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Item 1A. Risk Factors

2025-05-13 compared with 2024-11-13 · 158 added, 144 removed, 1304 unchanged (19% of the section changed)

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● Our product candidates may cause undesirable and unforeseen side effects, which could delay or prevent their advancement into clinical trials or regulatory approval, limit the commercial potential or result in significant negative consequences;

● We currently rely on our collaboration with Gemma for many aspects of our preclinical research and development programs, including for discovering, preclinically developing and conducting IND-enabling studies for our preclinical product candidates and our near-term future pipeline of product candidates;

● Gene therapies are novel, complex and difficult to manufacture.

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We have incurred net losses since our inception in 2017.

We incurred net losses of $52.0 million and $85.3 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $646.5 million.

We incurred net losses of $15.4 million and $16.7 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, we had an accumulated deficit of $674.6 million.

Substantially all of our operating losses have resulted from expenses incurred in connection with our research and development programs, acquiring the rights to our product candidates, and from general and administrative expenses associated with our operations.

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• expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts;

• expand or build our internal manufacturing capabilities;

• develop our internal manufacturing capabilities;

• maintain, expand and protect our intellectual property portfolio;

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To become and remain profitable, we must develop and eventually commercialize product candidates with significant market potential, which will require us to be successful in a range of challenging activities.

These activities can include completing preclinical studies and initiating and completing clinical trials of our product candidates, obtaining marketing

approval for these product candidates, manufacturing, obtaining coverage and adequate reimbursement from government and third-party payors, marketing, distributing, and selling those products that are approved and satisfying any post marketing requirements.

These activities can include completing preclinical studies and initiating and completing clinical trials of our product candidates, obtaining marketing approval for these product candidates, manufacturing, obtaining coverage and adequate reimbursement from government

and third-party payors, marketing, distributing, and selling those products that are approved and satisfying any post marketing requirements.

We may never succeed in any or all of these activities and, even if we do, we may never generate revenues that are significant or large enough to achieve profitability.

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Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.

Our ability to raise additional funds also depends on general financial, economic and market conditions as well as other factors, including financial institutions that may experience insolvency or financial distress similar to that experienced by both Silicon Valley Bank and Signature Bank in March 2023, over which we may have no or limited control.

If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce or eliminate certain of our licensing activities, our research and development programs or other operations.

Our operations have consumed significant amounts of cash since inception.

As of September 30, 2024, our cash, cash equivalents and marketable securities were $84.8 million.

We expect that our existing cash, cash equivalents and marketable securities, combined with the remaining initial payments from the Gemma Sublicenses and expected payments in connection with the Transition Services Agreement, will enable us to fund our operating expenses and capital expenditure requirements to the end of the second quarter of 2026.

As of March 31, 2025, our cash and cash equivalents were $63.4 million.

We expect that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2027.

However, we have based this estimate on assumptions that may prove to be wrong, and our operating plan may change as a result of factors currently unknown to us.

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Accordingly, we will need to continue to rely on additional financing to achieve our business objectives, which may not be available to us on acceptable terms, or at all.

For example, we are party to the Sales Agreement with Cowen relating to the sale and issuance, from time to time, shares of our common stock in at-the-market equity offerings with an aggregate offering price up to $125.0 million, or the ATM Facility.

$9.0 million of shares of our common stock have been sold under the ATM Facility as of September 30, 2024.

For example, we are party to the Sales Agreement with Cowen relating to the sale and issuance, from time to time, of shares of our common stock in at-the-market equity offerings with an aggregate offering price up to $50 million, or the ATM Facility.

However, our ability to raise capital under the ATM Facility or other registration statements may be limited by, among other things, SEC rules and regulations impacting the eligibility of smaller companies to use Form S-3 for primary offerings of securities.

Based on our public float as of the date of the filing of our Annual Report on Form 10-K, we are only permitted to utilize a shelf registration statement, including the registration statement under which the ATM Facility is operated, subject to Instruction I.B.6 to Form S-3, which is referred to as the “baby shelf” rule.

For so long as our public float is less than $75.0 million, we may not sell more than the equivalent of one-third of our public float during any 12 consecutive months pursuant to the baby shelf rules.

Although alternative public and private transaction structures may be available, these may require additional time and cost, may impose operational restrictions on us, and may not be available on attractive terms.

We may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans.

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The process of obtaining regulatory approval is expensive and time consuming.

The FDA and foreign regulatory authorities may never approve PBFT02 for sale and marketing, and even if PBFT02 is ultimately approved, regulatory approval may be delayed or limited in the United States or in other jurisdictions.

The FDA and foreign regulatory authorities may never approve PBFT02 for sale and marketing, and even if PBFT02 is ultimately approved, regulatory approval

may be delayed or limited in the United States or in other jurisdictions.

Even if we are authorized to sell and market PBFT02 in one or more markets, there is no assurance that we will be able to successfully market PBFT02 or that PBFT02 will achieve market acceptance sufficient to generate profits.

If we are unable to successfully develop and commercialize PBFT02 due to failure to obtain regulatory approval for PBFT02, to successfully market PBFT02 or, to

generate profits from the sale of PBFT02 due to other risk factors outlined in this report, it would have material adverse effects on our business, financial condition, and results of operations.

If we are unable to successfully develop and commercialize PBFT02 due to failure to obtain regulatory approval for PBFT02, to successfully market PBFT02 or, to generate profits from the sale of PBFT02 due to other risk factors outlined in this report, it would have material adverse effects on our business, financial condition, and results of operations.

We are early in our development efforts.

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The length of time of such testing may vary substantially according to the type, complexity and novelty of the program, and often can be several years or more per program.

Delays associated with programs for which we are conducting preclinical testing and studies may

cause us to incur additional operating expenses.

Delays associated with programs for which we are conducting preclinical testing and studies may cause us to incur additional operating expenses.

We may experience unexpected or adverse results in our ongoing or future clinical trials.

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The clinical study requirements of the FDA and ex-U.S.

regulatory agencies and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential products.

potential products.

The regulatory approval process for novel product candidates such as ours may be more expensive and take longer than for other, better known or extensively studied product candidates.

Further, as we are developing novel treatments for diseases in which there is little clinical experience with new endpoints and methodologies, there is heightened risk that the FDA or comparable foreign regulatory bodies may not consider the clinical trial endpoints to provide clinically meaningful results, and the resulting clinical data and results may be more difficult to analyze.

To date, only a limited number of gene therapy products have been approved in the United States and foreign countries,

which makes it difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for our product candidates in the United States or other jurisdictions.

To date, only a limited number of gene therapy products have been approved in the United States and foreign countries, which makes it difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for our product candidates in the United States or other jurisdictions.

Further, approvals by ex-U.S.

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There also is the potential risk of delayed adverse events following exposure to gene therapy products due to persistent biologic activity of the genetic material or other components of products used to carry the genetic material.

For example, Patient 1 in our upliFT-D trial, who received a low level of immunosuppression (60 mg oral prednisone daily for 60 days) experienced two serious adverse events that were both asymptomatic and likely consistent with an immune response.

Subsequently, we amended the protocol to increase the steroid regimen.

Additional possible adverse side effects could occur that may substantially limit the effectiveness of the treatment.

For example, two patients in our upliFT-D trial, have experienced a total of three serious adverse events, all of which were asymptomatic and likely consistent with an immune response.

As a result of the immune response observed in the first patient dosed, who received a low initial level of immunosuppression (60 mg oral prednisone daily for 60 days), we amended the protocol to increase the steroid regimen.

Subsequent to the serious adverse event experienced by the seventh patient, the Company introduced a new dose (Dose 2), which is half the dose used in patients one through seven (Dose 1), and plans to study Dose 2 for all remaining patients in Cohort 2.

Additional possible adverse side effects could occur that may require changes to the protocol in the future.

Further, adverse side effects could substantially limit the effectiveness of the treatment.

For example, in previous third-party clinical trials involving AAV vectors for gene therapy, some subjects experienced the development of a T-cell immune response, whereby after the vector is within the target cells, the cellular immune response system triggers the removal of transduced cells by activated T-cells.

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In addition to side effects caused by the product candidate, the administration process or related procedures also can cause adverse side effects.

Each of our clinical product candidates are expected to utilize ICM administration.

Our current clinical product candidate utilizes ICM administration.

While this method of administration has been available for decades, its use for therapies is relatively new, no therapies are currently approved using ICM administration, and it may be perceived as having greater risk than more common methods of administration, such as intravenous injection.

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Any of these occurrences may harm our ability to develop other product candidates, and may harm our business, financial condition and prospects significantly.

Additionally, if any of our product candidates receives marketing approval, the FDA could require us to adopt a Risk Evaluation and Mitigation Strategies, or REMS, to ensure that the benefits of the product outweigh its risks, which may include, among other things, a Medication Guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners.

include, among other things, a Medication Guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners.

Furthermore, if we or others later identify undesirable side effects caused by our product candidate, several potentially significant negative consequences could result, including:

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It was later discovered that adenoviruses could generate an extreme immune system reaction that can be life threatening.

Wilson, who also serves as a consultant to the Company as a Scientific Advisor, was a co-investigator of the 1999 trial while he was Director of the Institute for Human Gene Therapy of Penn.

James Wilson, who also serves as a consultant to us as a Scientific Advisor, was a co-investigator of the 1999 trial while he was Director of the Institute for Human Gene Therapy of Penn.

Serious adverse events in our clinical trials, or other clinical trials involving gene therapy by us or our competitors, even if not ultimately attributable to the relevant product candidates, and the resulting publicity, could result in increased government regulation, unfavorable public perception and potential regulatory delays in the clinical testing or approval of our product candidates.

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For example, we estimate the prevalence of FTD- GRN deficiency in the United States and Europe is approximately 18,000.

This could be a significant obstacle to the timely recruitment and enrollment of a sufficient number of eligible patients into our trial.

This could be a significant obstacle to the timely recruitment and

enrollment of a sufficient number of eligible patients into our trial.

Further, we expect to rely in part on our relationships with patient advocacy groups to assist in identifying eligible patients, and any deterioration of those relationships could impede our ability to successfully enroll patients.

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Delays as a result of an increased or lengthier regulatory approval process or further restrictions on the development of our product candidates can be costly and could negatively impact our ability to complete clinical trials and commercialize our current and future product candidates in a timely manner, if at all.

Changes in funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes.

In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.

For example, over the last several years, including for 35 days beginning on December 22, 2018, the U.S.

government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop important activities.

If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Disruptions at the FDA or other comparable foreign regulatory authorities may slow the time necessary for new products to be reviewed and/or approved, which would adversely affect our business.

In addition, there is substantial uncertainty regarding new initiatives under the new Administration and how these might impact the FDA, its implementation of laws, regulations, policies and guidance and its personnel.

Similar initiatives may also be directed toward other government agencies.

These initiatives could prevent, limit or delay development and regulatory approval of our product candidates, which would adversely affect our business.

Disruptions at the FDA or other comparable foreign regulatory authorities may slow the time necessary for new products to be reviewed and/or approved, which would adversely affect our business.

Changes in FDA staffing could result in delays in the FDA’s responsiveness or in its ability to review submissions or applications, issue regulations or guidance, or implement or enforce regulatory requirements in a timely fashion or at all.

If any legislation, executive orders, or lapses in agency funding impose constraints on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.

Similar consequences would also result in the event of another significant shutdown of the federal government.

For example, in 2024, the U.S.

government was on the verge of a shutdown and has previously shut down several times, and certain regulatory agencies, such as the FDA, had to furlough critical employees and stop critical activities.

If a prolonged government shutdown occurs, or if geopolitical or global health concerns prevent the FDA from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Further, future government shutdowns or delays could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

FDA-regulated industries, such as ours, face uncertainty with regard to the regulatory environment we will face under the new Administration as we proceed with research and development and potential future commercialization.

Some of these efforts have manifested to date as efforts to reduce the size of the federal government, including large-scale reductions in force at the FDA.

The loss of key personnel at the FDA, including those in leadership positions, is likely to impact operations at the FDA, which could result in, among other things, delays or limitations on our ability to obtain guidance from the FDA on our product candidates in development, longer review times and delays in obtaining the regulatory approvals for our product candidates.

Moreover, the new Administration has recently proposed action to freeze or reduce the budget of the National Institutes of Health as related to its funding for medical research, which could decrease the ability of facilities that rely on NIH funding to enroll and conduct clinical trials or increase the costs to us of conducting clinical trials.

There remains general uncertainty regarding future activities.

New executive orders, regulations, policies or guidance could be issued or promulgated that adversely affects us or creates a more challenging or costly environment to pursue the development of new therapeutic products.

Alternatively, state governments may attempt to address or react to changes at the federal level with changes to their own regulatory frameworks in a manner that is adverse to our operations.

If we become negatively impacted by future governmental orders, regulations, policies or guidance, there could be a material adverse effect on us and our business.

Failure to obtain marketing approval in foreign jurisdictions would prevent our product candidates from being marketed abroad and will limit our ability to realize their full market potential.

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In addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country.

Approval processes vary among countries and can involve additional product testing and validation and

additional administrative review periods.

Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods.

Seeking foreign regulatory approval could result in difficulties and costs for us and require additional preclinical studies or clinical trials which could be costly and time-consuming.

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Our business model is centered on developing therapies for patients with CNS disorders by establishing focused selection criteria to select, develop and advance product candidates that we believe will have a higher probability of technical and regulatory success through development into commercialization.

We may not be able to continue to identify and develop new product candidates in addition to the pipeline of product candidates that we have established through our collaboration with GTP.

We may not be able to continue to identify and develop new product candidates in addition to the pipeline of product candidates that we have established

through our collaboration with GTP.

As a result of the Outlicense Transaction Agreements, we no longer have a collaboration with GTP and instead have a collaboration with Gemma.

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As a result, Gemma may have competing interests with respect to their priorities and resources.

We may have disagreements

with Gemma with respect to the interpretation of the Gemma Collaboration Agreement, use of resources or otherwise that could cause our relationship with Gemma to deteriorate.

We may have disagreements with Gemma with respect to the interpretation of the Gemma Collaboration Agreement, use of resources or otherwise that could cause our relationship with Gemma to deteriorate.

As a result, Gemma may reduce their focus on, and resources allocated to, our programs, potentially delaying or terminating our ability to advance product candidates through preclinical studies.

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As a result, many important aspects of our development programs, including their conduct and timing, will be outside of our direct control.

Our reliance on third

parties to conduct future preclinical studies and clinical trials will also result in less day-to-day control over the management of data developed through preclinical studies and clinical trials than would be the case if we were relying entirely upon our own staff.

Our reliance on third parties to conduct future preclinical studies and clinical trials will also result in less day-to-day control over the management of data developed through preclinical studies and clinical trials than would be the case if we were relying entirely upon our own staff.

If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs.

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As a result of the foregoing, our current and any future collaboration agreements may not lead to development or commercialization of our product candidates in the most efficient manner or at all.

If a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or

commercialization program could be delayed, diminished or terminated.

If a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could be delayed, diminished or terminated.

Any failure to successfully develop or commercialize our product candidates pursuant to our current or any future collaboration agreements could have a material and adverse effect on our business, financial condition, results of operations and prospects.

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In addition, a significant number of recent business combinations among large pharmaceutical companies has resulted in a reduced number of potential future collaborators.

Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors.

Whether we reach a definitive agreement for a collaboration will

depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors.

Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing drugs, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally.

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If any conflicts arise with any of our collaborators, such collaborator may act in a manner that is adverse to our best interests.

Any such disagreement could result in one or more of the following, each of which could delay or prevent the development or commercialization of our product candidates, and in turn prevent us from generating

unwillingness on the part of a collaborator to pay us milestone payments or royalties we believe are due to us under a collaboration, which could require us to raise additional capital;

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If we acquire assets with promising markets or technologies, we may not be able to realize the benefit of acquiring such assets if we are not able to successfully integrate them with our existing technologies.

We may encounter numerous difficulties in developing, testing, manufacturing and marketing any new products resulting from a strategic acquisition that delay or prevent us from realizing their expected benefits or enhancing our business.

We may encounter numerous difficulties in developing, testing, manufacturing and marketing any new

products resulting from a strategic acquisition that delay or prevent us from realizing their expected benefits or enhancing our business.

We cannot assure you that following any such strategic transaction, we will achieve the expected synergies to justify the transaction.

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We currently rely on third parties to develop, manufacture and test clinical supplies of our product candidates, including the materials used to administer our product candidates.

For our initial clinical trials, we rely on the manufacturing facility of Catalent Maryland, a unit of Catalent, Inc., or Catalent, for supply of our product candidates.

For our initial clinical trials, we rely on the manufacturing facility of Catalent Maryland, a unit of Catalent, Inc.

acquired by Novo Holdings A/S, or Catalent, for supply of our product candidates.

We have limited experience as a company in developing manufacturing facilities.

If or when we decide to construct our own manufacturing facility for long-term commercial market supply, we may face delays in building out a plant, constructing new facilities, transferring technology to the facilities or hiring experts to staff and operate the facilities and, accordingly, our production capacity could be limited.

We have established internal testing operations supporting our preclinical and clinical manufacturing in addition to using external contract testing labs and established analytical

development and process development capabilities to support our pipeline.

We use external contract testing labs and analytical development and process development services to support our pipeline.

The manufacturing processes used to produce our product candidates are complex, novel and have not been validated for commercial use.

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For example, we have recently developed a potency assay for release of PBFT02 for late-stage clinical studies and commercialization.

While we have received initial positive feedback from the FDA on the suitability of our proposed assay, there can be no assurance that this assay will be approved by the FDA or ensure product potency.

While we have received initial positive feedback from the FDA on the suitability of our proposed potency assay, there can be no assurance that this assay will be approved by the FDA or ensure product potency.

Accordingly, we employ multiple steps to control the manufacturing process to assure that the process works consistently and the product candidate is made strictly and consistently in compliance with the process.

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The competition for gene therapy contract development, manufacturing and testing services is intense.

Additionally, these manufacturers do not have experience producing our product candidates at commercial levels and may not achieve the necessary regulatory approvals or produce our product candidates at the quality, quantities, locations and timing needed to support commercialization.

While we are in the process of establishing manufacturing capability for certain clinical manufacturing activities, we do not currently plan to independently manufacture most of the material for our planned clinical programs.

Additionally, these manufacturers do not have experience producing our product candidates at commercial scale and may not achieve the necessary regulatory approvals or produce our product candidates at the quality, quantities, locations and timing needed to support commercialization.

We currently rely, and expect to continue to rely, on third parties for the production of our preclinical study and planned clinical trial materials, including the materials used to administer our product candidates and, therefore, we can control only certain aspects of their activities.

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We may be unable to negotiate binding agreements with the manufacturers to support our potential commercialization activities at commercially reasonable terms.

In addition, under our current agreements with Catalent, (i) we no longer have exclusive access to the dedicated clean room suite and may not be able to secure future capacity or to meet our requirements for future clinical and commercial supply and (ii) we have an exclusive obligation to manufacture certain products with Catalent and therefore we may be unable to work with other third-party manufacturers.

future clinical and commercial supply and (ii) we have an exclusive obligation to manufacture certain products with Catalent and therefore we may be unable to work with other third-party manufacturers.

As a result, we may be unable to continue to develop and commercialize our products or product candidates.

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Even if our third-party manufacturers comply with applicable regulatory requirements, we cannot assure that they will be able to successfully manufacture additional product candidates at a larger scale in a timely or economical manner, or at all.

If they are unable to successfully increase our manufacturing scale or capacity, the development, testing, and clinical

trials of our product candidates may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.

If they are unable to successfully increase our manufacturing scale or capacity, the development, testing, and clinical trials of our product candidates may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.

Our third-party manufacturers and suppliers use biological materials and may use hazardous materials, and any claims relating to improper handling, storage or disposal of these materials could be time-consuming or costly.

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We may be unable to find a sufficient alternative supply channel in a reasonable time or on commercially reasonable terms.

Any performance failure on the part of our suppliers could delay the development and

potential commercialization of our product candidates, including limiting supplies necessary for clinical trials and regulatory approvals, which would have a material adverse effect on our business.

Any performance failure on the part of our suppliers could delay the development and potential commercialization of our product candidates, including limiting supplies necessary for clinical trials and regulatory approvals, which would have a material adverse effect on our business.

Risks Related to Commercialization

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We consider our most direct competitors with respect to PBFT02 for the treatment of FTD- GRN to be Prevail Therapeutics Inc.

(part of Eli Lilly & Co), which is conducting a Phase 1/2 clinical trial for a gene therapy treatment for FTD- GRN and AviadoBio Ltd, which began enrolling their Phase 1/2 gene therapy trial in patients with FTD- GRN in the second half of 2023.

(part of Eli Lilly & Co), which is

conducting a Phase 1/2 clinical trial for a gene therapy treatment for FTD- GRN and AviadoBio Ltd, which began enrolling their Phase 1/2 gene therapy trial in patients with FTD- GRN in the second half of 2023.

AviadoBio Ltd entered into an exclusive option and licensing agreement with Astellas in October 2024.

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in partnership with Takeda Pharmaceutical Company Limited, is conducting a Phase 1/2 clinical trial for their recombinant progranulin protein.

Vesper Bio ApS began Phase 1 enrollment for a small molecule sortilin antagonist program targeting FTD- GRN in the fourth quarter of 2023.

Vesper Bio ApS initiated a Ph1b study in asymptomatic GRN mutation carriers in Q1 2025.

We are also aware of other therapeutic approaches in preclinical development that may target FTD- GRN patients including the Arkuda Therapeutics small molecule progranulin enhancer program which entered an exclusive option and asset purchase agreement with Johnson & Johnson Innovative Medicine in the first quarter 2024.

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In addition to the GRN and C9orf72 targeted therapies, there are four clinical stage programs for FTD targeting the TDP-43 pathway.

There are also numerous pre-IND stage programs exploring TDP-43 and other targets for the treatment of FTD.

Many of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical, and other resources than we do, such as larger research and development, clinical, commercial and manufacturing organizations.

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Even with the requisite approvals from the FDA in the United States and other ex-U.S.

regulatory authorities, the commercial success of our product candidates will depend, in part, on the acceptance of physicians, patients (which

includes caregivers when applicable) and health care payors of gene therapy products in general, and our product candidates in particular, as medically necessary, cost-effective and safe.

regulatory authorities, the commercial success of our product candidates will depend, in part, on the acceptance of physicians, patients (which includes caregivers when applicable) and health care payors of gene therapy products in general, and our product candidates in particular, as medically necessary, cost-effective and safe.

Any product that we commercialize may not gain acceptance by physicians, patients, health care payors and others in the medical community.

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With respect to the commercialization of all or certain of our product candidates, we may choose to collaborate, either globally or on a territory-by-territory basis, with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems.

If we are unable to enter into such arrangements when needed on acceptable terms, or at all, we may not be able to successfully commercialize any of our product candidates that receive regulatory approval, or any such

commercialization may experience delays or limitations.

If we are not successful in commercializing our product candidates, either on our own or through collaborations with one or more third parties, our future product revenue will suffer and we may incur significant additional losses.

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Additionally, for some of our product candidates, we intend to rely on regulatory protection afforded through rare drug designations, data exclusivity and market exclusivity as well as patent term extensions, where available.

Currently, most of our intellectual property protection consists of patent applications that we have in-licensed from Penn under the Penn License Agreement.

Currently, our intellectual property protection includes patent applications that we have in-licensed from Penn under the Penn License Agreement.

The in-licensed patent applications are directed to certain new AAV capsids, to recombinant AAV viruses, or rAAV, capable of delivering certain genes into human cells to treat disorders of the CNS, to methods of treating those diseases with rAAV, as well as to certain aspects of our manufacturing capabilities and related technologies.

Our intellectual property also includes patent applications that we solely own that cover processes that we developed for manufacturing our rAAV products and certain of our product candidates.

Our intellectual property also includes patent applications that we solely own that cover processes that we developed for manufacturing our rAAV products, methods of treating adult neurodegenerative diseases such as FTD- C9orf72 and ALS and an assay for measuring potency of our rAAV product candidate.

We also have options under the Gemma Collaboration Agreement to conduct further research into new CNS indications that may create additional intellectual property.

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In the United States, the natural expiration of a patent is generally twenty years after its first nonprovisional U.S.

The natural expiration of a patent

outside of the United States varies in accordance with provisions of applicable local law, but is generally 20 years from the earliest local filing date.

The natural expiration of a patent outside of the United States varies in accordance with provisions of applicable local law, but is generally 20 years from the earliest local filing date.

Various extensions may be available;

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Other parties have developed technologies that may be related or competitive to our own and such parties may have filed or may file patent applications, or may have received or may receive patents, claiming inventions that may overlap or conflict with those claimed in our own patent applications or issued patents.

Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and in other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.

Publications of discoveries in the scientific

literature often lag behind the actual discoveries, and patent applications in the United States and in other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.

Therefore, we cannot know with certainty whether the inventors of our own or licensed patents and applications were the first to make the inventions claimed in those patents or pending patent applications, or that they were the first to file for patent protection of such inventions.

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As a result, one or more claims of our own or licensed patents may be narrowed or invalidated.

litigation, a competitor could claim that our patents, if issued, are not valid for a number of reasons.

In litigation, a competitor could claim that our patents, if issued, are not valid for a number of reasons.

If a court agrees, we would lose our rights to those challenged patents.

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In addition to patent protection, if any of our product candidates are approved by the FDA as a biological product under a BLA in the United States, we believe the product would qualify for a 12-year period of exclusivity.

Other regulatory exclusivities may be available, such as Orphan Drug exclusivity, with analogous data, marketing, and orphan exclusivities in various foreign countries.

Other regulatory

exclusivities may be available, such as orphan drug exclusivity, with analogous data, marketing, and orphan exclusivities in various foreign countries.

However, the scope of such regulatory exclusivities is subject to change, and may not provide us with adequate and continuing protection sufficient to exclude others from commercializing products similar to our product candidates.

All of our current product candidates and research programs, including for PBFT02, are licensed from or based upon licenses from a third-party and are field limited to certain indications.

All of our current product candidates and research programs, including PBFT02, are licensed from or based upon licenses from a third-party and are field limited to certain indications.

If the license agreements are terminated or interpreted to narrow our rights, our ability to advance our current product candidates or develop new product candidates based on these technologies will be materially adversely affected.

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Under the Penn License Agreement, we are subject to various obligations, including payment obligations, diligence obligations such as development and commercialization obligations, as well as potential royalty payments and other obligations.

If we fail to comply with any of these obligations or otherwise breach our license agreements, our licensors may have the right to terminate the

applicable license in whole or in part.

If we fail to comply with any of these obligations or otherwise breach our license agreements, our licensors may have the right to terminate the applicable license in whole or in part.

Generally, the loss of any one of our current licenses, or any other license we may acquire in the future, could harm our business, prospects, financial condition and results of operations.

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While this matter has been resolved and we believe that we would have valid defenses to these and any other such claims;

however, if any such claims were ultimately successful,

we might require a license to continue to use and sell any product candidates using such AAV vector.

however, if any such claims were ultimately successful, we might require a license to continue to use and sell any product candidates using such AAV vector.

Such licenses may not be available on commercially reasonable terms, or at all.

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Furthermore, because patent applications can take many years to issue, may be confidential for 18 months or more after filing and can be revised before issuance, there may be applications now pending which may later result in issued patents that may be infringed by the manufacture, use, sale or importation of our product candidates or future products.

If a patent holder believes the manufacture, use, sale, offer for sale or importation of one of our product candidates or future products infringes its patent, the patent holder may sue us even if we have licensed other patent protection for our technology.

Moreover, we may face patent infringement claims from non-practicing entities that have no relevant product revenue and against whom our licensed patent portfolio may therefore have no deterrent effect.

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If we lose a foreign patent lawsuit alleging our infringement of a competitor’s patents, we could be prevented from marketing our therapeutics in one or more foreign countries and/or be required to pay monetary damages for infringement or royalties in order to continue marketing.

Claims that we have misappropriated the confidential information, trade secrets or other intellectual

property of third parties could have a similar negative impact on our business.

Claims that we have misappropriated the confidential information, trade secrets or other intellectual property of third parties could have a similar negative impact on our business.

Any of these outcomes would have a materially adverse effect on our business.

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While an unintentional lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in premature abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.

Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure

to properly legalize and submit formal documents.

If we or our licensors fail to maintain the patents and patent applications covering our product candidates, we may not be able to stop a competitor from marketing drugs that are the same as or similar to our product candidates, which would have a material adverse effect on our business.

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Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States.

Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also export infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States.

Competitors may use our technologies in

jurisdictions where we have not obtained patent protection to develop their own products and may also export infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States.

These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

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There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patent claims do not cover the invention.

An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents against those parties or other competitors and may curtail or preclude our ability to exclude third parties from making and selling similar or

competitive products.

Any of these occurrences could adversely affect our competitive business position, business prospects and financial condition.

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Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded.

Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

Even if we ultimately prevail

in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

Changes in patent law in the United States and in ex-U.S.

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Moreover, the applicable time period or the scope of patent protection afforded could be less than we request.

If we are unable to obtain patent term extension or term of any such extension is less than we request, our competitors may obtain approval

of competing products following our patent expiration, and our business, financial condition, results of operations, and prospects could be materially harmed.

If we are unable to obtain patent term extension or term of any such extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our business, financial condition, results of operations, and prospects could be materially harmed.

Some of the intellectual property rights that we have in-licensed were generated through the use of U.S.

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or (iii) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”).

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.

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.

These time limits have recently been changed by regulation, and may change in the future.

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To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies.

In general, the prices of products under such systems are substantially lower than in the United States.

In general, the prices of products under such systems are substantially

lower than in the United States.

Other countries allow companies to fix their own prices for products, but monitor and control company profits.

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The BPCIA created an abbreviated pathway for the approval of biosimilar and interchangeable biological products.

The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as interchangeable based on its similarity to an existing reference

Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the original branded product is approved under a BLA.

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There has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several presidential executive orders, 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, reduce the costs of drugs under Medicare, and reform government program reimbursement methodologies for drug products.

The FDA released a final rule in September 2020

providing guidance for states to build and submit importation plans for drugs from Canada, and FDA authorized the first such plan in Florida in January 2024.

The FDA released a final rule in September 2020 providing guidance for states to build and submit importation plans for drugs from Canada, and FDA authorized the first such plan in Florida in January 2024.

Recently, several healthcare reform initiatives culminated in the enactment of the Inflation Reduction Act, or IRA, in August 2022, which allows, among other things, the U.S.

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Only high-expenditure single-source biologics that have been approved for at least 11 years (seven years for single-source drugs) can qualify for negotiation, with the negotiated price taking effect two years after the selection year.

Negotiations for Medicare Part D products begin in 2024 with the negotiated price taking effect in 2026, and negotiations for Medicare Part B products begin in 2026 with the negotiated price taking effect in 2028.

Negotiations for Medicare Part D products began in 2024 with the negotiated price taking effect in 2026, and negotiations for Medicare Part B products begin in 2026 with the negotiated price taking effect in 2028.

In August 2023, HHS announced the ten Medicare Part D drugs and biologics that it selected for negotiations, and by October 1, 2023, each manufacturer of the selected drugs signed a manufacturer agreement to participate in the negotiations.

HHS announced the negotiated maximum fair prices by August 2024, and these price caps, which cannot exceed the statutory ceiling price, will come into effect on January 1, 2026.

HHS announced the negotiated maximum fair prices on August 15, 2024, and these price caps, which cannot exceed the statutory ceiling price, will come into effect on January 1, 2026.

A drug or biological product that has an orphan drug designation for only one rare disease or condition will be excluded from the IRA’s price negotiation requirements, but loses that exclusion if it has designations for more than one rare disease or condition, or if is approved for an indication that is not within that single designated rare disease or condition, unless such additional designation or such disqualifying approvals are withdrawn by the time CMS evaluates the drug for selection for negotiation.

The IRA also imposes rebates on Medicare Part B and Part D drugs whose prices have increased at a rate greater than the rate of inflation.

also imposes rebates on Medicare Part B and Part D drugs whose prices have increased at a rate greater than the rate of inflation.

In addition, the law eliminates the “donut hole” under Medicare Part D beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and establishing a new manufacturer discount program, which requires manufacturers that want their drugs to be covered by Medicare Part D to provide statutorily defined discounts to Part D enrollees.

The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025.

The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through the year 2025.

The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

Manufacturers that fail to comply with the IRA may be subject to various penalties, some significant, including civil monetary penalties.

These provisions are taking effect progressively starting in 2023, although they may be subject to legal challenges.

These provisions began taking effect progressively starting in 2023, although they may be subject to legal challenges.

For example, the provisions related to the negotiation of selling prices of high-expenditure single-source drugs and biologics have been challenged in multiple lawsuits.

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federal and state healthcare laws and regulations may include the following:

to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;

● the federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;

● federal false claims laws, including the federal False Claims Act, imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

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● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health, or HITECH, Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, on certain types of people and entities with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

● the federal Physician Payment Sunshine Act requires applicable manufacturers of covered drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, certain types of advanced practice nurses, and teaching hospitals, as well as certain ownership and investment interests held by physicians and their immediate family, which includes annual data collection and reporting obligations;

value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, certain types of advanced practice nurses, and teaching hospitals, as well as certain ownership and investment interests held by physicians and their immediate family, which includes annual data collection and reporting obligations;

● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.

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In his capacity as a Scientific Advisor, Dr.

Wilson is not involved in day-to-day operations and does not have the ability to control or

significantly influence the management or operating policies of the Company.

Wilson is not involved in day-to-day operations and does not have the ability to control or significantly influence the management or operating policies of the Company.

Although we have entered into a consulting agreement with Dr.

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Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize drugs, particularly within the gene therapy space.

Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel.

Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous

pharmaceutical and biotechnology companies for similar personnel.

We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions.

Failure to succeed in clinical trials may make it more challenging to recruit and retain qualified scientific personnel.

Further, the reductions in our workforce announced in March 2022, November 2022, and July 2023 may also make retention of our current personnel both more important and more challenging.

Further, the reductions in our workforce announced in 2022, 2023, and January 2025 may also make retention of our current personnel both more important and more challenging.

These workforce reductions resulted in the loss of longer-term employees, the loss of institutional knowledge and expertise and the reallocation and combination of certain roles and responsibilities across the organization, all of which could adversely affect our operations.

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While we have not experienced any material losses as a result of any system failure, accident or security breach to date, we have been the subject of certain phishing attempts in the past.

If such an event were to occur and cause interruptions in our operations, it could result in a material

disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions.

If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions.

Additionally, a party who circumvents our security measures could, among other effects, appropriate patient information or other proprietary data, cause interruptions in our operations, or expose patients to hacks, viruses, and other disruptions.

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To the extent that any disruption, security breach, or cyber-attack were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of personal, confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed.

Depending on the nature of the information compromised, in the event of a data breach or other unauthorized access to our patient data, we may also have obligations to notify patients and regulators about the incident, and we may need to provide some form of remedy, such as a subscription to credit monitoring services, pay significant fines to one or more regulators, or pay compensation in connection with a class-action settlement (including under the new private right of action under the California Consumer Privacy Act of 2018, or the CCPA, which is expected to increase security breach litigation).

increase security breach litigation).

Such breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another.

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Our ability to utilize our net operating loss carryforwards may be subject to limitation.

As of December 31, 2023, we had federal net operating loss, or NOL, carryforwards of $265.5 million.

$0.3 million of the federal NOLs will begin to expire in 2037, if not used prior to that date, and the remainder will carryforward indefinitely.

As of December 31, 2023, we had state NOL carryforwards of $265.5 million, which will begin to expire in 2037, and expire through 2043.

As of December 31, 2023, we had local NOL carryforwards of $214.5 million, which began to expire in 2024, and expire through 2043.

As of December 31, 2024, we had federal and state net operating loss, or NOL, carryforwards of $339.1 million, and local NOL carryforwards of $218.8 million.

$0.3 million of the federal NOLs will begin to expire in 2037, and the remainder will carryforward indefinitely.

Our state NOL carryforwards will begin to expire in 2037, and expire through 2044, and our local NOL began to expire in 2024 and expire through 2044.

To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any.

Under legislative changes made by U.S.

federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act, or the TCJA, U.S.

federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the ability to utilize such federal net operating losses to offset taxable income is limited to 80% of our taxable income before the deduction for such net operating loss carryovers.

It is uncertain if and to what extent various states will conform to the TCJA.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the IRC, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset its post-change income and post-change liability may be limited.

We have not undertaken a Section 382 study, and it is possible that we have previously undergone one or more ownership changes so that our use of net operating losses is subject to limitation.

We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership.

As a result, if we earn net taxable income, our ability to use our pre-change NOLs to offset U.S.

federal taxable income may be subject to limitations, which could potentially result in increased future tax liability

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset its post-change income and post-change tax liability may be limited.

We have not undertaken a Section 382 study, and it is possible that we have previously undergone one or more ownership changes so that our use of net operating losses is currently limited.

We may experience ownership changes in the future as a result of equity offerings or other shifts in our stock ownership, some of which are outside of our control.

As a result, even if we earn net taxable income, our ability to use our pre-change NOLs and other tax attributes to offset taxable income and tax liability may be subject to limitations, which could potentially result in increased future tax liability to us.

In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

Any such limitations may result in greater tax liabilities than we would incur in the absence of such limitations and any increased liabilities could adversely affect our business, results of operations, financial position and cash flows.

federal income tax reform and changes in other tax laws could adversely affect us.

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Changes in tax laws and regulations in federal, state, local, and foreign jurisdictions could have material adverse impacts on our business, cash flows, operating results, or financial condition, and could materially affect our tax obligations and effective tax rate.

For example, the Tax Cuts and Jobs Act significantly reformed the Internal Revenue Code of 1986, as amended, or the Code.

For example, the Tax Cuts and Jobs Act significantly reformed the Code.

This legislation, among other things, included changes to U.S.

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We will face an inherent risk of product liability exposure related to the testing of our product candidates in clinical trials and will face an even greater risk if we commercialize any of our product candidates.

If we cannot successfully defend

ourselves against claims that our product candidates caused injuries, we could incur substantial liabilities.

If we cannot successfully defend ourselves against claims that our product candidates caused injuries, we could incur substantial liabilities.

Regardless of merit or eventual outcome, liability claims may result in:

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● health pandemics could adversely impact our business, including our clinical trials and clinical trial operations;

● general economic, industry and market conditions, including changes in interest rates, market volatility, a potential federal government shutdown and inflation;

● general economic, industry and market conditions, including fluctuating interest rates, potential tariffs, market volatility, a potential federal government shutdown and inflation;

● general economic uncertainty and capital markets disruptions, which has been substantially impacted by geopolitical instability due to the ongoing military conflicts around the world;

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Our executive officers, directors, principal stockholders and their affiliates exercise significant influence over our company, which will limit your ability to influence corporate matters and could delay or prevent a change in corporate control.

As of September 30, 2024, our executive officers, directors, beneficial owners of 5% or more of our capital stock and their respective affiliates beneficially owned shares representing a substantial portion of our capital stock.

As of March 31, 2025, our executive officers, directors, beneficial owners of 5% or more of our capital stock and their respective affiliates beneficially owned shares representing a substantial portion of our capital stock.

This group of stockholders may have the ability to control us through this ownership position and may be able to determine all matters requiring stockholder approval.

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The interests of this group of stockholders may not always coincide with your interests or the interests of other stockholders and they may act in a manner that advances their best interests and not necessarily those of other stockholders, including seeking a premium value for their common stock, and might affect the prevailing market price for our common stock.

The price of our common stock does not meet the requirements for continued listing on The Nasdaq Global Select Market.

The price of our common stock does not meet the requirements for continued listing on The Nasdaq Global Select Market or The Nasdaq Capital Market.

If we fail to regain compliance with the minimum listing requirements, our common stock will be subject to delisting.

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The continued listing standards of The Nasdaq Global Select Market, require, among other things, that the minimum bid price of a listed company’s stock be at or above $1.00.

On August 1, 2024, the Company received notice from the Listing Qualifications staff of the Nasdaq Stock Market, LLC, that, because the closing bid price for the Company’s

common stock had fallen below $1.00 per share for 30 consecutive business days, the Company no longer complies with the minimum bid price requirement for continued listing on the Nasdaq Global Select Market.

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided an initial compliance period of 180 calendar days, or until January 28, 2025, to regain compliance with the minimum bid price requirement.

To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days prior to January 28, 2025.

If the Company does not regain compliance by January 28, 2025, the Company may be eligible for an additional 180 calendar-day grace period if it applies to transfer the listing of its common stock to the Nasdaq Capital Market.

To qualify, the Company is required to meet the continued listing requirements for the market value of its publicly held shares and all other initial listing standards for the Nasdaq Capital Market, except the minimum bid price requirement, and provide written notice of its intention to cure the minimum bid price deficiency during the second compliance period by effecting a reverse stock split, if necessary.

On August 1, 2024, the Company received notice from the Listing Qualifications staff of The Nasdaq Stock Market, LLC, that, because the closing bid price for the Company’s common stock had fallen below $1.00 per share for 30 consecutive business days, the Company no longer complies with the minimum bid price requirement for continued listing on The Nasdaq Global Select Market.

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial compliance period of 180 calendar days, or until January 28, 2025, to regain compliance with the minimum bid price requirement.

The Company did not regain compliance by January 28, 2025.

In January 2025, the Company applied to Nasdaq for an additional 180 calendar day compliance period and, in connection with such application, applied to transfer the listing of our common stock from The Nasdaq Global Select Market to The Nasdaq Capital Market.

Nasdaq approved our transfer application effective on January 29, 2025, and the listing of our common stock transferred to The Nasdaq Capital Market effective as of the opening of business on January 30, 2025.

To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days prior to July 28, 2025.

To attempt to regain compliance with Nasdaq’s requirements, we intend to seek stockholder approval for a reverse stock split at our 2025 annual meeting of stockholders.

We cannot provide any assurances that we will obtain stockholder approval for a reverse stock split, or that any reverse stock split would result in any sustained increase in the market price of our common stock.

Because a reverse stock split will reduce the number of shares of common stock available in the public market, the trading market for common stock may be harmed, particularly if the stock price does not increase as a result of a reverse stock split.

We cannot provide any guarantee that we will regain compliance during the grace period or be able to maintain compliance with Nasdaq’s listing requirements in the future.

If we are not able to regain compliance during the grace period, or any extension of the grace period for which we may be eligible, our common stock will be subject to delisting.

Delisting from The Nasdaq Global Select Market could adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our common stock.

If we are not able to regain

compliance during the additional compliance period, or any other extension of the compliance period for which we may be eligible, our common stock will be subject to delisting.

If Nasdaq delists our securities for trading on The Nasdaq Capital Market, we could face significant adverse consequences.

Delisting from The Nasdaq Capital Market would likely have an adverse effect on the price of our common stock and could impair your ability to sell or purchase our common stock when you wish to do so.

Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.

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However, it is possible that we may identify deficiencies and weaknesses in our internal controls.

If material weaknesses or deficiencies in our internal controls exist and go undetected or unremediated, our financial statements could contain material misstatements that, when discovered

in the future, could cause us to fail to meet our future reporting obligations and cause the price of our common stock to decline.

If material weaknesses or deficiencies in our internal controls exist and go undetected or unremediated, our financial statements could contain material misstatements that, when discovered in the future, could cause us to fail to meet our future reporting obligations and cause the price of our common stock to decline.

We will continue to incur increased costs as a result of operating as a public company and our management will continue to be required to devote substantial time to new compliance initiatives.

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There is uncertainty as to whether a court would enforce such provision with respect to claims under the Securities Act, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

In March 2020, we amended and restated our restated bylaws to provide that the federal district courts of the United States of America will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or a Federal Forum Provision.

Our amended and restated bylaws also provide that the federal district courts of the United States of America will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or a Federal Forum Provision.

Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law.

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Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our restated certificate of incorporation and our restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions

in which you might otherwise receive a premium for your shares.

These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock.

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Each of these constantly evolving laws can be subject to varying interpretations.

Additionally, the SEC and many jurisdictions have enacted or may enact laws and regulations requiring companies to disclose or otherwise provide notifications regarding data security breaches.

Additionally, the SEC and many jurisdictions have enacted or may enact laws and regulations requiring companies to disclose or otherwise provide notifications regarding

data security breaches.

For example, the SEC recently adopted cybersecurity risk management and disclosure rules, which require the disclosure of information pertaining to cybersecurity incidents and cybersecurity risk management, strategy, and governance.

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We will monitor these legal developments and continue to use best practices to follow established European legal standards to conduct cross-border transfer of personal data.

In addition, while the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances.

In addition, while the Court of Justice of the European Union upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances.

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

The use of standard contractual clauses for the transfer of personal data specifically to the United States remains under review by a number of European data protection supervisory authorities, along with those of some other EU member states.

The use of standard contractual clauses for the transfer of personal data specifically to the United States

remains under review by a number of European data protection supervisory authorities, along with those of some other EU member states.

German and Irish supervisory authorities have indicated, and enforced in recent rulings, that the standard contractual clauses alone provide inadequate protection for EU-U.S.

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Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.

For example, the global financial crisis caused extreme volatility and disruptions in the capital and credit markets, and, in recent months, the global economy has been impacted by increasing interest rates and inflation.

Likewise, the capital and credit markets may be adversely affected by the ongoing conflicts in Ukraine and the Middle East, the possibility of a wider European or global conflict, global sanctions imposed in response thereto, and potential recessions.

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

For example, in March 2023, Silicon Valley Bank, SVB, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, or FDIC, as receiver.

While we did not hold any cash directly at SVB or other banking institutions that have since failed, we regularly maintain cash balances at third-party financial institutions in excess of the FDIC insurance limit and there is no guarantee that the federal government would guarantee all depositors if such financial institutions were to fail, as they did with SVB depositors, in the event of further bank closures and continued instability in the global banking system.

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

We regularly maintain cash balances at third-party financial institutions in excess of the FDIC insurance limit and there is no guarantee that the federal government would guarantee all depositors if such financial institutions were to fail, as they did with SVB depositors, in the event of further bank closures and continued instability in the global banking system.

A severe or prolonged economic downturn, such as the global financial crisis, could result in a variety of risks to our business,

including, weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all.

A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services.

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What changed 10-Q

Item 1A. Risk Factors