What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-11 compared with 2024-03-08 · 82 added, 87 removed, 144 unchanged (54% of the section changed)

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Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”

We are a biopharmaceutical company dedicated to meaningfully improving the lives of people affected by certain epilepsies and brain conditions with seizure symptoms.

We are a biopharmaceutical company dedicated to developing small molecule medicines for brain conditions with significant unmet need.

Our approach to achieve this goal is scientifically driven, patient focused, and coupled with an integrated and disciplined approach to research, clinical development and business development.

Our team has significant experience with and understanding of rare epilepsies and neurological conditions, and we continue to gain insight into the ways the different molecular mechanisms and pathways underlying these disorders impact the symptoms patients suffer.

We have set out to be a leader in the field, and have developed a differentiated pipeline containing four novel mechanisms of action to target different causes of certain epilepsies and brain conditions with seizure symptoms.

We have built a scalable scientific platform with efficient development capabilities in epilepsies and conditions with seizure symptoms that focuses on clear, clinical endpoints.

Three of our programs are in clinical trials in humans, and the fourth is in preclinical development and anticipated to advance into human safety studies in 2024.

We are initially pursuing therapeutic assets for rare disorders as they can leverage accelerated development programs.

If successfully developed and marketed in rare conditions, we intend to explore these assets for broader neurologic indications.

Our cohesive focus in certain epilepsies and brain conditions with seizure symptoms reinforces our belief that we can develop and produce multiple novel medicines, scale our infrastructure, and thereby succeed in our mission.

Since our inception in April 2014, we have devoted substantially all of our efforts to organizing and planning our business, building our management and technical team, acquiring operating assets and raising capital.

Our team has significant experience with and understanding of epilepsies and other neurological conditions, and we continue to gain insight into the ways the different molecular mechanisms and pathways underlying these disorders impact the symptoms patients experience.

We have developed a differentiated pipeline of drug candidates containing three novel MoAs to target seizures and believe we are the only company that holds a portfolio of direct activators of KCC2.

Two of our programs are in clinical trials in humans, and a third will begin a clinical trial in the second quarter of 2026.

We are initially pursuing therapeutic drug candidates for epilepsy and psychosis in Parkinson’s disease and Lewy body dementia.

If successfully developed and marketed to treat these conditions, we intend to explore these drug candidates for broader neurologic indications.

Our cohesive focus in brain conditions with significant unmet need reinforces our belief that we can develop and produce multiple novel medicines, scale our infrastructure, positively impact patients’ lives and create long-term stockholder value.

During the years ended December 31, 2024 and 2023, we generated $0.6 million and $0.4 million of royalty and licensing revenue, respectively.

We have otherwise primarily funded our business through the sale of our capital stock and through the closing of the RLT Agreement with Takeda, which resulted in a one-time up-front payment of $196.0 million in 2021.

Through December 31, 2023, we have raised net proceeds of $275.4 million from the sale of our convertible preferred and common stock.

We have otherwise primarily funded our business through the sale of our capital stock and through the entry into the RLT Agreement with Takeda, which resulted in a one-time up-front payment of $196.0 million in 2021 and the entry into a Royalty Monetization Agreement (the “Ligand Agreement”) with Ligand Pharmaceuticals Incorporated (“Ligand”), which resulted in a one-time up-front payment of $30.0 million in 2023.

Through December 31, 2024, we have raised net proceeds of $275.4 million from the sale of our preferred and common stock.

As of December 31, 2024, we had $53.1 million in cash, cash equivalents and marketable securities.

We recorded net loss of $52.3 million and $54.2 million for the years ended December 31, 2023 and 2022, respectively.

We recorded net losses of $26.4 million and $52.3 million for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, we had an accumulated deficit of $304.3 million.

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Significant Risks and Uncertainties

The global economic slowdown, the overall disruption of global healthcare systems and other risks and uncertainties associated with public health crises and global geopolitical tensions, like the ongoing war between Russia and Ukraine and the war in Israel, may have a material adverse effect on our business, financial condition, results of operations and growth prospects.

The resulting high inflation rates may materially affect our business and corresponding financial position and cash flows.

The global economic slowdown, the overall disruption of global healthcare systems and other risks and uncertainties associated with public health crises and global geopolitical tensions, like tensions between China and Taiwan, the ongoing war between Russia and Ukraine and the war involving Israel, may have a material adverse effect on our business, financial condition, results of operations and growth prospects.

The resulting fluctuations in inflation rates may materially affect our business and corresponding financial position and cash flows.

Inflationary factors, such as increases in the cost of our clinical trial materials and supplies, interest rates and overhead costs may adversely affect our operating results.

High interest rates also present a recent challenge impacting the U.S.

Relatively high interest rates also present a recent challenge impacting the U.S.

economy and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future.

Furthermore, economic conditions have produced downward pressure on share prices.

Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates remain high or begin to rise again) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, global geopolitical tensions as a result of the ongoing war between Russia and Ukraine and the war in Israel, worsening global macroeconomic conditions and employee availability and wage increases, which may result in additional stress on our working capital resources.

Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates remain relatively high or begin to rise again) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, global geopolitical tensions as a result of tensions between China and Taiwan, the ongoing war between Russia and Ukraine and the war involving Israel, worsening global macroeconomic conditions, as well as potential future conditions, which may be impacted by the implementation of tariffs by the United States and other countries, and employee availability and wage increases, which may result in additional stress on our working capital resources.

Moreover, there is great uncertainty with respect to potential changes in trade regulations, tariffs, sanctions and export controls which also increase volatility in the global economy.

In addition, we are subject to other challenges and risks specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry with development and commercial operations, including, without limitation, risks and uncertainties associated with:

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pharmaceutical product development and the inherent uncertainty of clinical success;

and the challenges of protecting and enhancing our intellectual property rights;

complying with applicable regulatory requirements.

the challenges of protecting and enhancing our intellectual property rights;

and complying with applicable regulatory requirements.

Financial Operations Overview

We have generated revenue primarily under the RLT Agreement, as well as nominal amounts from other licensing agreements and royalties.

We have generated revenue primarily under the RLT Agreement and the Ligand Agreement, as well as nominal amounts from other licensing and royalty agreements.

We have not generated any revenue from commercial drug sales and we do not expect to generate any revenue from commercial drug sales unless or until we obtain regulatory approval and commercialize one or more of our current or future drug candidates, or if we become entitled to revenue from our licensing agreements.

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• employee-related expenses, including salaries, benefits and stock-based compensation expense;

• fees paid to consultants for services directly related to our drug development and regulatory effort;

• fees paid to consultants for services directly related to our drug development and regulatory efforts;

• expenses incurred under agreements with contract research organizations, as well as contract manufacturing organizations and consultants that conduct preclinical studies and clinical trials;

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• milestone payments and other costs and payments under licensing agreements, research agreements and collaboration agreements.

• depreciation expense for assets used in research and development activities.

Costs incurred in connection with research and development activities are expensed as incurred.

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• duration of patient follow-up;

• efficacy and safety profile of the drug candidate.

• efficacy and safety profile of the drug candidates.

In addition, the probability of success for any of our current or future drug candidates will depend on numerous factors, including competition, manufacturing capability and commercial viability.

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General and administrative expenses consist primarily of employee-related expenses, including salaries, benefits and stock-based compensation expense, related to our executive, finance, business development and support functions.

Other general and administrative expenses include costs associated with operating as a public company, travel expenses, conferences, professional fees for auditing, tax and legal services and facility-related costs.

Other general and administrative expenses include costs associated with operating as a public company, generation and maintenance of intellectual property, travel expenses, conferences, professional fees for auditing, tax and legal services and facility-related costs.

Other Income (Expense), net

Other income (expense), net, consists primarily of interest income and accretion of discount on short-term investments and unrealized gains/losses on long-term equity investments.

Other income (expense), net, consists primarily of interest income, accretion of discount on short-term investments, and unrealized gains/losses on long-term equity investments, changes in the values of long-term investments and the royalty monetization liability under the Ligand Agreement, and loss related to a fraudulent funds transfer.

Results of Operations

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The following table summarizes the results of our operations for the periods indicated:

Year Ended December 31, 2023

Year Ended December 31, 2022

(in thousands)

(in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 Change $

License and other revenue $ 566 $ 392 $ 175

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Net loss $ (26,433) $ (52,339) $ 25,905

Revenue of $0.4 million was recognized for the year ended December 31, 2023 related to royalties.

Revenue was $1.5 million for the year ended December 31, 2022 related to licensing and other agreements.

Revenue of $0.6 million and $0.4 million was recognized for the years ended December 31, 2024 and 2023, respectively, related to a royalty agreement.

Research and Development Expenses

Year Ended December 31, 2023

Year Ended December 31, 2022

(in thousands)

Preclinical and development expenses $ 14,605 $ 9,715 $ 4,883

(in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 Change $

Preclinical and clinical development expenses $ 23,965 $ 14,605 $ 9,360

Payroll and payroll-related expenses 9,889 10,541 (652)

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Research and development expenses were $36.8 million for the year ended December 31, 2024 compared to $28.6 million for the year ended December 31, 2023.

The increase of $4.9 million in preclinical and development expenses was due to additional activities related to our ongoing development programs, primarily relating to OV888 (GV101) and OV329.

The decrease of $1.0 million in payroll and payroll-related expenses was primarily due to the impact of a reorganization in early 2022 which resulted in approximately $1.0 million in severance costs during the period.

The increase of $9.4 million in preclinical and development expenses was due to additional activities related to our ongoing development programs, primarily relating to OV350, OV888 (GV101) and OV329.

The decrease in payroll and payroll-related expenses was primarily due to the impact of an organizational restructuring in 2024, which resulted in approximately $1.7 million in severance costs during the period ended December 31, 2024 compared to approximately $0.2 million for the same period in 2023.

General and Administrative Expenses

Year Ended December 31, 2023

Year Ended December 31, 2022

(in thousands)

(in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 Change $

Payroll and payroll-related expenses $ 13,835 $ 17,131 $ (3,296)

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General and administrative expenses were $25.7 million for the year ended December 31, 2024 compared to $31.1 million for the year ended December 31, 2023.

The decrease of $1.3 million was primarily due to reduced legal and professional fees and general office expenses, partially offset by an increase in non-cash compensation expenses.

The decrease of $5.4 million was primarily due to the impact of the organizational restructuring in 2024, which resulted in approximately $1.8 million in severance costs during the period compared to approximately $1.5 million for the same period in 2023.

Additionally, resulting from the restructuring, non-severance payroll and related expenses were reduced by approximately $3.7 million between the years ended December 31, 2024 and 2023.

Legal and professional fees and general office expenses were primarily reduced by cost-cutting efforts.

Other Income (Expense), net

Other income (expense), net was $6.9 million for the year ended December 31, 2023, comprised of $4.9 million in interest and accretion income on investments in U.S.

treasuries and $2.0 million of unrealized gain on long-term equity investments.

Other income (expense), net was $35.5 million for the year ended December 31, 2024, comprised of a $30.0 million decrease in fair value of the royalty monetization liability resulting from Takeda’s reported negative soticlestat Phase 3 study results and announcement of program discontinuation, $3.9 million in interest and accretion income on investments in U.S.

treasuries, $1.8 million loss on a fraudulent funds transfer and a net $3.3 million unrealized gain on long-term equity investments.

For the year ended December 31, 2023, other income (expense), net of $6.9 million was comprised of $4.9 million in interest and accretion income on investments in U.S.

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As of December 31, 2024 and 2023, we had total cash, cash equivalents and marketable securities of $53.1 million and $105.8 million, respectively.

We believe that our cash, cash equivalents and marketable securities as of December 31, 2023 will fund our projected operating expenses and capital expenditure requirements for at least 12 months from the issuance of this Annual Report on Form 10-K.

We believe that our cash, cash equivalents and marketable securities as of December 31, 2024 are sufficient to fund our existing and planned operating expenses and capital expenditure requirements into the second half of 2026.

Similar to other development-stage biotechnology companies, we have generated limited revenue.

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As of December 31, 2024, we had an accumulated deficit of $304.3 million and working capital of $45.4 million.

At-the-Market Offering Program

In November 2023, we filed a new shelf registration statement on Form S-3 (Registration No.

333-275307) that allows us to sell up to an aggregate of $250.0 million of our common stock, preferred stock, convertible debt securities and/or warrants (the “S-3 Registration Statement”), which includes a prospectus covering the issuance and sale of up to $75.0 million of common stock pursuant to our at-the-market (“ATM”) program.

During the years ended December 31, 2024 and 2023, we did not sell any shares under our ATM program.

As of December 31, 2024, we had up to $250.0 million available under our S-3 Registration Statement, including up to $75.0 million available pursuant to our ATM program.

As of the date of this Form 10-K, our public float was less than $75.0 million.

As a result, we are subject to the limitations of General Instruction I.B.6 to Form S-3 until such time as our public float exceeds $75 million, which means we only have the capacity to sell shares up to one-third of our public float under the S-3 Registration Statement, including the ATM program, in any twelve-month period.

We will remain constrained by the limitations of General Instruction I.B.6 to Form S-3 until such time as our public float exceeds $75 million, at which time the number of securities we may sell under a Form S-3 registration statement will no longer be limited by limitations of General Instruction I.B.6 to Form S-3.

Future Funding Requirements

We believe that our available cash, cash equivalents and marketable securities are sufficient to fund existing and planned cash requirements into the first half of 2026.

We expect our expenses to continue to increase in connection with our ongoing activities, particularly as we conduct clinical trials of, and seek marketing approval for, our product candidates and advance our other programs.

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, clinical costs, legal and other regulatory expenses and general overhead costs.

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Additionally, the process of testing drug candidates in clinical trials is costly, and the timing of progress in these trials is uncertain.

We cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates or whether, or when, we may achieve profitability.

As of December 31, 2023, we had no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase order basis.

We cannot estimate whether we will receive or the timing of any potential contingent payments upon the achievement by us of clinical, regulatory and commercial events, as applicable, or royalty payments that we may be required to make under license agreements we have entered into with various entities pursuant to which we have in-licensed certain intellectual property as contractual obligations or commitments, including agreements with AstraZeneca, Gensaic and Northwestern.

Pursuant to these license agreements, we have agreed to make milestone payments up to an aggregate of $660.3 million upon the achievement of certain development, regulatory and sales milestones.

We excluded these contingent payments from the consolidated financial statements given that the timing, probability, and amount, if any, of such payments cannot be reasonably estimated at this time.

In September 2021, we entered into a 10-year lease agreement for our corporate headquarters with a term commencing March 10, 2022, for approximately 19,000 square feet of office space at Hudson Commons in New York, New York.

The lease provides for monthly rental payments over the lease term.

The base rent under the lease is currently $2.3 million per year.

Rent payments commenced January 10, 2023, and will continue for ten years following the rent commencement date.

We issued a letter of credit in the amount of $1.9 million in association with the execution of the lease agreement, which is reflected as restricted cash on the consolidated balance sheets.

Payment obligations under the lease agreement include approximately $2.3 million in the 12 months subsequent to December 31, 2023 and approximately $23.5 million over the term of the agreement.

For additional information see Note 5 to our consolidated financial statements under the heading 'Leases.'

We cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our drug candidates or whether, or when, we may achieve profitability.

We have no products approved for commercial sale and have not generated any revenues from product sales to date.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings and additional funding from license and collaboration arrangements.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through

a combination of equity offerings, debt financings and additional funding from license and collaboration arrangements.

Except for any obligations of our collaborators to reimburse us for research and development expenses or to make milestone or royalty payments under our agreements with them, we will not have any committed external source of liquidity.

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There can be no assurance that such financings will be obtained on terms acceptable to us, if at all.

Additionally, while the long-term economic impact of geopolitical tensions, including the war between Russia and Ukraine and war in Israel, is difficult to assess or predict, each of these events has caused significant disruptions to the global financial markets and contributed to a general global economic slowdown.

Furthermore, inflation rates have increased recently to levels not seen in decades.

Additionally, while the long-term economic impact of geopolitical tensions, including tensions between China and Taiwan, the ongoing war between Russia and Ukraine and the war involving Israel, is difficult to assess or predict, each of these events has caused significant disruptions to the global financial markets and contributed to a general global economic slowdown.

Furthermore, inflation rates have increased recently to levels not seen in decades, which may also be impacted by the implementation of tariffs by the United States and other countries.

Moreover, there is great uncertainty with respect to potential changes in trade regulations, tariffs, sanctions and export controls which also increase volatility in the global economy.

In addition, the U.S.

Federal Reserve has raised interest rates in response to concerns about inflation.

High interest rates, especially if coupled with reduced government spending and volatility in financial markets, may further increase economic uncertainty and heighten these risks.

If the disruptions and slowdown deepen or persist, we may not be able to access additional capital on favorable terms, or at all, which could in the future negatively affect our ability to pursue our business strategy.

Relatively high interest rates and fluctuations in inflation, especially if coupled with reduced government spending and volatility in financial markets, may further increase economic uncertainty and heighten these risks.

If the disruptions and slowdown deepen or persist, we may not be able to access additional capital on favorable terms, or at all, which could negatively affect our future ability to pursue our business strategy.

If we raise additional funds through collaborations, strategic alliances or licensing agreements with third parties for one or more of our current or future drug candidates, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates or to grant licenses on terms that may not be favorable to us.

Our failure to raise capital as and when needed would have a material adverse effect on our financial condition and our ability to pursue our business strategy.

See “Risk Factors” for additional risks associated with our capital requirements.

At-the-Market Offering Program

In November 2020, we filed a shelf registration statement on Form S-3 (Registration No.

333-250054) (the “Prior S-3 Registration Statement”).

In November 2023, upon expiration of the of the Prior Registration Statement, we filed a new shelf registration statement on Form S-3 (Registration No.

333-275307) that allows us to sell up to an aggregate of $250.0 million of our common stock, preferred stock, debt securities and/or warrants (the “Current S-3 Registration Statement”), which includes a prospectus covering the issuance and sale of up to $75.0 million of common stock pursuant to an at-the-market (“ATM”) offering program, including the unsold securities under the Prior Registration Statement.

During the years ended December 31, 2023 and 2022, we did not sell any shares under our ATM program.

As of December 31, 2023, we had $250.0 million available under our Current S-3 Registration Statement, including $75.0 million available pursuant to our ATM program.

We may be required to take additional actions beyond the cost preservation measures initiated to address our liquidity needs, including exploring other strategic options, continuing to further reduce operating expense or delaying, reducing the scope of, discontinuing or altering our research and development activities.

See “ Item 1A.

Risk Factors ” for additional risks associated with our capital requirements.

Material Cash Requirements

As of December 31, 2024, we had no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase order basis.

Pursuant to these license agreements, we have agreed to make milestone payments up to an aggregate of $660.3 million upon the achievement of certain development, regulatory and sales milestones.

We excluded these contingent payments from the consolidated financial statements given that the timing, probability, and amount, if any, of such payments cannot be reasonably estimated at this time.

In September 2021, we entered into a ten year lease agreement for our corporate headquarters with a term commencing in March 2022 for approximately 19,000 square feet of office space at Hudson Commons in New York, New York.

The lease provides for monthly rental payments over the lease term.

The base rent under the lease is currently $2.3 million per year.

Rent payments commenced in January 2023, and will continue for ten years following the rent commencement date.

We issued a letter of credit in the amount of $1.9 million in association with the execution of the lease agreement, which is reflected as restricted cash on the consolidated balance sheets.

Payment obligations under the lease agreement include approximately $2.3 million in the 12 months subsequent to December 31, 2024 and approximately $19.3 million over the remainder of the agreement.

For additional information see Note 5 to our consolidated financial statements under the heading ‘Leases.’

The following table summarizes our cash flows for the periods indicated:

Year Ended December 31, 2023

Year Ended December 31, 2022

(in thousands)

(in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023

Net cash (used in) provided by:

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Net Cash Used in Operating Activities

Net cash used in operating activities was $45.8 million for the year ended December 31, 2023, which consisted of net loss of $52.3 million offset by a net of $6.6 million of various non-cash charges and operating cash changes, most significantly $7.3 million in stock-based compensation.

Net cash used in operating activities was $55.2 million for the year ended December 31, 2022, which consisted of net loss of $54.2 million and $8.3 million decrease in accounts payable and accrued expenses, partially offset by various non-cash charges and cash changes.

Net Cash Used in Investing Activities

Net cash used in investing activities was $2.6 million for the year ended December 31, 2023, which was primarily related to our purchases and sales/maturities of investments in U.S.

treasury funds and the purchase of a long-term equity investment.

Net cash used in operating activities was $56.0 million for the year ended December 31, 2024, which consisted of net loss of $26.4 million offset by $29.4 million, net, of various noncash charges, most significantly a $30.0 million in change in fair value of the royalty monetization liability with Ligand.

Net cash used in operating activities was $45.8 million for the year ended December 31, 2023, which consisted of net loss of $52.3 million offset by a net of $4.2 million of various noncash charges, most significantly $7.3 million in stock-based compensation expense.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities was $54.6 million for the year ended December 31, 2024, which was primarily related to our purchases and sales/maturities of investments in U.S.

treasuries and the purchase of a long-term equity investment.

For the year ended December 31, 2023, $2.6 million was used in investing activities, primarily comprised of purchases and sales/maturities of investments in U.S.

treasury funds.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $30.5 million for the year ended December 31, 2023, which was primarily due to the $30.0 million received in connection with the Ligand Agreement.

For the same period in 2022, cash provided by financing activities was $0.2 million, related to proceeds from the exercise of options and purchases made under the employee stock purchase plan.

Critical Accounting Estimates and Policies

Net cash provided by financing activities was $0.6 million for the year ended December 31, 2024, which was comprised of proceeds from the exercise of options and purchases made under our employee stock purchase plan.

For the same period in 2023, cash provided by financing activities was $30.5 million, primarily due to the $30.0 million received in connection with the Ligand Agreement in addition to proceeds from the exercise of options and purchases made under the employee stock purchase plan.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

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Revenue Recognition

We recognize revenue under sublicense agreements in accordance with ASC 606, Revenue Recognition, which is applicable to the RLT Agreement.

We recognize revenue under sublicense agreements in accordance with ASC 606, Revenue Recognition.

The terms of the agreements within this scope may contain multiple performance obligations, including but not limited to licenses and research and development activities.

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When preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses.

This process involves reviewing open contracts and communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost.

This process involves reviewing open contracts and communicating with our personnel and consultants to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost.

Payments under certain contracts we have with third parties depend on factors, such as the successful enrollment of certain numbers of patients, site initiation and the completion of clinical trial milestones.

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We are a smaller reporting company as defined in the Exchange Act.

We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

As a smaller reporting company, we are permitted to comply with scaled-back disclosure obligations in our SEC filings compared to other issuers, including with respect to disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

We have elected to adopt the accommodations available to smaller reporting companies, including but not limited to:

• reduced disclosure obligations regarding executive compensation arrangements;

• being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure.

We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) the value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our most recently completed second fiscal quarter or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and our the value of voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our most recently completed second fiscal quarter.

As a smaller reporting company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis