metrics as our business grows and as we introduce new solutions.
+Added: For example, while we believe that the number of active partners metric is a key metric for the performance of our business, there is no guarantee that an increase in the number of active partners will lead to additional programs or additional revenue.
+Added: Furthermore, while we believe the number of active programs is an indication for potential future revenue, given the long development timelines and the uncertainties of product development, there is no guarantee that an increase in the number of active programs will lead to additional revenue.
+Added: In addition, we are highly dependent on information provided by our partners as to the status of their development programs.
+Added: To the extent such information is later shown to be inaccurate, our metrics and forecasts could be materially and adversely affected.
+Added: The Company has not historically been materially impacted by inaccurate information from partners.
+Added: If our management fails to review other relevant information or change or substitute the key business metrics they review as our business grows, or if our metrics prove inaccurate or unrepresentative based on information provided by our partners or otherwise, their ability to accurately formulate financial projections and make strategic decisions may be compromised and our business, financial results and future growth prospects may be adversely impacted.
+Added: To date, the metrics disclosed in our historical filings have not been materially impacted by information from partners that was subsequently found to be inaccurate.
+Added: The sizes of the markets and forecasts of market growth for the demand of our OmniAb technology platform and other of our key performance indicators are based on a number of complex assumptions and estimates, and may be inaccurate.
+Added: We estimate annual total addressable markets and forecasts of market growth for our platform and technologies and for antibody-based therapeutics generally.
+Added: We have also developed a standard set of key performance indicators in order to enable us to assess the performance of our business in and across multiple markets, and to forecast future revenue.
+Added: These estimates, forecasts and key performance indicators are based on a number of complex assumptions, internal and third party estimates and other business data, including assumptions and estimates relating to our ability to generate revenue from the development of new workflows.
+Added: While we believe our assumptions and the data underlying our estimates and key performance indicators are reasonable, there are inherent challenges in measuring or forecasting such information.
+Added: As a result, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors and indicators.
+Added: As a result, our estimates of the annual total addressable market and our forecasts of market growth and future revenue from technology access fees, service fees, milestone payments or royalties may prove to be incorrect, and our key business metrics may not reflect our actual performance.
+Added: For example, if the annual total addressable market or the potential market growth for our platform is smaller than we have estimated or if the key business metrics we utilize to forecast revenue are inaccurate, it may impair our sales growth and have an adverse impact on our business, financial condition, results of operations and prospects.
We may be unable to manage our current and future growth effectively, which could make it difficult to execute our business strategy.
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Our platform utilizes animals to discover and produce antibodies.
−Removed: We cannot completely eliminate the risks of animals contracting disease, or a natural or man-made disaster that could cause death to valuable production animals, in our vivarium facilities, or those of the contract research organizations (“CROs”) that maintain our mouse and rat colonies.
+Added: We cannot completely eliminate the risks of animals contracting disease, or a natural or man-made disaster that could cause death to valuable production animals, in our vivarium facilities, or those of the CROs that maintain our mouse and rat colonies.
We cannot make any assurance that we or our CROs will be able to contain or reverse any such instance of disease.
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To the extent the activities of these groups are successful, our research and development activities and the ability for us and our partners to use our technology platform could be interrupted or delayed, our costs could increase and our reputation could be harmed.
−Removed: We have invested, and expect to continue to invest, in research and development efforts that further enhance our antibody discovery platform.
−Removed: Such investments in technology are inherently risky and may affect our operating results.
−Removed: If the return on these investments is lower or develops more slowly than we expect, our revenue and operating results may suffer.
−Removed: We have historically dedicated a substantial portion of our resources on the development of our platform and the technology that it incorporates.
−Removed: These investments may involve significant time, risks, and uncertainties, including the risk that the expenses associated with these investments may affect operating results and that such investments may not generate sufficient technological advantage relative to alternatives in the market which would, in turn, impact revenues to offset liabilities assumed and expenses associated with these new investments.
−Removed: The industry in which we operate changes rapidly as a result of technological and drug developments, which may render our solutions less desirable.
−Removed: We believe that we must continue to invest a significant amount of time and resources in our platform and technology to maintain and improve our competitive position.
−Removed: If we do not achieve the benefits anticipated from these investments, if the achievement of these benefits is delayed, or if our technology platform is not able to accelerate the process of antibody drug discovery as quickly as we anticipate, our revenue and operating results may be adversely affected.
The life sciences and biotech platform technology market is highly competitive, and if we cannot compete successfully with our competitors, we may be unable to increase or sustain our revenue, or sustain profitability.
We face significant competition in the market for technologies that enable the discovery and development of therapeutic antibodies.
−Removed: Our technologies address antibody therapeutic discovery challenges that are addressed by other platform technologies controlled by companies that have a variety of business models, including the development of internal pipelines of therapeutics, technology licensing, and the sale of instruments and devices.
+Added: Competing companies address therapeutic antibody discovery challenges in the industry and have a variety of business models, including the development of internal pipelines of therapeutics, financial investment in partner programs, technology licensing, and the sale of instruments and devices.
Examples of technical competition at different steps of our technology platform include:
−Removed: • in discovery using genetically engineered rodents, we face technical competition from companies that provide access to similar technologies, such as AbCellera Biologics Inc., Ablexis LLC, Adimab LLC, Alloy Therapeutics, Inc., Biocytogen Pharmaceuticals (Beijing) Co., Ltd., Harbour Antibodies BV, Leveragen, Inc., and Regeneron Pharmaceuticals, Inc.;
+Added: • in discovery using genetically-engineered rodents, we face technical competition from companies that provide access to similar technologies, such as AbCellera Biologics Inc., Ablexis LLC, Alloy Therapeutics, Inc., Biocytogen Pharmaceuticals (Beijing) Co., Ltd., Nona Biosciences, Leveragen, Inc., Regeneron Pharmaceuticals, Inc.
+Added: and Twist Bioscience Corporation;
• in the field of single-cell screening, we face technical competition from companies that provide access to similar technologies, such as AbCellera Biologics Inc., Bruker Corporation., HiFiBio Inc., and Sphere Fluidics Ltd.;
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Our competitors and potential competitors may enjoy a number of competitive advantages over us.
−Removed: For example these may include longer operating histories, larger customer bases, greater brand recognition and market penetration, greater financial resources, greater technological and research and development resources, better system reliability and robustness, greater selling and marketing capabilities, and integrated manufacturing capabilities.
−Removed: As a result, our competitors and potential competitors may be able to respond more quickly to changes in customer requirements, devote greater resources to the development, promotion and sale of their platforms or instruments than we can or sell their platforms or instruments, or offer solutions competitive with our platform and solutions at prices designed to win significant levels of market share.
−Removed: In addition, we may encounter challenges in marketing our solutions with our pricing model, which is structured to capture the potential downstream revenues associated with therapeutic candidates that were discovered using our platform.
+Added: For example, these may include discount pricing, longer operating histories, larger customer bases, greater brand recognition and market penetration, greater financial resources, greater technological and research and development resources, better system reliability and robustness, greater selling and marketing capabilities, and integrated manufacturing capabilities.
+Added: We may encounter challenges in marketing our solutions with our pricing model, which is structured to capture the potential downstream revenues associated with therapeutic candidates that were discovered using our platform.
Our partners and potential partners may prefer one or more pricing models employed by our competitors that involve upfront payments rather than downstream revenues.
We may not be able to compete effectively against these organizations.
+Added: In addition, our competitors and potential competitors may be able to respond more quickly to changes in customer requirements, devote greater resources to the development, promotion and sale of their platforms or instruments than we can or sell their platforms or instruments, or offer solutions competitive with our platform and solutions at prices designed to win significant levels of market share.
In addition, competitors may be acquired by, receive investments from or enter into other commercial relationships with larger, well-established and well-financed companies.
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If we are unable to compete successfully against current and future competitors, we may be unable to increase market adoption and sales of our platform, which could prevent us from increasing our revenue or sustaining profitability.
−Removed: Our management uses certain key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions and such metrics may not accurately reflect all of the aspects of our business needed to make such evaluations and decisions, in particular as our business continues to grow.
−Removed: In addition to our financial results, our management regularly reviews a number of operating and financial metrics, including the number of active partners, the number of active programs, the number and progress of active clinical programs, and the number and commercial progress of approved products, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.
−Removed: We believe that these metrics are representative of our current business;
−Removed: however, these metrics may not accurately reflect all aspects of our business, and we anticipate that these metrics may change or may be substituted for additional or different metrics as our business grows and as we introduce new solutions.
−Removed: In addition, we are highly dependent on information provided by our partners as to the status of their development programs.
−Removed: To the extent such information is later shown to be inaccurate, our metrics and forecasts could be materially and adversely affected.
−Removed: If our management fails to review other relevant information or change or substitute the key business metrics they review as our business grows, or if our metrics prove inaccurate or unrepresentative based on information provided by our partners or otherwise, their ability to accurately formulate financial projections and make strategic decisions may be compromised and our business, financial results and future growth prospects may be adversely impacted.
−Removed: We rely on third parties to host our mouse and rat colonies, and these third parties may not perform satisfactorily which could delay, prevent or impair our partnership programs and research and development efforts.
+Added: We rely on third parties to host our mouse and rat colonies, and these third parties may not perform satisfactorily which could delay, prevent or impair our partnerships, programs and research and technology development efforts.
We do not own or operate vivarium facilities for our mouse and rat colonies and have no plans to expand our vivarium facilities beyond those that house our chickens.
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Though we carefully manage our relationships with these third parties, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, results of operations, financial condition and prospects.
−Removed: We rely on a limited number of suppliers for laboratory equipment and materials and may not be able to find replacements or immediately transition to alternative suppliers.
−Removed: We rely on a limited number of suppliers, or in some cases single suppliers, to provide certain consumables and equipment that we use in our laboratory operations, as well as reagents and other laboratory materials involved in the development of our technology.
−Removed: Fluctuations in the availability and price of laboratory materials and equipment could have an adverse effect on our ability to meet our technology development goals with our partners and thus our results from operations as well as future partnership opportunities.
−Removed: An interruption in our laboratory operations or technology transfer could occur if we encounter delays, quality issues or other difficulties in securing these consumables, equipment, reagents or other materials, and if we cannot then obtain an acceptable substitute.
−Removed: In addition, while we believe suitable additional or alternative suppliers are available to accommodate our operations, if needed, any transition to new or additional suppliers may cause delays in our processing of samples or development and commercialization of our technology.
−Removed: Any such interruption could significantly affect our business, financial condition, results of operations and reputation.
−Removed: The sizes of the markets and forecasts of market growth for the demand of our OmniAb technology platform and other of our key performance indicators are based on a number of complex assumptions and estimates, and may be inaccurate.
−Removed: We estimate annual total addressable markets and forecasts of market growth for our platform and technologies and for antibody-based therapeutics generally.
−Removed: We have also developed a standard set of key performance indicators in order to enable us to assess the performance of our business in and across multiple markets, and to forecast future revenue.
−Removed: These estimates, forecasts and key performance indicators are based on a number of complex assumptions, internal and third party estimates and other business data, including assumptions and estimates relating to our ability to generate revenue from the development of new workflows.
−Removed: While we believe our assumptions and the data underlying our estimates and key performance indicators are reasonable, there are inherent challenges in measuring or forecasting such information.
−Removed: As a result, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors and indicators.
−Removed: As a result, our estimates of the annual total addressable market and our forecasts of market growth and future revenue from technology access fees, service fees, milestone payments or royalties may prove to be incorrect, and our key business metrics may not reflect our actual performance.
−Removed: For example, if the annual total addressable market or the potential market growth for our platform is smaller than we have estimated or if the key business metrics we utilize to forecast revenue are inaccurate, it may impair our sales growth and have an adverse impact on our business, financial condition, results of operations and prospects.
+Added: We have invested, and expect to continue to invest, in research and development efforts that further enhance our antibody discovery platform.
+Added: Such investments in technology are inherently risky and may affect our operating results.
+Added: If the return on these investments is lower or develops more slowly than we expect, our revenue and operating results may suffer.
+Added: We have historically dedicated a substantial portion of our resources on the development of our platform and the technology that it incorporates.
+Added: These investments may involve significant time, risks, and uncertainties, including the risk that the expenses associated with these investments may affect operating results and that such investments may not generate sufficient technological advantage relative to alternatives in the market which would, in turn, impact revenues to offset liabilities assumed and expenses associated with these new investments.
+Added: The industry in which we operate changes rapidly as a result of technological and drug developments, which may render our solutions less desirable.
+Added: We believe that we must continue to invest a significant amount of time and resources in our platform and technology to maintain and improve our competitive position.
+Added: If we do not achieve the benefits anticipated from these investments, if the achievement of these benefits is delayed, or if our technology platform is not able to accelerate the process of antibody drug discovery as quickly as we anticipate, our revenue and operating results may be adversely affected.
Third-party payor coverage and reimbursement status of newly approved therapeutics is uncertain.
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The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford any therapeutics generated using our platform that our partners may develop and sell.
−Removed: In addition, because the therapeutics we generate may represent new classes of treatments for diseases, we and our partners cannot accurately estimate how such therapeutics would be priced, whether reimbursement could be obtained or any potential revenue generated.
−Removed: Sales of such therapeutics will depend substantially, both domestically and internationally, on the extent to which the costs of such therapeutics are paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors.
+Added: In addition, because the therapeutics we generate may represent new classes of treatments for diseases, we and our partners cannot accurately estimate how such therapeutics would be priced, whether reimbursement could be obtained, whether reimbursement (if available) will be at adequate levels, or any potential revenue generated.
+Added: Sales of such therapeutics will depend substantially, both domestically and internationally, on the extent to which the costs of such therapeutics are paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors, including government health programs in the United States, such as Medicare and Medicaid.
If reimbursement is not available, or is available only to limited levels, our partners may not be able to successfully commercialize some therapeutics generated with our technology.
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Due to the trend toward value-based pricing and coverage, the increasing influence of health maintenance organizations and additional legislative changes, we expect our partners to experience pricing pressures on therapeutics generated using our platform that our partners may commercialize.
−Removed: The downward pressure on healthcare costs in general, particularly novel therapeutics, has become very intense.
+Added: The downward pressure on healthcare costs in general, particularly novel therapeutics, has increased and may further increase.
As a result, increasingly high barriers are being erected to the entry of new products, which would negatively impact our ability to generate revenues.
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In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our products profitably.
−Removed: In particular, in the United States, in 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (“ACA”), was enacted, which, among other things, subjected biologic products to potential competition by lower-cost biosimilars;
−Removed: addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;
−Removed: increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program;
−Removed: extended the Medicaid rebate obligation to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations;
+Added: In particular, in the United States, in 2010, the Affordable Care Act (“ACA”) was enacted, which, among other things, subjected biologic products to potential competition by lower-cost biosimilars;
+Added: implemented a new methodology for calculating rebates owed by manufacturers under the Medicaid Drug Rebate Program for drugs that are inhaled, infused, instilled, implanted or injected;
+Added: increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program;
+Added: extended the Medicaid rebate obligation to utilization under Medicaid managed care organizations;
subjected manufacturers to new annual fees and taxes for certain branded prescription drugs;
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Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.
−Removed: Prior to the Supreme Court’s decision, President Biden issued an Executive Order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.
−Removed: The Executive Order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.
+Added: Thus, the ACA will remain in effect in its current form.
In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted.
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Further, in August 2011, the Budget Control Act of 2011, among other things, included aggregate reductions of Medicare payments to providers.
−Removed: These reductions went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032, with the exception of a temporary suspension that lasted from May 1, 2020 through March 31, 2022 due to the COVID-19 pandemic.
+Added: These reductions went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032.
Further, heightened governmental scrutiny is likely to continue over the manner in which product manufacturers set prices for their marketed products, which has already resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.
−Removed: On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA) into law.
+Added: Most recently, in August 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law.
This statute marks the most significant action by Congress with respect to the pharmaceutical industry since adoption of the ACA in 2010.
−Removed: Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023), and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
+Added: Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap;
+Added: imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023);
+Added: redesigns the Medicare Part D benefit (beginning in 2024);
+Added: and replaces the Part D coverage gap discount program with a new manufacturer discount program (beginning in 2025).
+Added: The Centers for Medicare & Medicaid Services has published the negotiated prices for the initial ten drugs, which will first be effective in 2026, and has published the list of the subsequent 15 drugs that will be subject to negotiation.
The IRA permits the Secretary of the Department of Health and Human Services (“HHS”) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
−Removed: HHS has and will continue to issue and update guidance as these programs are implemented.
−Removed: These provisions started to take effect progressively starting in fiscal year 2023.
−Removed: On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges.
−Removed: In addition, in response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the Center for Medicare and Medicaid Innovation which will be evaluated on their ability to lower the cost of drugs, promote accessibility, and improve quality of care.
−Removed: It is unclear whether the models will be utilized in any health reform measures in the future.
+Added: HHS has and will continue to issue and update guidance as these programs are implemented, although the Medicare drug price negotiation program is currently subject to legal challenges.
+Added: While the impact of the IRA on the pharmaceutical industry cannot yet be fully determined, it is likely to be significant.
+Added: Moreover, individual states in the United States have become increasingly active in developing proposals, passing legislation and implementing regulations designed to control drug pricing, including price or patient reimbursement constraints, discounts, formulary flexibility, marketing cost disclosure, drug price increase disclosure, and other transparency measures.
+Added: Some states have enacted legislation creating so-called prescription drug affordability boards, which ultimately may attempt to impose price limits on certain drugs in these states.
We expect that additional U.S.
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For instance, on December 13, 2021, Regulation No 2021/2282 on Health Technology Assessment (“HTA”) amending Directive 2011/24/EU, was adopted in the EU.
−Removed: While the Regulation entered into force in January 2022, it will only begin to apply from January 2025 onwards, with preparatory and implementation-related steps to take place in the interim.
−Removed: Once applicable, it will have a phased implementation depending on the concerned products.
+Added: This regulation entered into force in January 2022 and has been applicable since January 2025, with phased implementation based on the type of product, i.e., oncology and advanced therapy medicinal products as of 2025, orphan medicinal products as of 2028, and all other medicinal products by 2030.
This regulation intends to boost cooperation among EU member states in assessing health technologies, including new medicinal products, and provide the basis for cooperation at the EU level for joint clinical assessments in these areas.
It will permit EU member states to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the highest potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.
−Removed: Individual EU member states will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technologies, and making decisions on pricing and reimbursement.
+Added: Individual EU member states will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement.
+Added: legislation, sanctions, tariffs, trade restrictions and other foreign regulatory requirements could increase costs and adversely impact the supply of material from foreign CROs and CMOs to us and our partners or our partners’ ability to secure government commitments to purchase potential therapies.
+Added: We and/or our partners or potential partners currently and may in the future rely on foreign CROs and CMOs, such as WuXi Biologics.
+Added: Such foreign CROs and CMOs may be subject to U.S.
+Added: legislation, sanctions, tariffs, trade restrictions and other foreign regulatory requirements which could increase the cost or reduce the supply of material available to us or our partners or potential partners, delay the procurement or supply of such material or have an adverse effect on our or our partners’ or potential partners’ ability to secure significant commitments from governments to purchase potential therapies.
+Added: For example, in January 2024, there was Congressional activity, including the introduction of the BIOSECURE Act (H.R.
+Added: 7085) in the House of Representatives and a substantially similar Senate bill (S.3558).
+Added: The BIOSECURE Act was passed by the House of Representatives in September 2024.
+Added: If these bills become law, or similar laws are passed, they would have the potential to severely restrict the ability of U.S.
+Added: biopharmaceutical companies like us or our partners to purchase services or products from, or otherwise collaborate with, certain Chinese biotechnology companies “of concern” without losing the ability to contract with, or otherwise receive funding from, the U.S.
+Added: In addition, changes by the U.S.
+Added: and foreign governments in trade policies including the imposition of higher tariffs on imports into the U.S.
+Added: and other governmental regulations affecting trade between the U.S.
+Added: and other countries where we and/or our partners conduct business, and any retaliatory actions by other governments, could increase costs, impact the supply of materials and adversely impact our business, financial condition and results of operations.
+Added: We rely on a limited number of suppliers for laboratory equipment and materials and may not be able to find replacements or immediately transition to alternative suppliers.
+Added: We rely on a limited number of suppliers, or in some cases single suppliers, to provide certain consumables and equipment that we use in our laboratory operations, as well as reagents and other laboratory materials involved in the development of our technology.
+Added: Fluctuations in the availability and price of laboratory materials and equipment could have an adverse effect on our ability to meet our technology development goals with our partners and thus our results from operations as well as future partnership opportunities.
+Added: An interruption in our laboratory operations or technology transfer could occur if we encounter delays, quality issues or other difficulties in securing these consumables, equipment, reagents or other materials, and if we cannot then obtain an acceptable substitute.
+Added: In addition, while we believe suitable additional or alternative suppliers are available to accommodate our operations, if needed, any transition to new or additional suppliers may cause delays in our processing of samples or development and commercialization of our technology.
+Added: Any such interruption could significantly affect our business, financial condition, results of operations and reputation.
We must adapt to rapid and significant technological change and respond to introductions of new products and technologies by competitors to remain competitive.
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Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
−Removed: For example, the California Consumer Privacy Act of 2018 (“CCPA”) went into effect on January 1, 2020.
−Removed: The CCPA creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal information.
−Removed: The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that has increased the likelihood of, and risks associated with data breach litigation.
−Removed: Further, the California Privacy Rights Act (“CPRA”) generally went into effect on January 1, 2023, and significantly amends the CCPA.
−Removed: It imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
−Removed: It also creates a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement.
−Removed: Additional compliance investment and potential business process changes may also be required.
+Added: For example, the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”) requires covered businesses that process the personal information of California residents to, among other things:
+Added: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information;
+Added: (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information;
+Added: and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
Similar laws have passed in other states and are continuing to be proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States.
The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.
−Removed: In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.
+Added: In the event that we are subject to or affected by HIPAA, the CCPA, or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.
We are also or may become subject to rapidly evolving data protection laws, rules and regulations in foreign jurisdictions.
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As a result, we may have to make certain operational changes and we will have to implement revised standard contractual clauses and other relevant documentation for existing data transfers within required time frames.
−Removed: Further, from January 1, 2021, companies have been subject to the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law.
+Added: Further, from January 1, 2021, companies have been subject to the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in national law of the United Kingdom (“UK”).
The UK GDPR mirrors the fines under the GDPR, e.g., fines up to the greater of €20.0 million (£17.5 million) or 4% of global turnover.
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As we continue to expand into other foreign countries and jurisdictions, we may be subject to additional laws and regulations that may affect how we conduct business.
+Added: Further, we use artificial intelligence, machine learning, and automated decision-making technologies (collectively, “AI Technologies”) throughout our business.
+Added: The regulatory framework for AI Technologies is rapidly evolving as many federal, state and foreign government bodies and agencies have introduced or are currently considering additional laws and regulations.
+Added: Additionally, existing laws and regulations may be interpreted in ways that would affect the operation of our AI Technologies.
+Added: As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or market perception of their requirements may have on our business and may not always be able to anticipate how to respond to these laws or regulations.
+Added: Already, certain existing legal regimes (e.g., relating to data privacy) regulate certain aspects of AI Technologies, and new laws regulating AI Technologies either entered into force in the United States and the EU in 2024 or are expected to enter into force in 2025.
+Added: In the United States, the Trump administration has rescinded an executive order relating to AI Technologies that was previously implemented by the Biden administration.
+Added: The Trump administration may continue to rescind other existing federal orders and/or administrative policies relating to AI Technologies, or may implement new executive orders and/or other rule making relating to AI Technologies in the future.
+Added: Any such changes at the federal level could require us to expend significant resources to modify our products, services, or operations to ensure compliance or remain competitive.
+Added: legislation related to AI Technologies has also been introduced at the federal level and is advancing at the state level.
+Added: For example, California Privacy Protection Agency is currently in the process of finalizing regulations under the CCPA regarding the use of automated decision-making.
+Added: Such additional regulations may impact our ability to develop, use and commercialize AI Technologies in the future.
+Added: California also enacted seventeen new laws in 2024 that further regulate use of AI Technologies and provide consumers with additional protections around companies’ use of AI Technologies, such as requiring companies to disclose certain uses of generative AI.
+Added: Other states have also passed AI-focused legislation, such as Colorado’s Artificial Intelligence Act, which will require developers and deployers of “high-risk” AI systems to implement certain safeguards against algorithmic discrimination, and Utah’s Artificial Intelligence Policy Act, which establishes disclosure requirements and accountability measures for the use of generative AI in certain consumer interactions.
+Added: In Europe, on May 21, 2024, the European Union legislators approved the EU Artificial Intelligence Act (the “EU AI Act”), which establishes a comprehensive, risk-based governance framework for artificial intelligence in the EU market.
+Added: The EU AI Act enters into force on August 2, 2024, and the majority of the substantive requirements will apply from August 2, 2026.
+Added: The EU AI Act will apply to companies that develop, use and/or provide AI in the EU and includes requirements around transparency, conformity assessments and monitoring, risk assessments, human oversight, security, accuracy, general purpose AI and foundation models, and proposes fines for breach of up to 7% of worldwide annual turnover.
+Added: In addition, on September 28, 2022, the European Commission proposed two Directives seeking to establish a harmonized civil liability regime for AI in the EU in order to facilitate civil claims in respect of harm caused by AI and to include AI-enabled products within the scope of the EU’s existing strict product liability regime.
+Added: Once fully applicable, the EU AI Act and the Liability Directives will have a material impact on the way AI is regulated in the EU.
+Added: Recent case law from the CJEU has taken an expansive view of the scope of the GDPR’s requirements around automated decision making and introduced uncertainty in the interpretation of these rules.
+Added: The EU AI Act, and developing interpretation and application of the GDPR in respect of automated decision making, together with developing guidance and/or decisions in this area, may affect our use of AI Technologies and our ability to provide, improve or commercialize our business, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition.
+Added: It is possible that further new laws and regulations will be adopted in the United States and in other non-U.S.
+Added: jurisdictions, or that existing laws and regulations, including competition and antitrust laws, may be interpreted in ways that would limit our ability to use AI Technologies for our business, or require us to change the way we use AI Technologies in a manner that negatively affects the performance of our business and the way in which we use AI Technologies.
+Added: We may need to expend resources to adjust our operations in certain jurisdictions if the laws, regulations, or decisions are not consistent across jurisdictions.
+Added: 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 Technologies).
+Added: Such an increase in operating expenses, as well as any actual or perceived failure to comply with such laws and regulations, could adversely affect our business, financial condition and results of operations.
Compliance with applicable data privacy and security laws, rules and regulations could require us to take on more onerous obligations in our contracts, require us to engage in costly compliance exercises, restrict our ability to collect, use and disclose data, or in some cases, impact our or our partners’ ability to operate in certain jurisdictions.
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If OmniAb is required to pay any liabilities under the circumstances set forth in the Tax Matters Agreement or pursuant to applicable tax law, the amounts may be significant.
−Removed: We might not be able to engage in certain transactions and equity issuances as a result of the Distribution.
−Removed: Our ability to engage in equity transactions could be limited or restricted in order to preserve, for U.S.
−Removed: federal income tax purposes, the qualification of the Distribution, together with certain related transactions, as a generally tax-free reorganization under Sections 355 and 368(a)(1)(D) of the Code.
−Removed: Even if the Distribution otherwise qualifies for tax-free treatment under Section 355 of the Code, it may result in corporate-level taxable gain to Ligand if there is a 50% or greater change in ownership, by vote or value, of our shares of common stock, Ligand’s stock or the stock of a successor of any of the foregoing occurring as part of a plan or series of related transactions that includes the Distribution.
−Removed: Any acquisitions or issuances of shares of our stock or Ligand’s stock within two years of the Distribution are generally presumed to be part of such a plan, although Ligand may be able to rebut that presumption.
−Removed: Under the Tax Matters Agreement that we entered into with Ligand, we are required to comply with the representations made in the materials submitted to legal counsel in connection with the tax opinion that Ligand received regarding the intended tax treatment of the Distribution and certain related transactions.
−Removed: The Tax Matters Agreement also restricts our ability to take or fail to take any action if such action or failure to act could adversely affect the intended tax treatment of the Distribution, together with certain related transactions.
−Removed: In particular, except in specific circumstances, in the two years following the Distribution, we are restricted from, among other things, (i) entering into certain transactions pursuant to which all or a portion of shares of our common stock would be acquired, whether by merger, consolidation, certain stock issuances or otherwise, and (ii) ceasing to actively conduct certain of the OmniAb businesses.
−Removed: These restrictions may limit for a period of time our ability to pursue certain transactions that we may believe to be in the best interests of our stockholders or that might increase the value of our business.
−Removed: Potential indemnification obligations to Ligand pursuant to the Separation Agreement could materially and adversely affect our businesses, financial condition, results of operations and cash flows.
−Removed: The Separation Agreement, among other things, provides for indemnification obligations (for uncapped amounts) designed to make us financially responsible for all liabilities that Ligand may incur or may exist relating to our business activities (as currently and historically conducted), whether incurred prior to or after the Separation.
−Removed: Pursuant to the Separation Agreement and certain other agreements with Ligand, Ligand agreed to indemnify us for certain liabilities.
−Removed: However, third parties could also seek to hold us responsible for any of the liabilities that Ligand has agreed to retain, and there can be no assurance that the indemnity from Ligand will be sufficient to protect us against the full amount of such liabilities, or that Ligand will be able to fully satisfy its indemnification obligations.
−Removed: In addition, Ligand’s insurance will not necessarily be available to us for liabilities associated with occurrences of indemnified liabilities prior to the Separation, and in any event Ligand’s insurers may deny coverage to us for liabilities associated with certain occurrences of indemnified liabilities prior to the Separation.
−Removed: Moreover, even if we ultimately succeed in recovering from Ligand or such insurance providers any amounts for which we are held liable, we may be temporarily required to bear these losses.
−Removed: Each of these risks could negatively affect our businesses, financial position, results of operations and cash flows.
−Removed: The Separation and Distribution may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements.
−Removed: The Separation and Distribution are subject to review under various state and federal fraudulent conveyance laws.
−Removed: Fraudulent conveyance laws generally provide that an entity engages in a constructive fraudulent conveyance when (i) the entity transfers assets and does not receive fair consideration or reasonably equivalent value in return;
−Removed: and (ii) the entity:
−Removed: (a) is insolvent at the time of the transfer or is rendered insolvent by the transfer;
−Removed: (b) has unreasonably small capital with which to carry on its business;
−Removed: or (c) intends to incur or believes it will incur debts beyond its ability to repay its debts as they mature.
−Removed: An unpaid creditor or an entity acting on behalf of a creditor (including without limitation a trustee or debtor-in-possession in a bankruptcy by us or Ligand or any of our respective subsidiaries) may bring an action alleging that the Separation or Distribution or any of the related transactions constituted a constructive fraudulent conveyance.
−Removed: If a court accepts these allegations, it could impose a number of remedies, including without limitation, voiding our claims against Ligand, requiring our stockholders to return to Ligand some or all of the shares of our common stock issued in the Distribution, or providing Ligand with a claim for money damages against us in an amount equal to the difference between the consideration received by Ligand and our fair market value at the time of the Distribution.
−Removed: The measure of insolvency for purposes of the fraudulent conveyance laws will vary depending on which jurisdiction’s law is applied.
−Removed: Generally, an entity would be considered insolvent if (i) the present fair saleable value of its assets is less than the amount of its liabilities (including contingent liabilities);
−Removed: (ii) the present fair saleable value of its assets is less than its probable liabilities on its debts as such debts become absolute and matured;
−Removed: (iii) it cannot pay its debts and other liabilities (including contingent liabilities and other commitments) as they mature;
−Removed: or (iv) it has unreasonably small capital for the business in which it is engaged.
−Removed: We cannot assure you what standard a court would apply to determine insolvency or that a court would determine that we, Ligand or any of our respective subsidiaries were solvent at the time of or after giving effect to the Distribution.
−Removed: The Distribution of our common stock is also subject to review under state corporate distribution statutes.
−Removed: Under the DGCL, a corporation may only pay dividends to its stockholders either (i) out of its surplus (net assets minus capital) or (ii) if there is no such surplus, out of its net profits for the fiscal year in which the dividend is declared or the preceding fiscal year.
−Removed: Although Ligand intended to make the Distribution of our common stock entirely from surplus, we cannot assure you that a court will not later determine that some or all of the Distribution to Ligand stockholders was unlawful.
Risks Related to Our Intellectual Property
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government also has the right to take title to these inventions if we, or the applicable licensor, fail to disclose the invention to the government and fail to file an application to register the intellectual property within specified time limits.
−Removed: These time limits have recently been changed by regulation, and may change in the future.
+Added: These time limits may change in the future.
Intellectual property generated under a government funded program is also subject to certain reporting requirements, compliance with which may require us or the applicable licensor to expend substantial resources.
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Unstable market and economic conditions and adverse developments with respect to financial institutions and associated liquidity risk may have serious adverse consequences on our business, financial condition and stock price.
−Removed: From time to time, the global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, inflation, increases in unemployment rates and interest rates and uncertainty about economic stability.
+Added: From time to time, the global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, inflation, increases in unemployment rates and interest rates and uncertainty about economic stability, including changes related to the U.S.
+Added: and foreign governments in tariffs and trade policies affecting trade between the U.S and other countries.
There can be no assurance that future deterioration in credit and financial markets and confidence in economic conditions will not occur.
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There can be no assurance that future credit and financial market instability and a deterioration in confidence in economic conditions will not occur.
−Removed: Our general business strategy may be adversely affected by any such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market conditions.
+Added: Our general business strategy may be adversely affected by any such economic downturn, liquidity shortages, volatile business environment, changes in tariffs and trade policies or continued unpredictable and unstable market conditions.
If the equity and credit markets deteriorate, or if adverse developments are experienced by financial institutions, it may cause short-term liquidity risk and also make any necessary debt or equity financing more difficult, more costly, more onerous with respect to financial and operating covenants and more dilutive.
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As a public company, we incur significant legal, accounting, insurance and other expenses that we did not incur as a private company.
−Removed: We are subject to the reporting requirements of the Exchange Act, which will require, among other things, that we file with the SEC annual, quarterly and current reports with respect to our business and financial condition.
+Added: We are subject to the reporting requirements of the Exchange Act, which requires, among other things, that we file with the SEC annual, quarterly and current reports with respect to our business and financial condition.
In addition, Sarbanes-Oxley, as well as rules subsequently adopted by the SEC and Nasdaq to implement provisions of Sarbanes-Oxley, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices.
Further, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC has adopted additional rules and regulations in these areas, such as mandatory “say on pay” voting requirements that will apply to us when we cease to be an emerging growth company.
−Removed: Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.
+Added: Stockholder activism, government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.
We expect the rules and regulations applicable to public companies to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly.
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Our business is subject to risks arising from pandemic and epidemic diseases.
−Removed: Future pandemics, including the residual effects of the COVID-19 pandemic, or other public health epidemics pose the risk that we or our employees, contractors, including our CROs, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns that may be requested or mandated by governmental authorities.
+Added: Future pandemics or other public health epidemics pose the risk that we or our employees, contractors, including our CROs, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns that may be requested or mandated by governmental authorities.
We cannot guarantee that pandemics, such as COVID-19 or the emergence of variants thereof, or a similar event, will not impact our operations or business in the future.
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any of which could delay our partnership programs, increase our operating costs, and have a material adverse effect on our business, financial condition and results of operations.
−Removed: In addition, if COVID-19 or any other pandemic or epidemic disease infects our genetically modified animals, which form the basis of our platform, or if there is an outbreak among our employees or our subcontractor’s employees who maintain and care for these animals, we and our partners may be unable to produce antibodies for development.
+Added: In addition, if any pandemic or epidemic disease infects our genetically modified animals, which form the basis of our platform, or if there is an outbreak among our employees or our subcontractor’s employees who maintain and care for these animals, we and our partners may be unable to produce antibodies for development.
The COVID-19 pandemic and mitigation measures had, and any emergence of variants thereof or future pandemic or epidemic disease outbreaks may have, an adverse impact on global economic conditions which could have an adverse effect on our business and financial condition and the trading price of shares of our common stock and could impair our ability to raise capital when needed.
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Under a registration statement on Form S-1, Registration No.
−Removed: 333-268613, that we filed the with SEC on February 7, 2023, as amended, including as amended by the Post-Effective Amendment No.
−Removed: 3 to Form S-1 on Form S-3 that we filed with the SEC on December 8, 2023 and the SEC declared effective on December 18, 2023 (the “Resale S-3”), the Selling Securityholders (as defined in the Resale S-3) may sell (a) up to 36,450,645 Total Resale Shares (as defined in the Resale S-3 and which represented approximately 31.2% of our total outstanding Common Stock as of December 31, 2023, assuming no exercise of the Warrants and options, or approximately 28.4% of our outstanding Common Stock if the Warrants were exercised in full), which consist of (i) up to 3,920,440 shares of Common Stock issued in connection with the Business Combination at an equity consideration value of $10.00 per share, including 843,736 Earnout Shares (as defined in the Resale S-3), (ii) 15,922,934 shares of Common Stock issued to the Sponsor in private placements, which include 5,750,000 shares of Founder Shares (as defined in the Resale S-3) issued in connection with APAC’s initial public offering (the “IPO”) at a purchase price of approximately $0.004 per share, including 1,293,299 Sponsor Earnout Shares (as defined in the Resale S-3),
−Removed: and an aggregate of 10,172,934 shares issued in the Redemption Backstop and the Forward Purchase (each as defined in the Resale S-3) at a purchase price of $10.00 per share, (iii) 11,345,489 shares of Common Stock that are issuable upon the exercise of 11,345,489 Private Placement Warrants (as defined in the Resale S-3) at an exercise price of $11.50 per share, which include 8,233,333 warrants originally issued by us to the Sponsor in connection with the IPO at a price of $1.50 per Private Placement Warrant, and an aggregate of 3,112,156 warrants issued to the Sponsor in the Redemption Backstop and the Forward Purchase, which warrants were issued as part of the overall share purchase price of $10.00 per share in such transactions, and (iv) 5,115,522 shares of Common Stock issued or issuable upon the exercise of options to purchase Common Stock and the vesting of restricted stock units and performance restricted stock units, and (b) up to 11,345,489 of the Private Placement Warrants (which represented approximately 8.8% of our total outstanding Common Stock as of December 31, 2023, assuming the Warrants were exercised in full).
+Added: 333-268613, that we filed with the SEC on February 7, 2023, as amended, including as amended by the Post-Effective Amendment No.
+Added: 3 to Form S-1 on Form S-3 that we filed with the SEC on December 8, 2023 and the SEC declared effective on December 18, 2023 (the “Resale S-3”), the Selling Securityholders (as defined in the Resale S-3) may sell (a) up to 36,450,645 Total Resale Shares (as defined in the Resale S-3 and which represented approximately 31.2% of our total outstanding common stock as of December 31, 2024, assuming no exercise of the Warrants and options, or approximately 28.4% of our outstanding common stock if the warrants were exercised in full), which consist of (i) up to 3,920,440 shares of common stock issued in connection with the Business Combination at an equity consideration value of $10.00 per share, including 843,736 Earnout Shares (as defined in the Resale S-3), (ii) 15,922,934 shares of common stock issued to the Sponsor in private placements, which include 5,750,000 shares of Founder Shares (as defined in the Resale S-3) issued in connection with APAC’s initial public offering (the “IPO”) at a purchase price of approximately $0.004 per share, including 1,293,299 Sponsor Earnout Shares (as defined in the Resale S-3), and an aggregate of 10,172,934 shares issued in the Redemption Backstop and the Forward Purchase (each as defined in the Resale S-3) at a purchase price of $10.00 per share, (iii) 11,345,489 shares of common stock that are issuable upon the exercise of 11,345,489 Private Placement Warrants (as defined in the Resale S-3) at an exercise price of $11.50 per share, which include 8,233,333 warrants originally issued by us to the Sponsor in connection with the IPO at a price of $1.50 per Private Placement Warrant, and an aggregate of 3,112,156 warrants issued to the Sponsor in the Redemption Backstop and the Forward Purchase, which warrants were issued as part of the overall share purchase price of $10.00 per share in such transactions, and (iv) 5,115,522 shares of common stock issued or issuable upon the exercise of options to purchase common stock and the vesting of restricted stock units and performance restricted stock units, and (b) up to 11,345,489 of the Private Placement Warrants (which represented approximately 8.8% of our total outstanding common stock as of December 31, 2024, assuming the Warrants were exercised in full).
Such equityholders will not be restricted from selling shares of common stock held by them, other than by applicable securities laws.
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For example, the 5,750,000 Founder Shares were initially purchased by the Sponsor at a price of $0.004 per share.
−Removed: Based on the closing price of our Common Stock on March 1, 2024 of $5.91 per share, the holders of the Founder Shares, including affiliates of the Sponsor, would experience a potential profit of up to approximately $5.906 per share, or approximately $34.0 million in the aggregate.
+Added: Based on the closing price of our common stock on February 28, 2025 of $3.48 per share, the holders of the Founder Shares, including affiliates of the Sponsor, would experience a potential profit of up to approximately $3.476 per share, or approximately $20.0 million in the aggregate.
Public securityholders may not be able to experience the same positive rates of return on securities they purchase due to the low price at which the Sponsor initially purchased the Founder Shares.
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• advance notice procedures that stockholders must comply with in order to nominate candidates to our Board or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
−Removed: We are also subject to the anti-takeover provisions contained in Section 203 of the DGCL.
+Added: We are also subject to the anti-takeover provisions contained in Section 203 of the Delaware General Corporation Law (“DGCL”).
Under Section 203, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other exceptions, the Board has approved the transaction.
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Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock.
−Removed: Additionally, the combined company will regularly monitor its compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to it.
−Removed: As a result of new standards, changes to existing standards and changes in their interpretation, the combined company might be required to change its accounting policies, alter its operational policies, and implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or the combined company may be required to restate its published financial statements.
+Added: Additionally, the company will regularly monitor its compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to it.
+Added: As a result of new standards, changes to existing standards and changes in their interpretation, the company might be required to change its accounting policies, alter its operational policies, and implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or the company may be required to restate its published financial statements.
Such changes to existing standards or changes in their interpretation may have an adverse effect on its reputation, business, financial position, and profit.
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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.