PHGE filing — read by section

Item 1A. Risk Factors

ITEM 1A. RISK FACTORS 
 
 You should carefully consider the risks and
uncertainties described below and the other information in this Annual Report before making an investment in our securities. Our business,
financial condition, results of operations, or prospects could be materially and adversely affected if any of these risks occurs, and
as a result, the market price of our securities could decline and you could lose all or part of your investment. This Annual Report also
contains forward-looking statements that involve risks and uncertainties. See “Cautionary Statement Regarding Forward-Looking Statements.”
Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain
factors, including those set forth below. 
 
 Risks Related to Our Business, Technology and Industry 
 
 Our exploration of strategic alternatives could adversely affect our business and
our stock price. 
 
 In December 2025, we announced that our Israeli
subsidiary, BiomX Ltd., commenced insolvency proceedings in Israel. On December 26, 2025, we entered into the 2025 Second SPA. The initiation
of such insolvency process, combined with the potential for the Investor from the 2025 Second SPA to become a majority shareholder upon
stockholder approval, creates risks and uncertainties regarding our strategic direction, including our potential inability to
consummate any proposed strategic alternative resulting from the process due to, among other things, insufficient funding, market,
regulatory and other factors. Such potential change in control, resulting from the 2025 Second SPA, could affect our ability to consummate
proposed strategic alternatives, impact our market price and trading volatility, and potentially lead to a shift in the Company’s business,
strategy, and objectives in accordance with any plans our Board may adopt.
 
 If we fail to obtain stockholder approval required under NYSE
American rules in connection with the 2025 Second SPA, we could be unable to access sufficient financing, and could be required to hold
additional stockholder meetings and incur significant costs, potentially leading to the delisting of our Common Stock. 
 
 After extensive efforts to raise capital on more
favorable terms, we believed that the 2025 Second SPA was the only viable financing alternative available to us at the time. Pursuant
to the terms of the 2025 Second SPA, we are required to obtain stockholder approval for this proposal within 60 calendar days from the
closing date. If we fail to obtain such stockholder approval for this proposal, we will be required to incur additional costs in order
to hold additional stockholder meetings every 60 days to seek such approval as is required under the purchase agreement. Further, until
such time as we obtain stockholder approval for this proposal, we will not be able to issue more than 19.99% of our outstanding shares
of Common Stock to the Series Y Preferred Stock and warrant holders in connection with the 2025 Second SPA.
 
 If we are unable to obtain such stockholder approval
on a timely basis, our ability to access sufficient financing on acceptable terms, or at all, could be materially and adversely affected,
and we could be required to further reduce or discontinue our operations, which could materially and adversely affect our business, financial
condition and results of our operations. Additionally, failure to obtain the required stockholder approval could also lead to a determination
by NYSE American that we do not maintain sufficient ongoing business operations, which could result in the delisting of our Common Stock. Moreover,
our inability to obtain such stockholder approval on a timely basis would severely constrain our financial flexibility and could significantly
delay our ongoing efforts to evaluate and pursue strategic alternatives and other business opportunities.
 
 We are a clinical-stage company and have incurred losses since
our inception. Subject to availability of sufficient financial and other resources, we anticipate that we will continue to incur significant
expenses, and we will continue to incur significant losses for the foreseeable future. 
 
 We are a clinical-stage biopharmaceutical company
with limited operating history compared to the long time it takes to develop phage based products. We have incurred losses in each year
since BiomX Ltd.’s inception in 2015. As of December 31, 2025, our accumulated deficit was $216.9 million. We do not expect to generate
any revenue from the commercial sales of our product candidates in the near term.
 
 For the years ended December 31, 2025 and 2024,
we had losses from operations of $41.5 million and $44.5 million, respectively. Subject to availability of sufficient financial and other
resources, we anticipate that the level of our expenses will continue to be significant if and as we:
 
 ● 
 initiate and continue research, preclinical and clinical development efforts for any future product candidates; 

 ● 
 seek marketing and regulatory approvals for any product candidates that successfully complete clinical trials; 

 24 

 ● 
 require the manufacture of larger quantities of product candidates for clinical development and, potentially, commercialization; 

 ● 
 maintain, expand and protect our intellectual property portfolio; 

 ● 
 establish sales, marketing, distribution and other commercial infrastructure in the future to commercialize products for which we obtain marketing approval, if any; and 

 ● 
 add operational, financial and management information systems and personnel, including personnel to support our product development and commercialization and help us continue to comply with our obligations as a public company. 

 We will need to raise additional capital in the future to support
our operations which may not be available at terms that are favorable to us and might cause significant dilution to our stockholders or
increase our debt towards third parties. 
 
 As of December 31, 2025, we had cash, cash equivalents
and restricted cash of $5.0 million, and we have had recurring losses from operations and negative operating cash flows since inception.
We will need to raise additional capital in the future to support our operations and product development activities. In the near term,
we expect to continue to fund our operations and other development activities relating to additional product candidates from the cash
held by us, governmental and other grants and through future equity and debt financing. We have explored and raised funds in multiple
manners since our inception. For instance, we filed in December 2023 a shelf registration statement on Form S-3 that was subsequently
declared effective by the SEC and entered into an At the Market Offering Agreement, or the ATM Agreement, with H.C. Wainwright & Co.,
LLC, or Wainwright, as manager, pursuant to which we may issue and sell shares of our Common Stock having an aggregate offering price
of up to $1,765,939 from time to time through Wainwright. We are not obligated to make any sales of Common Stock under the ATM Agreement.
On February 27, 2025, we completed a registered direct offering and a concurrent private placement. Additionally, certain warrant holders
agreed to exercise their warrants following our agreement to reduce the exercise price. Through these transactions, we generated approximately
$12 million. In addition, in March 15, 2024, concurrently with the consummation of the acquisition of APT, we consummated a private placement
of $50 million. Most recently, on January 13, 2026, we completed a private placement of preferred stock and warrants under a Securities
Purchase Agreement, or the 2025 Second SPA, with an investor for gross proceeds of $3.0 million.
 
 We anticipate conducting additional capital raises
in the future. If we enter into a collaboration for one or more of our current or future product candidates at an earlier development
stage, the terms of such a collaboration will likely be less favorable than if we were to enter the collaboration in later stages or if
we commercialized the product independently. If we raise additional funds through equity offerings, the terms of these securities may
include liquidation or other preferences that adversely affect our stockholders’ rights or cause significant dilution to our stockholders.
If we raise additional capital through debt financing, it would be subject to fixed payment obligations and may be subject to covenants
limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring
dividends or acquiring or licensing intellectual property rights.
 
 Developing drugs and conducting clinical trials
is expensive. Our future funding requirements will depend on many factors, including:
 
 ● 
 the costs, timing and progress of our research and development and clinical activities; 

 ● 
 manufacturing costs associated with our targeted bacteriophage, or phage, therapies strategy and other research and development activities; 

 ● 
 the terms and timing of any collaborative, licensing, acquisition or other arrangements that we may establish; 

 ● 
 employee-related expenses, as well as external costs such as fees paid to outside consultants; 

 ● 
 the costs and timing of seeking regulatory approvals and related to compliance with regulatory requirements; and 

 ● 
 the costs of filing, prosecuting, defending and enforcing any patent applications, claims, patents and other intellectual property rights. 

 Domestic and international equity and debt markets
have experienced and may continue to experience heightened volatility and turmoil based on domestic and international economic conditions
and concerns. In the event these economic conditions and concerns continue or worsen and the markets continue to remain volatile, or a
bear market, or recession, ensues in the U.S. stock market, or the markets are negatively impacted by factors such as Israel’s war
with Hamas and Hezbollah, the Russian invasion of Ukraine and the resulting world sanctions on Russia, Belarus, and related parties or
other sources of geopolitical uncertainty and instability, our operating results and liquidity could be affected adversely by those factors
in many ways, including making it more difficult for us to raise funds if necessary and our stock price may decline.
 
 25 

 There can be no assurance that sufficient funds
will be available to us when required or on acceptable terms, if at all. Our inability to obtain additional funds could have a material
adverse effect on our business, financial condition and results of operations. Moreover, if we are unable to obtain additional funds on
a timely basis, there will be substantial doubt about our ability to continue as a going concern and increased risk of insolvency and
up to a total loss of investment by our stockholders.
 
 If we engage in future acquisitions or strategic partnerships,
this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject
us to other risks. 
 
 We may evaluate various additional acquisition
opportunities and strategic partnerships, including licensing or acquiring complementary or unrelated products, intellectual property
rights, technologies or businesses. Any potential acquisition or strategic partnership may entail numerous risks, including:
 
 ● 
 increased operating expenses and cash requirements; 

 ● 
 the assumption of additional indebtedness or contingent liabilities; 

 ● 
 the issuance of our equity securities; 

 ● 
 assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; 

 ● 
 the diversion of our management’s attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition; 

 ● 
 retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; 

 ● 
 risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and marketing approvals; and 

 ● 
 our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs. 

 Our financial statements contain an explanatory paragraph regarding
substantial doubt about our ability to continue as a going concern, which could prevent us from obtaining new financing on reasonable
terms or at all. 
 
 Our financial statements contain
an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. We have concluded that there is
substantial doubt about our ability to continue as a going concern. We have accumulated a deficit of $216.9 million since our inception.
To date, we have not generated revenue from our operations and we do not expect to generate any significant revenues from sales of products
in the next twelve months. Our cash needs may increase in the foreseeable future. As of December 31, 2025, we had $5.0 million in cash
and cash equivalents and restricted cash.
 
 We believe our cash and cash equivalents on hand,
including the cash raised in January 2026, as described under “Liquidity and Capital Resources” in Item 7 of this Annual Report,
will be sufficient to meet our working capital and capital expenditure requirements through the end of the second quarter of 2026. Our
continuation as a going concern is dependent upon many factors, including our ability to raise additional funds, the success of our clinical
trial for DFI/DFO and our ability to repay our obligations when due. We cannot be sure that we will be able to obtain any future funding,
and any such funding we may obtain may not be sufficient to finance our operations. If we are unable to obtain sufficient funds, we may
be unable to continue as a going concern.
 
 26 

 We are seeking to develop product candidates using phage technology,
an approach for which it is difficult to predict the time and cost of development. To our knowledge, as of the date of this Annual Report,
no bacteriophage has thus far been approved as a drug in the United States or in the European Union. 
 
 We are developing our drug product candidates with
phage technology. We have not, nor to our knowledge has any other company, received regulatory marketing approval from the FDA, or equivalent
foreign regulatory agencies for a drug product based on this approach (phage technology). While in vitro and in vivo studies
have characterized the behavior of phage in cell cultures and animal models and there exists a body of literature regarding the use of
phage therapy in humans, the safety and efficacy of phage therapy in humans has not been extensively studied in well-controlled modern
clinical trials. Most of the prior research on phage-based therapy was conducted in the former Soviet Union prior to and immediately after
World War II and lacked appropriate control group design or lacked control groups at all. Furthermore, the standard of care has changed
substantially during the ensuing decades since those studies were performed, diminishing the relevance of prior claims of improved cure
rates. Any product candidates that we develop may not demonstrate in patients the therapeutic properties ascribed to them in laboratory
and other preclinical studies, and they may interact with human biological systems in unforeseen, ineffective or even harmful ways. We
cannot be certain that our approach will lead to the development of approvable or marketable drug products. Furthermore, the bacterial
targets of phage may develop resistance to our product candidates over time, which we may or may not be able to overcome with the development
of new phage cocktails or we may not be able to construct a cocktail with sufficient coverage of our target pathogen universe.
 
 If our product candidates receive regulatory approval
but do not achieve an adequate level of acceptance by physicians, healthcare payors and patients, we may not generate product revenue
sufficient to attain profitability. Our success will depend upon physicians who specialize in the treatment of diseases targeted by our
product candidates that we pursue as drugs, prescribing potential treatments that involve the use of our product candidates in lieu of,
or in addition to, existing treatments with which they are more familiar and for which greater clinical data may be available. Our success
will also depend on consumer acceptance and adoption of our products that we commercialize. Adverse events in preclinical studies and
clinical trials of our product candidates or in clinical trials of others developing similar products and the resulting publicity, as
well as any other adverse events in the field of phage therapeutics, could result in a decrease in demand for any product that we may
develop. The degree of market acceptance of any approved products will depend on a number of factors, including:
 
 ● 
 the effectiveness of the product; 

 ● 
 the prevalence and severity of any side effects; 

 ● 
 potential advantages or disadvantages over alternative treatments; 

 ● 
 relative convenience and ease of administration; 

 ● 
 the strength of marketing and distribution support; 

 ● 
 the price of the product, both in absolute terms and relative to alternative treatments; and 

 ● 
 sufficient third-party coverage or reimbursement. 

 Developing our product candidates on a commercial
scale will require substantial technical, financial and human resources. We and our third-party collaborators may experience delays in
developing manufacturing capabilities for our product candidates, and may not be able to do so at the scale required to efficiently conduct
the clinical trials required to obtain regulatory approval of those of our product candidates that require it, or to manufacture commercial
quantities of our products, if approved or otherwise permitted to be marketed.
 
 27 

 Our product candidates must undergo clinical testing which may
fail to demonstrate the requisite safety and efficacy for drug products, or safety, purity, and potency for biologics, and any of our
product candidates could cause adverse effects, which would substantially delay or prevent regulatory approval and/or commercialization. 
 
 Before we can obtain regulatory approval for a
product candidate or otherwise obtain evidence allowing us to market the product as a drug or biologic, we must undertake extensive preclinical
and clinical testing in humans to demonstrate safety and efficacy or in the case of biologics, safety, purity, and potency, to the satisfaction
of the FDA or other regulatory agencies. Clinical trials of product candidates sufficient to obtain regulatory marketing approval or otherwise
demonstrate safety prior to marketing, are expensive and take years to complete. Furthermore, results from these clinical trials may not
show safety or efficacy of our product candidates sufficient to lead to approval, or to warrant further development. Our approach is intended
to design phage combinations, or cocktails, to target specific strains of pathogenic bacteria in order to alter microbiome composition
and confer potential therapeutic or cosmetic benefit to patients. However, there can be no assurance that the eradication of the selected
targets will result in a clinically meaningful effect on the underlying disease, such as in cases where the pathology of the disease is
not well-defined. In addition, the bacteria that we target may be associated with the disease, but may not be causative or contributive
to the pathology of the disease, or there may be other bacteria that our product candidates do not target that are more meaningful drivers
of the underlying disease. In addition, our product candidates require the use of effective delivery vehicles to reach the target organ
or tissue, and there can be no assurance that our intended delivery systems will allow our product candidates to reach the desired locations
in a patient. Safety must first be established through preclinical testing and early clinical trials, before efficacy can be evaluated
and established and thereby lead to FDA or other regulatory agencies marketing approval. Our clinical trials may produce undesirable side
effects or negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and/or preclinical
testing or to abandon programs.
 
 Ongoing geopolitical instability have adversely affected
and may continue to adversely affect our business, including our clinical trials. 
 
 General economic, political, demographic and business
conditions worldwide, including geopolitical uncertainty and instability, such as the Israel’s war with Hamas and Hezbollah and
the Russia-Ukraine conflict, might adversely affect our business, through indirect disruption to our supply chain, harming our ability
to raise funds at terms acceptable to us among other affects. We may further experience additional disruptions that could severely impact
our business, preclinical studies and clinical trials, including:
 
 ● 
 delays or difficulties in enrolling patients in our clinical trials; 

 ● 
 delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; 

 ● 
 interruption of, or delays in receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems; and 

 ● 
 interruptions or delays to our sourced discovery and clinical activities. 

 Changes in trade policy, including the imposition of tariffs,
may adversely affect our business, results of operations and financial condition. 
 
 The U.S. and various foreign governments have established
certain trade and tariff requirements. From time to time, the U.S. government has indicated a willingness to revise or renegotiate tariffs
on certain goods imported into the U.S. Since we rely on certain components from certain countries in the European Union, such steps,
if adopted, could adversely impact our business, increase our costs, and make our products less competitive.
 
 28 

 If we are not able to obtain, or if there are delays in obtaining,
required regulatory approvals for our product candidates for therapeutic indications, we will not be able to commercialize, or will be
delayed in commercializing, our product candidates, and our future ability to generate revenue will be materially impaired. 
 
 Our product candidates and the activities associated
with their development and commercialization for therapeutic indications, including their design, testing, manufacture, safety, efficacy,
recordkeeping, labeling, storage, approval, advertising, promotion, sale, distribution, import and export are subject to regulation by
the FDA and other regulatory agencies in the United States and by equivalent foreign regulatory authorities. Before we can commercialize
any of our product candidates for therapeutic indications, we must obtain marketing approval. We have not received approval to market
any of our product candidates from regulatory authorities in any jurisdiction, and it is possible that none of our product candidates
or any product candidates we may seek to develop in the future will ever obtain regulatory approval.
 
 The process of obtaining regulatory approvals for
therapeutic indications, both in the United States and in other countries, is expensive, may take many years if additional clinical trials
are required, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates
involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or
regulations, or changes in regulatory review for each submitted IND, or equivalent application types, may cause delays in the approval
or rejection of an application. The FDA and equivalent foreign regulatory authorities have substantial discretion in the approval process
and may refuse to accept any application or may decide that our data is insufficient for approval and require additional preclinical,
clinical or other studies. There is uncertainty around new budget and staffing cuts imposed by the Trump administration on the FDA, which
may affect the timely development, approval and commercialization of new drugs. Also, the Trump administration may change or overhaul
existing drug regulations, which would lead to additional time and money to comply with. Furthermore, the Trump administration’s
tariffs could raise the cost of the clinical operations or affect the supply chains. Our product candidates could be delayed in receiving,
or fail to receive, regulatory approval for many reasons, including the following:
 
 ● 
 the FDA or equivalent foreign regulatory authorities may disagree with the design, including study population, dose level, dose regimen, and bioanalytical assay methods, or implementation of our clinical trials; 

 ● 
 we may be unable to demonstrate to the satisfaction of the FDA or equivalent foreign regulatory authorities that a drug candidate is safe and effective for its proposed indication or a related companion diagnostic is suitable to identify appropriate patient populations; 

 ● 
 the results of clinical trials may not meet the level of statistical significance required by the FDA or equivalent foreign regulatory authorities for approval, such as was the case with our acne product candidate; 

 ● 
 we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; 

 ● 
 the FDA or equivalent foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; 

 ● 
 the data collected from clinical trials of our product candidates may not be sufficient to support the submission of a marketing application or other submission or to obtain regulatory approval in the United States or elsewhere; 

 ● 
 the FDA or equivalent foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and 

 ● 
 the approval policies or regulations of the FDA or equivalent foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval. 

 Of the large number of drugs in development, only
a small percentage successfully complete the FDA or equivalent foreign regulatory approval processes and are commercialized. The lengthy
approval process as well as the unpredictability of future clinical trial results may result in us failing to obtain regulatory approval
to market its product candidates, which would significantly harm our business, results of operations and prospects.
 
 29 

 The FDA may also require a panel of experts, referred
to as an Advisory Committee, to deliberate on the adequacy of the safety and efficacy data to support approval for therapeutic indications.
The opinion of the Advisory Committee, although not binding, may have a significant impact on our ability to obtain approval of any product
candidates that we develop based on the completed clinical trials. In the European Union, the safety and efficacy data of any product
candidate considered by the EMA to qualify as an advanced therapy medicinal product must be reviewed by the EMA’s, Committee for
Advanced Therapies, a group of experts in advanced therapy medicinal products.
 
 Moreover, under PREA, in the United States, and
the Pediatric Regulation, in the European Union, the FDA or equivalent foreign regulatory authority could require mandatory testing in
the pediatric population. Applications for approval in the United States or in the European Union must contain data to assess the safety
and efficacy of the biologic for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration
for each pediatric subpopulation for which the product is safe and effective. The FDA or equivalent foreign regulatory authority may,
in its discretion, grant full or partial waivers, or deferrals, for submission of data in pediatric subjects. If the FDA requires data
in pediatric patients, significantly more capital will have to be invested in order to conduct the mandatory pediatric clinical trials
and studies, but the approval of the medicinal products for the adult population should normally not be affected. If the results of such
pediatric studies are not positive, our product candidates will not be approved for children.
 
 In addition, even if we were to obtain approval,
regulatory authorities may approve any of our product candidates for fewer or more limited therapeutic indications than our requests,
may include limitations for use or contraindications that limit the suitable patient population, may not approve the price we intend to
charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials or may approve a product
candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product
candidate. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.
 
 If we experience delays in obtaining approval or
if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our future
ability to generate revenues will be materially impaired.
 
 We have never generated any revenue from product sales and may
never be profitable or, if achieved, may not sustain profitability. 
 
 Our ability to generate meaningful revenue and
achieve profitability depends on our ability, and the ability of any third party with which we may partner, to successfully complete the
development of, and meet regulatory requirements, including (but not limited to) obtaining any necessary regulatory approvals, to commercialize
our product candidates. We do not currently meet regulatory requirements or have the required approvals to market our product candidates
and may never meet or receive them. We do not anticipate generating revenue from product sales for the foreseeable future, if ever. If
any of our product candidates fail in clinical trials or if any of our product candidates do not meet regulatory requirements, including
gaining regulatory approval when needed, or if any of our product candidates, if marketed, fail to achieve market acceptance, we may never
become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.
Our ability to generate future revenue from product sales depends heavily on our success in:
 
 ● 
 completing research and preclinical and clinical development of our product candidates; 

 ● 
 seeking and obtaining regulatory and marketing approvals for product candidates for which we complete clinical trials; 

 ● 
 meeting regulatory requirements for marketing the products; 

 ● 
 developing a sustainable, scalable, reproducible and transferable manufacturing process for our product candidates; 

 30 

 ● 
 launching and commercializing product candidates for which we obtain regulatory and marketing approval or are otherwise permitted to market, either by establishing a sales force, marketing and distribution infrastructure or by collaborating with a partner; 

 ● 
 obtaining market acceptance of any approved products; 

 ● 
 addressing any competing technological and market developments; 

 ● 
 implementing additional internal systems and infrastructure, as needed; 

 ● 
 identifying and validating new product candidates; 

 ● 
 negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; 

 ● 
 maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and 

 ● 
 attracting, hiring and retaining qualified personnel. 

 Even if one or more of the product candidates that
we develop is approved for commercial sale or otherwise permitted for marketing, we anticipate incurring significant costs associated
with commercializing any approved product. Our expenses could increase beyond expectations if we are required by the FDA, or the EMA,
or other equivalent foreign regulatory agencies to perform clinical trials and other studies in addition to those that we currently anticipate.
Even if we are able to generate revenue from the sale of any approved products, we may not become profitable and may need to obtain additional
funding to continue operations. If we fail to become profitable, or if we are unable to fund our continuing losses, our business, financial
condition and results of operations may be materially adversely impacted.
 
 We are seeking to develop product candidates to treat medical
conditions related to the presence of certain bacteria. Our success is largely dependent on a broad degree of market acceptance, and in
the case of drug products, physician adoption and use, which are necessary for commercial success. 
 
 Even if we obtain FDA or foreign regulatory approvals
for our drug product candidates, the commercial success of our product candidates will depend on consumer acceptance and adoption of products
that we commercialize. Adverse events in preclinical studies and clinical trials of our product candidates or in clinical trials of others
developing similar products and the resulting publicity could result in a decrease in demand for any product that we may develop.
 
 In addition, the commercial success of our drug
product candidates will depend significantly on their broad adoption and use by pediatricians and other physicians for approved therapeutic
indications, as well as any other indications for which we may seek approval. We cannot be certain that our approach will lead to the
development of approvable or marketable products.
 
 Obtaining high titers for specific phage cocktails necessary
for our preclinical and clinical testing may be difficult and time-consuming. 
 
 Our product candidates are phage cocktails that
we have designed to meet specific characteristics. We and our contract manufacturers produce a cocktail of multiple phage and it may be
difficult or time-consuming to achieve high titers, or levels, of phage sufficient for our preclinical and clinical testing. In some cases,
it may require multiple product runs in order for us to obtain the amounts necessary for its clinical testing. This may result in delays
in our clinical trial timelines, and it may increase production costs and associated expenses. Also, it may be difficult to reproduce
the manufacturing process to the extent that more significant quantities are required as our product candidates advance through the clinical
development process.
 
 31 

 Results from preclinical studies of our product candidates may
not be predictive of the results of clinical trials or later stage clinical development. 
 
 Preclinical studies of our product candidates,
such as BX011, including studies in animal disease models may not accurately predict the safety of the product candidate such that further
human clinical trials would be allowed to proceed. In particular, promising preclinical testing suggesting the potential efficacy of prototype
phage products may not predict the ability of these products to address conditions in the human clinical settings. For example, while
we have studied phage activity in vitro and in vivo , these results may not be replicated when our phage cocktails are administered
to human subjects. Despite promising data in any preclinical studies, our phage technology may be found not to be efficacious when studied
in clinical trials.
 
 To satisfy FDA or equivalent foreign regulatory
approval standards, we must demonstrate in adequate and well controlled clinical trials that our drug product candidates are safe and
effective for their intended use. Success in preclinical testing and early-stage clinical trials does not ensure that later clinical trials
will be successful. Our initial results from preclinical testing also may not be confirmed by later analysis or subsequent larger clinical
trials. A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials, even after
obtaining promising results in earlier clinical trials, and most product candidates that commence clinical trials are never approved for
commercial sale.
 
 If we encounter difficulties enrolling patients in our clinical
trials, our clinical development activities could be delayed or otherwise adversely affected. 
 
 Completion of clinical trials depends, among other
things, on our ability to enroll a sufficient number of patients, which is a function of many factors, including:
 
 ● 
 the therapeutic endpoints chosen for evaluation; 

 ● 
 the eligibility criteria defined in the protocol; 

 ● 
 the perceived benefit of the product candidate under study; 

 ● 
 the size of the patient population required for analysis of the clinical trial’s therapeutic endpoints; 

 ● 
 our ability to recruit clinical trial investigators and sites with the appropriate competencies and experience; 

 ● 
 our ability to obtain and maintain patient consents; and 

 ● 
 competition for patients from clinical trials for other treatments. 

 We have experienced and may continue to experience
difficulties in enrolling patients in our clinical trials, including recently with respect to enrollment in our DFO phase 2 study, which
could increase the costs or affect the timing or outcome of these clinical trials. This is particularly true with respect to diseases
with relatively small patient populations. In addition, potential patients for our trials may not be adequately diagnosed or identified
with the diseases that we are targeting or may not meet the entry criteria for our studies.
 
 We may not be able to initiate or continue clinical
trials if we are unable to locate a sufficient number of eligible patients to participate in the clinical trials required by the FDA or
equivalent foreign regulatory agencies. In addition, the process of finding and diagnosing patients may prove costly. Our inability to
enroll a sufficient number of patients for any of our clinical trials would result in significant delays or may require us to abandon
one or more clinical trials.
 
 32 

 Delays, or clinical holds, in our clinical trials could result
in us not achieving anticipated developmental milestones when expected, increased costs and delays in our ability to obtain regulatory
approval for and commercialization of our product candidates. 
 
 Delays in our clinical trials could result in us
not meeting anticipated clinical milestones and could materially impact our product development costs and delay regulatory approval of
our product candidates. Planned clinical trials may not be commenced or completed on schedule, or at all. Furthermore, our clinical trials
may become subject to a clinical hold based on the evaluation of data and information submitted to the governing regulatory authorities.
 
 Clinical trials can be delayed, or be subject to
a clinical hold, for a variety of reasons, including:
 
 ● 
 delays in the development of manufacturing capabilities for our product candidates to enable their consistent production at clinical trial scale; 

 ● 
 failures in our internal manufacturing operations that result in our inability to consistently and timely produce bacteriophage in sufficient quantities to support our clinical trials; 

 ● 
 the availability of financial resources to commence and complete our planned clinical trials; 

 ● 
 delays in reaching a consensus with clinical investigators on study design; 

 ● 
 delays in reaching a consensus with regulatory agencies on trial design or in obtaining regulatory approval to commence a trial; 

 ● 
 delays in obtaining clinical materials; 

 ● 
 slower than expected patient recruitment for participation in clinical trials; 

 ● 
 regulatory constraints or injunctions (for example, from supervisory authorities in case of noncompliance with cybersecurity and data privacy laws); 

 ● 
 failure by clinical trial sites, other third parties or us to adhere to clinical trial agreements and/or the trial protocol; 

 ● 
 delays in reaching agreement on acceptable clinical trial agreement terms with prospective sites or obtaining IRB or independent ethics committee approval; and 

 ● 
 adverse safety events experienced during our clinical trials. 

 If we do not successfully commence or complete
our clinical trials on schedule, the price of our securities may decline. Significant preclinical or clinical trial delays or suspensions
could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors
to bring products to market before we do, potentially impairing our ability to successfully commercialize our product candidates and harming
our business and results of operations.
 
 33 

 Our current or future product candidates may cause adverse effects
that could halt their clinical development, prevent their approval or marketing, limit their commercial potential or result in significant
negative consequences. 
 
 Adverse effects could occur and cause us or regulatory
authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of marketing
approval by the FDA or equivalent foreign regulatory agencies. Results of our trials could reveal a high and unacceptable severity and
prevalence of side effects or unexpected characteristics. For example, adverse events experienced by participants in our Study contributed
to our decision to discontinue further development of BX004, followed by additional internal analysis and feedback from the DMC, which
recommended consideration of adjusting dosing regimen.
 
 If adverse effects arise in the development of
our product candidates, we, the FDA or equivalent foreign regulatory agencies, the IRBs or independent ethics committees at the institutions
in which our studies are conducted, or the Data Safety Monitoring Board could suspend or terminate our clinical trials or the FDA or equivalent
foreign regulatory agencies could deny approval of our product candidates for any or all targeted indications.
 
 We intend to continue to evaluate our product candidates
for safety and tolerability in the form of Phase 1 clinical trials. While our current and future product candidates will undergo safety
testing to the extent possible and, where applicable, under such conditions discussed with regulatory authorities, not all adverse effects
of drugs can be predicted or anticipated. Unforeseen adverse effects could arise either during clinical development or, if such adverse
effects are more rare, after our products have been approved by regulatory authorities and the approved product has been marketed, resulting
in the exposure of additional patients. For example, while we screen our phage in attempts to minimize safety issues, there can be no
assurance that we will eliminate the risk of the appearance of virulence genes, antibiotic resistance genes, lysogenic genes, integrase
genes, or other toxic genes in our phage, or of adverse reactions to our phage in a patient’s immune system. So far, we have not
demonstrated, and we cannot predict, if ongoing or future clinical trials will demonstrate that any of our product candidates are safe
in humans. Moreover, clinical trials of our product candidates are conducted in carefully defined sets of patients who have agreed to
enter into clinical trials. Consequently, it is possible that our clinical trials may indicate an apparent positive effect of a product
candidate that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable adverse effects.
 
 Ultimately, some or all of our product candidates
may prove to be unsafe for human use. Moreover, we could be subject to significant liability if any volunteer or patient suffers, or appears
to suffer, adverse health effects as a result of participating in our clinical trials. Any of these events could prevent us from achieving
or maintaining market acceptance of our product candidates and could substantially increase commercialization costs.
 
 We have not completed composition development of our product
candidates. 
 
 The development of our product candidates requires
that we isolate, select, optimize and combine a number of phage that target the desired bacteria for that product candidate. The selection
of phage for any of our product candidates is based on a variety of factors, including, without limitation, the ability of the selected
phage, in combination, to successfully kill the targeted bacteria, the degree of cross-reactivity of the individual phage with the same
part of the bacterial targets, the ability of the combined phage to satisfy regulatory requirements, our ability to manufacture sufficient
quantities of the phage, intellectual property rights of third parties, and other factors. While we have selected an initial formulation
of BX011, there can be no assurance that this initial formulation will be the final formulations of this product candidate for commercialization
if approved. If we are unable to complete formulation development of our product candidates in the time frame that we have anticipated,
then our product development timelines, and the regulatory approval of our product candidates, could be delayed.
 
 34 

 We must continue to develop manufacturing processes for our product
candidates, and any delay in doing so, or our inability to do so, would result in delays in our clinical trials. 
 
 The manufacturing processes for our product candidates,
and the scale-up of such processes for clinical trials, may present challenges, and there can be no assurance that we will be able to
complete this work in a timely manner, if at all. Any delay in the development or scale-up of these manufacturing processes could delay
the start of clinical trials and harm our business. In order to scale-up our manufacturing capacity, we need to either build additional
internal manufacturing capacity, contract with one or more partners, or both. Our technology and the production process for our equipment
and tools are complex and we may encounter unexpected difficulties in manufacturing our product candidates. For example, the manufacturing
hosts that we use to produce our phage may contain one or more integrated phage in their genomes that, if we are unable to remove, can
present challenges in manufacturing of the produced phage. There is no assurance that we will be able to continue to build manufacturing
capacity internally or find one or more suitable partners, or both, to meet the necessary volume and quality requirements. Manufacturing
and product quality issues may arise as we increase the scale of our production. Any delay or inability in establishing or expanding our
manufacturing capacity could diminish our ability to develop our product candidates.
 
 If we submit marketing applications for any of
our product candidates manufactured by third-party manufacturers, the manufacturing facilities used to produce such product candidates
will be subjected to ongoing periodic inspection for compliance with European, FDA and cGMP regulations. Compliance with these regulations
and standards is complex and costly, and there can be no assurance that we will be able to comply. Any failure to comply with applicable
regulations could result in sanctions being imposed (including fines, injunctions and civil penalties), failure of regulatory authorities
to grant marketing approval of our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or
recalls of product candidates or products, operating restrictions and criminal prosecution.
 
 If our competitors are able to develop and market products that
are more effective, safer or more affordable than ours, or obtain marketing approval before we do, our commercial opportunities may be
limited. 
 
 Competition in the biotechnology and pharmaceutical
industries is intense and continues to increase. Some companies that are larger and have significantly more resources than us are aggressively
pursuing development programs for indications that we are pursuing, including traditional therapies and therapies with novel mechanisms
of action. In addition, other companies are developing phage-based products for therapeutic and non-therapeutic uses, and may elect to
use their expertise in phage development and manufacturing to try to develop products that would compete with our products.
 
 We also face potential competition from academic
institutions, government agencies and private and public research institutions engaged in the discovery and development of drugs and therapies.
Many of our competitors have significantly greater financial resources and expertise in research and development, preclinical testing,
conducting clinical trials, obtaining regulatory approvals, manufacturing, sales and marketing than we do. Smaller or early-stage companies
may also prove to be significant competitors, particularly through collaborative arrangements with large and established pharmaceutical
companies.
 
 In the European Union, potential competition also
comes from medicinal preparations made by hospitals or pharmacists and administered without marketing authorizations, generally referred
to as “compounding.” In some member states, national authorities generally promote compounding in order to reduce healthcare
expenses.
 
 Our competitors may succeed in developing products
that are more effective, have fewer side effects and are safer or more affordable than our product candidates, which would render our
product candidates less competitive or noncompetitive. These competitors also compete with us to recruit and retain qualified scientific
and management personnel, establish clinical trial sites and patient registration for clinical trials, as well as to acquire technology
and technology licenses complementary to our programs or advantageous to our business. Moreover, competitors that are able to achieve
patent protection, obtain regulatory approvals and commence commercial sales of their products before we do, and competitors that have
already done so may enjoy a significant competitive advantage.
 
 35 

 We may not be successful in our efforts to identify or discover
additional product candidates. 
 
 Although we intend to utilize our technology to
evaluate other therapeutic opportunities in addition to the product candidates that we are currently developing, we may fail to identify
other product candidates for clinical development for a number of reasons. For example, our research methodology may not be successful
in identifying potential product candidates, or those we identify may be shown to have harmful side effects or other characteristics that
make them unmarketable or unlikely to receive regulatory approval. In addition, we may not be able to identify phage that eradicate the
target bacteria, including due to sourcing difficulties such as lack of diversity, inability to obtain samples in a timely manner or at
all, or contamination in the samples. We may also encounter difficulties in designing phage cocktails that meet the requirements of an
investigational therapy, including due to the build-up of resistances in bacteria to our phage, the range of host bacteria that are affected
by our phage, the variety of activity on different bacteria growth states, issues with toxicity in our phage, and the stability, robustness
and ease of manufacturing of our product candidates. In addition, the designing of synthetically engineered phage may fail to result in
the development of phage with the desired characteristics or behaviors that are suitable for use as viable therapies, or may result in
phage that contain undesired features such as immunogenicity, toxicity and other safety concerns.
 
 A key part of our strategy is to utilize our screening
technology to identify product candidates to pursue in clinical development. If we fail to identify and develop additional potential product
candidates, we may be unable to grow our business and our results of operations could be materially harmed. Such product candidates will
require additional, time-consuming development efforts prior to commercial sale, including preclinical studies, clinical trials and approval
by the FDA and/or applicable foreign regulatory agencies. All product candidates are prone to the risks of failure that are inherent in
pharmaceutical product development.
 
 Legal requirements as well as ethical and social concerns about
synthetic biology and genetic engineering could limit or prevent the use of our technologies and limit our revenues. 
 
 Our technology may include the use of synthetic
biology and genetic engineering. In some countries, drugs made using genetically modified organisms may be subject to a more stringent
legal regime, which could prove to be complex and very challenging, especially for a small life sciences company. For example, in the
European Union, the rules on genetically modified organisms would apply in addition to the general rules on medicinal products or cosmetic
products. The rules on advanced therapy medicinal products may also apply.
 
 Additionally, public perception about the safety
and environmental hazards of, and ethical concerns over, synthetic biology and genetic engineering could influence public acceptance of
our technologies, product candidates and processes. If we and our collaborators are not able to overcome the legal challenges as well
as the ethical and social concerns relating to synthetic biology and genetic engineering, our technologies, product candidates and processes
may not be accepted. These challenges and concerns could result in increased expenses, regulatory scrutiny and increased regulation, trade
restrictions on imports of our product candidates, delays or other impediments to our programs or the public acceptance and commercialization
of our products. We design and produce product candidates with characteristics comparable or superior to those found in naturally occurring
organisms or enzymes in a controlled laboratory; however, the release of such organisms into uncontrolled environments could have unintended
consequences. Any adverse effect resulting from such a release could have a material adverse effect on our business, financial condition
or results of operations, and we may have exposure to liability for any resulting harm.
 
 We may expend our limited resources to pursue a particular product
candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is
a greater likelihood of success. 
 
 Because we have limited financial and managerial
resources, we intend to focus on developing product candidates for specific indications that we identify as most likely to succeed, in
terms of both their potential for marketing approval and commercialization. As a result, we may forego or delay pursuit of opportunities
with other product candidates or for other indications that may prove to have greater commercial potential. For example, we spent significant
time and resources developing BX005 and BX004, which we discontinued.
 
 Our resource allocation decisions may cause us
to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and
development programs and product candidates for specific indications may not yield any commercially viable product candidates. If we do
not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights
to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous
for us to retain sole development and commercialization rights to the product candidate.
 
 36 

 There is a substantial risk of product liability claims in our
business. If we do not obtain sufficient liability insurance, a product liability claim could result in substantial liabilities to us. 
 
 Our business exposes us to significant potential
product liability risks that are inherent in the development, manufacturing and marketing of human therapeutic products. Regardless of
merit or eventual outcome, product liability claims may result in:
 
 ● 
 delay or failure to complete our clinical trials; 

 ● 
 withdrawal of clinical trial participants; 

 ● 
 decreased demand for our product candidates; 

 ● 
 injury to our reputation; 

 ● 
 litigation costs; 

 ● 
 substantial monetary awards against us; and 

 ● 
 diversion of management or other resources from key aspects of our operations. 

 If we succeed in marketing products, product liability
claims could result in an FDA or equivalent foreign regulatory agency investigation of the safety or efficacy of our products, our manufacturing
processes and facilities or our marketing programs. Such investigation could also potentially lead to a recall of our products or more
serious enforcement actions, or limitations on the indications, for which they may be used, or suspension or withdrawal of approval.
 
 We currently only have limited clinical trials
insurance policies that cover clinical trials in certain territories. We intend to expand our insurance coverage to include the sale of
commercial products if marketing approval is obtained for our product candidates or any other compound that we may develop. However, insurance
coverage is expensive, and we may not be able to maintain insurance coverage at a reasonable cost or at all, and the insurance coverage
that we have or obtain may not be adequate to cover potential claims or losses.
 
 37 

 Our employees, independent contractors, consultants, commercial
partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements. 
 
 We are exposed to the risk of employee fraud or
other illegal activity by our employees, independent contractors, consultants, commercial partners and vendors. Misconduct by these parties
could include intentional, reckless and/or negligent conduct that fails to comply with the laws of the FDA and other similar foreign regulatory
bodies, provide true, complete and accurate information to the FDA and other similar foreign regulatory bodies, comply with manufacturing
standards we have established, comply with healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct
laws or report financial information or data accurately or to disclose unauthorized activities to us. If we obtain FDA approval of any
of our product candidates and begin commercializing those products in the United States, our potential exposure under such laws will increase
significantly, and our costs associated with compliance with such laws are also likely to increase. These laws may impact, among other
things, our current activities with principal investigators and research patients, as well as proposed and future sales, marketing and
education programs.
 
 Our limited operating history compared to the long time it takes
to develop phage based products may make it difficult to evaluate the success of our business to date and to assess our future viability. 
 
 Since inception in 2015 through its dissolution
in February 2026, BiomX Ltd. devoted substantially all of its resources to developing product candidates with phage technology through
its preclinical programs, building its intellectual property portfolio, developing a supply chain, planning its business, raising capital
and providing general and administrative support for these operations. Such development efforts take very long periods of time before
they can be proved successful. We have not yet demonstrated our ability to successfully complete any clinical study or other pivotal clinical
trials, obtain regulatory approvals, manufacture a commercial-scale product, or arrange for a third-party to do so on our behalf, or conduct
sales and marketing activities necessary for successful product commercialization. Consequently, any predictions made about our future
success or viability may not be as accurate as they could be if we had a longer operating history.
 
 In addition, as an early-stage company, we may
encounter unforeseen expenses, difficulties, complications, delays and other known and unknown circumstances. As we advance our product
candidates, we will need to transition from a company with a research focus to a company capable of supporting clinical development and,
if successful, commercial activities. We may not be successful in such a transition.
 
 We may need to grow the size of our organization and may experience
difficulties in managing this growth. 
 
 As our research, development, manufacturing and
commercialization plans and strategies, we may need additional managerial, operational, sales, marketing, financial and other personnel.
Future growth would impose significant added responsibilities on members of management, including:
 
 ● 
 evaluating and pursuing strategic alternatives and other business opportunities, including potential collaborations, financings, or other strategic transactions; 

 ● 
 identifying, recruiting, compensating, integrating, maintaining and motivating additional employees; 

 ● 
 managing our internal research and development efforts effectively, including identification of clinical candidates, scaling our manufacturing process and navigating the clinical and FDA review process for our product candidates; and 

 ● 
 improving our operational, financial and management controls, reporting systems and procedures. 

 Our future financial performance and our ability
to commercialize our product candidates will depend, in part, on our ability to effectively manage any future growth, and our management
may also have to divert a disproportionate amount of our attention away from day-to-day activities in order to devote a substantial amount
of time to managing these growth activities.
 
 38 

 If we are not able to effectively expand our organization
by hiring additional employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the
tasks necessary to further develop and commercialize our product candidates and, accordingly, may not achieve our research, development
and commercialization goals.
 
 In addition, our ongoing evaluation of strategic
alternatives may not result in any transaction or alternative that improves our prospects, or at all, on terms acceptable to us or our
stockholders. If we are unable to identify and execute a viable strategic alternative or otherwise secure sufficient additional resources,
we may be required to further reduce or discontinue our operations, delay, limit or terminate development activities, pursue an orderly
wind-down, and our business, financial condition and results of operations could be materially and adversely affected.
 
 Risks Related to Government Regulation and Government 
 
 Our product candidates are subject to significant regulatory
approval requirements, including the risk of clinical holds, which could delay, prevent or limit our ability to market or develop our
product candidates. 
 
 Our research and development activities, preclinical
studies, clinical trials and the anticipated manufacturing and marketing of our drug product candidates are subject to extensive regulation
by the FDA and other regulatory agencies in the United States and by comparable authorities in Europe and elsewhere. To satisfy FDA or
equivalent foreign regulatory approval standards, we must demonstrate in adequate and well controlled clinical trials that our drug product
candidates are safe and effective for their intended use. The regulatory approval process is expensive and time-consuming, and the timing
of receipt of regulatory approval is difficult to predict. Given the uncertainties around phage therapy, our product candidates could
require a significantly longer time to gain regulatory approval than expected or may never gain approval. We cannot be certain that, even
after expending substantial time and financial resources, we will obtain regulatory approval for any of our product candidates. A delay
or denial of regulatory approval could delay or prevent our ability to generate product revenue and to achieve profitability. In addition,
the FDA or comparable foreign regulatory authorities may impose a clinical hold at any time if they determine that we have not satisfied
applicable requirements or conditions, which could delay or prevent the initiation or continuation of our clinical trials and materially
adversely affect our development timelines and costs.
 
 Regulatory requirements for development of our
product candidates are uncertain and evolving. Changes in these laws or the current interpretation or application of these laws would
have a significant adverse impact on our ability to develop and commercialize our product candidates. The legal and regulatory status
of phage therapy remains unclear in many countries, including the European Union. Changes in regulatory approval policies during the development
period of any of our product candidates, changes in, or the enactment of, additional regulations or statutes, or changes in regulatory
review practices for a submitted product application may cause a delay in obtaining approval or result in the rejection of an application
for regulatory approval.
 
 Regulatory approval, if obtained, may be made subject
to limitations on the indicated uses for which we may market a product, as well as the approved labeling for the product. These limitations
could adversely affect our potential product revenue. Regulatory approval may also be conditioned on costly post-marketing follow-up studies.
In addition, the labeling, packaging, adverse event reporting, storage, advertising, promotion and recordkeeping related to the product
will be subject to extensive ongoing regulatory requirements. Furthermore, for any marketed product, our manufacturer and our manufacturing
facilities will be subject to registration and listing requirements and continual review and periodic inspections by the FDA or other
regulatory authorities. Failure to comply with applicable regulatory requirements may, among other things, result in fines, suspensions
of regulatory approvals, product recalls, product seizures, operating restrictions and criminal prosecution.
 
 39 

 Failure to comply with health and data protection laws and regulations
could lead to claims, government enforcement actions (which could include civil or criminal penalties), regulatory actions, private litigation
and/or adverse publicity and could negatively affect our operating results and business. 
 
 We may be subject to federal, state and foreign
data protection laws and regulations (i.e., laws and regulations that address privacy and security). In the United States, numerous federal
and state laws and regulations, including federal health information privacy laws, state consumer privacy laws, state data breach notification
laws, state health information privacy laws and federal and state consumer protection laws (e.g., Section 5 of the Federal Trade Commission
Act), that govern the collection, use, disclosure and protection of health-related and other personal information could apply to our operations
or the operations of our collaborators. In addition, we may obtain health information from third parties (including research institutions
from which we obtain clinical trial data) that are subject to privacy and security requirements under HIPAA, as amended by the Health
Information Technology for Economic and Clinical Health of 2009. Depending on the facts and circumstances, we could be subject to criminal
penalties if we knowingly obtain, use or disclose individually identifiable health information maintained by a HIPAA-covered entity in
a manner that is not authorized or permitted by HIPAA.
 
 Additional requirements may also be imposed by
international data protection laws. In this context, Regulation 2016/679 of the GDPR (in addition to many other international data protection
laws) may have an impact on our operations when we collect and/or process personal data of individuals located in the European Union.
The GDPR has applied since May 25, 2018 (replacing previously applicable data protection frameworks) and has an extraterritorial reach.
The GDPR allows members states to introduce specific requirements in relation to certain areas, including processing of special categories
of data, and we may face further restrictions and non-compliance risks under such national frameworks. We have not yet assessed whether
its activities might be caught by the GDPR.
 
 Because of the types of data we collect and process,
which may involve health, biometric and genetic data, we may face high risks for non-compliance with the GDPR rules (or local declinations
of GDPR-rules across the different European Union Member States), as these types of data are considered as special categories of data
and are granted higher protection. The risks are further increased considering the diverging approach in the European Union as to the
rules, requirements and frameworks in relation to the processing of personal data in clinical trials (in matters such as the choice of
the legal basis for the processing of data, the possible uses of the personal data collected, etc.) and the interplay with other relevant
frameworks. The GDPR introduced stringent data protection requirements in the European Union, as well as potential fines for noncompliant
companies of up to the greater of €20 million or 4% of annual worldwide turnover. Supervisory authorities also have the ability
to restrict our processing activities if those are deemed not to be in compliance with the GDPR (or local declinations); this may significantly
impact the way we conduct our activities. The GDPR imposes numerous requirements for the collection, use and disclosure of personal data,
including high standards for consent to be valid, and specific information to be provided to individuals about how their personal data
is used, the obligation to notify regulators and (in some cases) to communicate to affected individuals of personal data breaches, extensive
new internal privacy governance requirements and obligations to allow individuals to exercise their strengthened privacy rights (e.g.,
the right to access, correct and delete their personal data, to withdraw their consent, etc.), and obligations when contracting with
third parties such as service providers, CROs, etc. In addition, the GDPR includes restrictions on data transfers outside the EEA. The
actual mechanisms made available under GDPR to transfer such personal data have received heightened regulatory and judicial scrutiny.
If we cannot rely on existing mechanisms for transferring personal data from the EEA, the United Kingdom, or other jurisdictions, we
may be unable to transfer personal data in those regions. Further, the United Kingdom’s vote in favor of exiting the European Union,
often referred to as “Brexit,” has created uncertainty as to whether or not the United Kingdom data protection legislation
will depart from the GDPR and how data transfers to and from the United Kingdom will be regulated.
 
 40 

 Compliance with U.S. and international data protection
laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose
data, or in some cases, impact our ability to operate in certain jurisdictions. Such laws and regulations could limit our ability to use
and share personal or other data, thereby increasing our costs and harming our business and financial condition. Failure to comply with
U.S. and international data protection laws and regulations could result in claims, government enforcement actions (which could include
civil or criminal penalties), regulatory actions, private litigation and/or adverse publicity and could negatively affect our operating
results and business. Moreover, clinical trial subjects about whom we or our potential collaborators obtain information, as well as the
providers who share this information with us, may contractually limit our ability to use and disclose the information. Claims that we
have violated individuals’ privacy rights, failed to comply with data protection laws, or breached our contractual obligations,
even if we are not found liable, could be expensive and time consuming to defend and could result in adverse publicity that could harm
our business. Finally, we may be required to disclose personal data pursuant to demands from government agencies, from law enforcement
agencies, and from intelligence agencies. This disclosure may result in a failure or perceived failure by us to comply with data privacy
laws, rules, and regulations and could result in proceedings or actions against us in the same or other jurisdictions, and could have
an adverse impact on our reputation and brand.
 
 Our relationships with healthcare providers, physicians and third-party
payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to
criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings. 
 
 Healthcare providers, physicians and third-party
payors in the United States and elsewhere play a primary role in the recommendation and prescription of pharmaceutical products. Arrangements
with third-party payors and customers can expose pharmaceutical manufacturers to broadly applicable fraud and abuse and other healthcare
laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the FCA, and foreign equivalent legislation,
which may constrain the business or financial arrangements and relationships through which such companies sell, market and distribute
pharmaceutical products. In particular, the promotion, sales and marketing of healthcare items and services, as well as certain business
arrangements in the healthcare industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive
practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring
and commissions, certain customer incentive programs and other business arrangements generally. Activities subject to these laws also
involve the improper use of information obtained in the course of patient recruitment for clinical trials. The applicable federal, state
and foreign healthcare laws and regulations laws that may affect our ability to operate include, but are not limited to:
 
 ● 
 the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs. A person or entity can be found guilty of violating the statute without actual knowledge of the statute or specific intent to violate it. In addition, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and fo rmulary managers on the other hand. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution; 

 ● 
 federal civil and criminal false claims laws, including the FCA, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment to, or approval by Medicare, Medicaid or other federal healthcare programs, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim or an obligation to pay or transmit money to the federal government, or knowingly concealing or knowingly and improperly avoiding or decreasing or concealing an obligation to pay money to the federal government. Manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudule nt claims. The FCA also permits a private individual acting as a “whistleblower” to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery; 

 41 

 ● 
 HIPAA, which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA without actual knowledge of the statute or specific intent to violate it; 

 ● 
 the federal Physician Payment Sunshine Act, created under the Patient Protection and Affordable Care Act and its implementing regulations, which require manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the United States Department of Health and Human Services information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; 

 ● 
 federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; 

 ● 
 analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by nongovernmental third-party payors, including private insurers, and may be broader in scope than their federal equivalents; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; and state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and 

 ● 
 European Union and other foreign provisions. 

 The distribution of pharmaceutical products is
subject to additional requirements and regulations, including extensive recordkeeping, licensing, storage, security requirements intended
to prevent the unauthorized sale of pharmaceutical products and, in some foreign countries, including the European Union countries, mandatory
anti-counterfeit features.
 
 42 

 The scope and enforcement of each of these laws
is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable
precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare
companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare
industry. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government
authorities, can be time- and resource-consuming and can divert a company’s attention from the business.
 
 It is not always possible to identify and deter
employee misconduct, and the precautions we take to detect and prevent inappropriate conduct may not be effective in controlling unknown
or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure
to be in compliance with such laws or regulations. Efforts to ensure that our business arrangements will comply with applicable healthcare
laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that our business practices
may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws
and regulations. The failure to comply with any of these laws or regulatory requirements could subject us to possible legal or regulatory
action. Depending on the circumstances, failure to meet applicable regulatory requirements can result in civil, criminal and administrative
penalties, damages, fines, disgorgement, individual imprisonment, possible exclusion from participation in federal and state funded healthcare
programs, contractual damages and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight
if we become subject to a corporate integrity agreement or other agreement to resolve allegations of noncompliance with these laws. Any
action for violation of these laws, even if successfully defended, could cause a pharmaceutical manufacturer to incur significant legal
expenses and divert management’s attention from the operation of the business. Prohibitions or restrictions on sales or withdrawal
of future marketed products could materially affect business in an adverse way.
 
 In addition, the approval and commercialization
of any of our product candidates outside the United States will also likely subject us to foreign equivalents of the healthcare laws mentioned
above, among other foreign laws.
 
 The FDA and other equivalent foreign regulatory agencies may
implement additional regulations or restrictions on the development and commercialization of products which act on the microbiome, which
may be difficult to predict. 
 
 The FDA and equivalent foreign regulatory agencies
in other countries have each expressed interest in further regulating biotechnology products and product candidates, such as those that
act on the human microbiome. Agencies at both the federal and state level in the United States, as well as the U.S. congressional committees
and other governments or governing agencies, have also expressed interest in further regulating the biotechnology industry. Such action
may delay or prevent commercialization of some or all of our product candidates. Adverse developments in non-IND human clinical studies
or clinical trials of microbiome products conducted by others may cause the FDA or other oversight bodies to change the requirements for
approval of any of our product candidates. These regulatory review agencies and committees and the new requirements or guidelines they
promulgate may lengthen the regulatory review process, require us to perform additional studies or trials, increase our development costs,
lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates
or lead to significant post-approval limitations or restrictions. As we advance our product candidates, we will be required to consult
with these regulatory agencies and comply with applicable requirements and guidelines. If we fail to do so, we may be required to delay
or discontinue development of such product candidates. These additional processes may result in a review and approval process that is
longer than we otherwise would have expected. 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.
 
 Even if we receive regulatory approval of any product candidates
for therapeutic indications, we will be subject to ongoing regulatory compliance obligations and continued regulatory review, which may
result in significant additional expense. Additionally, any of our product candidates, if approved, could be subject to labeling and other
restrictions and market withdrawal, and we may be subject to penalties if we fail to comply with regulatory requirements or experience
unanticipated problems with our product candidates. 
 
 If any of our product candidates is approved for
therapeutic indications, we will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, distribution,
advertising, promotion, sampling, recordkeeping, export, import, conduct of post-marketing studies and submission of safety, efficacy
and other post-market information, including both federal and state requirements in the United States and requirements of equivalent foreign
regulatory agencies. In addition, we will be subject to continued compliance with cGMP and GCP requirements for any clinical trials that
we conduct post-approval.
 
 43 

 Manufacturers and manufacturers’ facilities
are required to comply with extensive FDA and equivalent foreign regulatory agency requirements, including ensuring that quality control
and manufacturing procedures conform to cGMP regulations. As such, we and our contract manufacturers will be subject to continual review
and inspections to assess compliance with cGMP and adherence to commitments made in any NDA, other marketing applications and previous
responses to inspection observations. Accordingly, we and others with whom we work must continue to expend time, money, and effort in
all areas of regulatory compliance, including manufacturing, production and quality control.
 
 The FDA or equivalent foreign regulatory agencies
have significant post-marketing authority, including, for example, the authority to require labeling changes based on new safety information
and to require post-marketing studies or clinical trials to evaluate serious safety risks related to the use of a drug. Any regulatory
approvals that we receive for our product candidates may be subject to limitations on the approved indicated uses for which the product
may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase
4 clinical trials and surveillance to monitor the safety and efficacy of the product candidate. The FDA or equivalent foreign regulatory
agencies may also require a REMS program as a condition of approval of our product candidates, which could entail requirements for long-term
patient follow-up, a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution
methods, patient registries and other risk minimization tools. In addition, if the FDA or an equivalent foreign regulatory agency approves
our product candidates, we will have to comply with requirements, including submissions of safety and other post-marketing information
and reports and registration.
 
 The FDA or equivalent foreign regulatory agencies
may impose consent decrees or withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems
occur after the product reaches the market. Later discovery of previously unknown problems with our product candidates, including adverse
events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply
with regulatory requirements may result in revisions to the approved labeling to add new safety information, the imposition of post-market
studies or clinical trials to assess new safety risks, or the imposition of distribution restrictions or other restrictions under a REMS
program. Other potential consequences include, among other things:
 
 ● 
 restrictions on the marketing or manufacturing of our products, withdrawal of products from the market, or voluntary or mandatory product recalls; 

 ● 
 fines, warning or untitled enforcement letters, or holds on clinical trials; 

 ● 
 refusal by the FDA or equivalent foreign regulatory agencies to approve pending applications or supplements to approved applications filed by us or the suspension or revocation of license approvals; 

 ● 
 product seizure or detention or refusal to permit the import or export of our product candidates; and 

 ● 
 injunctions or the imposition of civil or criminal penalties. 

 The FDA or equivalent foreign regulatory agencies
strictly regulate the marketing, labeling, advertising and promotion of drug products that are placed on the market. Products may be promoted
only for the approved indications and in accordance with the provisions of the approved label or other regulatory marketing pathway. The
FDA and equivalent foreign regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses,
and a company that is found to have improperly promoted off-label uses may be subject to significant liability. The policies of the FDA
or equivalent foreign regulatory agencies may change, and additional government regulations may be enacted that could prevent, limit or
delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption
of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may
have obtained, which would adversely affect our business, prospects and the ability to achieve or sustain profitability.
 
 44 

 The policies of the FDA or equivalent foreign regulatory
agencies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our
product candidates. We also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation
or administrative or executive action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing
requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may be subject
to enforcement action, and we may not achieve or sustain profitability.
 
 Noncompliance by us or any future collaborator
with regulatory requirements, including safety monitoring or pharmacovigilance requirements, can also result in significant financial
penalties.
 
 We may conduct clinical trials for our product candidates outside
the United States, and the FDA may not accept data from such trials. 
 
 We have and may continue to conduct certain clinical
trials or a portion of our clinical trials for our product candidates outside the U.S. The acceptance of study data from clinical trials
conducted outside the U.S. or another jurisdiction by the FDA or comparable foreign regulatory authority may be subject to certain conditions
or may not be accepted at all. In cases where data from foreign clinical trials are intended to serve as the sole basis for marketing
approval in the U.S., the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable
to the U.S. population and U.S. medical practice; (ii) the trials were performed by clinical investigators of recognized competence and
pursuant to GCP regulations; and (iii) the data may be considered valid without the need for an on-site inspection by the FDA, or if the
FDA considers such inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate
means. In addition, even where the foreign study data are not intended to serve as the sole basis for approval, the FDA will not accept
the data as support for an application for marketing approval unless the study is well-designed and well-conducted in accordance with
GCP requirements and the FDA is able to validate the data from the study through an onsite inspection if deemed necessary. Many foreign
regulatory authorities have similar approval requirements. In addition, such foreign trials would be subject to the applicable local laws
of the foreign jurisdictions where the trials are conducted. There can be no assurance that the FDA or any comparable foreign regulatory
authority will accept data from trials conducted outside of the U.S. or the applicable jurisdiction. If the FDA or any comparable foreign
regulatory authority does not accept such data, it would result in the need for additional trials, which could be costly and time-consuming,
and which may result in current or future product candidates that we may develop not receiving approval for commercialization in the applicable
jurisdiction.
 
 Any products that we may develop may become subject to unfavorable
pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which could make it difficult for us to sell
any product candidates or therapies profitably. 
 
 The regulations that govern pricing for new medical
products vary widely from country to country. As a result, we might obtain regulatory approval for a product in a particular country but
then be subject to pricing regulations in that country that delay the commercial launch of the product and negatively impact the revenue
we are able to generate from the sale of the product in that country. In addition, our ability to commercialize any approved products
successfully will depend in part on the extent to which reimbursement for these products will be available from government health administration
authorities, private health insurers and other organizations. Even if we succeed in bringing one or more therapeutic products to market,
these products may not be considered cost-effective, and the amount reimbursed for any products may be insufficient to allow us to sell
them on a competitive basis. If the price we are able to charge for therapeutic products is inadequate in light of our development and
other costs, our future profitability could be adversely affected.
 
 Ongoing health care legislative and regulatory reform measures
may have a material adverse effect on our business and results of operations. 
 
 Changes in regulations, statutes or the interpretation
of existing regulations could impact our business in the future by requiring, for example, (i) changes to our manufacturing arrangements,
(ii) additions or modifications to product labeling, (iii) the recall or discontinuation of our products, or (iv) additional record-keeping
requirements. If any such changes were to be imposed, they could adversely affect the operation of our business.
 
 In the United States, there have been and continue
to be a number of legislative initiatives to contain health care costs. For example, in March 2010, the ACA was passed, which substantially
changed the way health care is financed by both governmental and private insurers and significantly impacted the United States pharmaceutical
industry. The ACA, among other things, subjected biological products to potential competition by lower-cost biosimilars; addressed a new
methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused,
instilled, implanted or injected; increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program;
and extended the rebate program to individuals enrolled in Medicaid managed care organizations. It also established annual fees and taxes
on manufacturers of certain branded prescription drugs and creates a new Medicare Part D coverage gap discount program in which manufacturers
must now agree to offer 50% point of sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their
coverage gap period as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D.
 
 45 

 Since its enactment, there have been judicial,
executive and Congressional challenges to certain aspects of the ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent
judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision,
President Biden issued an executive order initiating a special enrollment period from February 15, 2021 through August 15, 2021 for purposes
of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies
to review and reconsider their existing policies and rules that limit access to healthcare. More recently, on March 11, 2021, President
Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at
100% of a drug’s average manufacturer price, beginning January 1, 2024. It is unclear how other healthcare reform measures of the
Biden administration, if any, will impact our business.
 
 These laws and future state and federal health
care reform measures may be adopted in the future, any of which may result in additional reductions in Medicare and other health care
funding and otherwise affect the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or
the frequency with which any such product candidate is prescribed or used.
 
 A similar movement is observed in the European
Union countries. Criteria for pricing and reimbursement, which vary from country to country, are regularly amended and tightened in order
to reduce the draw on the budget allocated to national health insurance systems. Moreover, the system of reference pricing (the price
in a country calculated on the basis of prices in other countries with typically lower prices) leads to price reductions in countries
that traditionally granted high prices.
 
 Disruptions at the FDA and other government agencies and entities,
such as the U.S. Department of Defense, caused by funding shortages, government shutdowns, global health concerns or other causes could
hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from
being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business. 
 
 The ability of the FDA to review and or approve
new products can be affected by a variety of factors, including government budget and funding levels, government shutdowns, statutory,
regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other
events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the FDA have fluctuated
in recent years as a result. Any material reductions in the ability of FDA to perform these and other functions may delay the development
and approval of our product candidates. Recent actions by the Trump administration have caused concern in the industry that this may occur.
For example, beginning on February 13, 2025, the Department of Health and Human Services began firing a large number of its probationary
employees, a category that includes new federal employees and employees recently promoted or transferred to new positions or agencies.
Reports indicate that 5,000 out of 80,000 employees have been terminated. Although we cannot be certain at this early stage, these terminations
and others, if they withstand legal challenges, may significantly delay and impede our interactions with FDA. Similar results may stem
from the recent confirmed resignations of some senior FDA employees with responsibility for regulation of drugs and biologics, as well
as possible future layoffs and resignations. There are also reports that the Trump administration intends to request Congress to reduce
FDA funding in upcoming budgets. Such funding cuts may also delay the development and approval of our products.
 
 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.
For instance, we have funded our research and development from grants, including grants from MTEC, a consortium working in partnership
with the U.S. Department of Defense. In connection therewith, in 2019, APT entered into the Research Agreement, with the USAMRAA and the
USAMRDC, to advance personalized phage therapy from niche to broad use and have received awards under this agreement. Cost cutting of
grants and other disruptions at the Department of Defense, the FDA and other regulatory authorities may also lengthen the time necessary
for new drugs and biologics to be developed, reviewed and/or approved by necessary regulatory authorities, which would adversely affect
our business, or require us to obtain alternative funding and other resources, if available.
 
 We are subject to certain U.S. and foreign anticorruption, anti-money
laundering, export control, sanctions and other trade laws and regulations. We can face serious consequences for violations. 
 
 Among other matters, U.S. and foreign anticorruption,
anti-money laundering, export control, sanctions and other trade laws and regulations, which are collectively referred to as Trade Laws,
prohibit companies and their employees, agents, clinical research organizations, legal counsel, accountants, consultants, contractors
and other partners from authorizing, promising, offering, providing, soliciting or receiving, directly or indirectly, corrupt or improper
payments or anything else of value to or from recipients in the public or private sector. Violations of Trade Laws can result in substantial
criminal fines and civil penalties, imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud
litigation, reputational harm, and other consequences. We have direct or indirect interactions with officials and employees of government
agencies or government-affiliated hospitals, universities and other organizations. We also expect our non-U.S. activities to increase
over time. We plan to engage third parties for clinical trials and/or to obtain necessary permits, licenses, patent registrations and
other regulatory approvals, and we can be held liable for the corrupt or other illegal activities of our personnel, agents or partners,
even if we do not explicitly authorize or have prior knowledge of such activities.
 
 46 

 Risks Related to our Licensed and Co-Owned Intellectual Property 
 
 We are highly dependent on intellectual property licensed from
third parties, and termination or limitation of any of these licenses could result in the loss of significant rights and materially harm
our business. 
 
 We currently rely on licenses from third-party
collaborators for certain aspects of our technology and for certain of our existing programs. In particular, we received exclusive, royalty-bearing
licenses to certain patents held by third parties.
 
 If we fail to comply with our obligations under
our license agreements, including payment terms, our licensors may have the right to terminate our license agreements, in which event
we may not be able to develop, manufacture, market or sell the products covered by those license agreements. We may also face other penalties
under our license agreements if we do not meet our contractual obligations. Such an occurrence could materially adversely affect the value
of our products being developed under any such license agreements. Termination of one or more of our license agreements, or reduction
or elimination of our rights under these license agreements, may result in us having to negotiate new or reinstated license agreements,
which may not be available to us on equally favorable terms, or at all, which may mean we are unable to commercialize the affected product
candidates. In addition, termination of our license agreements could cause significant delays in our product and commercialization efforts
that could prevent us from commercializing our product candidates, including our phage-based therapeutic product candidates, without first
expanding our internal capabilities or entering into other agreements with third parties. Any alternative collaboration or license could
also be on less favorable terms to us.
 
 In the future, we may rely upon additional licenses
to certain patent rights and proprietary technology from third parties that are important or necessary to the development of our product
candidates and proprietary product platform. Patent rights that we in-license in the future may be subject to a reservation of rights
by one or more third parties. As a result, any such third party may have certain rights to such intellectual property. 
 
 In addition, subject to the terms of any such license
agreements, we may not have the right to control the preparation, filing, prosecution and maintenance, and we may not have the right to
control the enforcement and defense, of patents and patent applications covering the technology that we license from third parties. We
cannot be certain that our in-licensed patent applications (and any patents issuing therefrom) that are controlled by our licensors will
be prepared, filed, prosecuted, maintained, enforced and defended in a manner consistent with the best interests of our business. If our
licensors fail to prosecute, maintain, enforce and defend such patents rights, or lose rights to those patent applications (or any patents
issuing therefrom), the rights we have licensed may be reduced or eliminated, our right to develop and commercialize any of our product
candidates and proprietary product platform technology that are subject of such licensed rights could be adversely affected, and we may
not be able to prevent competitors from making, using and selling competing products. Moreover, we cannot be certain that such activities
by our potential future licensors will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable
patents or other intellectual property rights. In addition, even where we may have the right to control the prosecution of patents and
patent applications that we may license to and from third parties, we may still be adversely affected or prejudiced by actions or inactions
of our potential future licensees, licensors and their counsel that took place prior to the date of assumption of control over patent
prosecution.
 
 The patent position of biopharmaceutical companies,
including ours and our licensors’, is generally uncertain and involves complex legal and factual considerations and, therefore,
validity and enforceability cannot be predicted with certainty. Our licensed and co-owned intellectual property may be challenged, deemed
unenforceable, invalidated or circumvented. We and our licensors will be able to protect our intellectual property rights from unauthorized
use by third parties only to the extent that these rights (and the products and services they cover) are protected by valid and enforceable
patents, copyrights or trademarks, or are effectively maintained as trade secrets.
 
 47 

 Any patents obtained by our licensors or us, may
be challenged by re-examination or otherwise invalidated or eventually found unenforceable. Both the patent application process and the
process of managing patent disputes can be time consuming and expensive. If we or one of our licensors were to initiate legal proceedings
against a third party to enforce a patent relating to one of our products, the defendant in such litigation could counterclaim that the
asserted patents are invalid and/or unenforceable. In patent litigation in the U.S., defendant counterclaims alleging invalidity or unenforceability
are common, as are validity challenges by the defendant against the subject patent or related patents before the USPTO. Grounds for a
validity challenge could be an alleged failure to meet any of several statutory patentability requirements, including lack of novelty,
obviousness, non-enablement, failure to meet the written description requirement, indefiniteness, and/or failure to claim patentable subject
matter. Grounds for an unenforceability assertion could be an allegation that someone connected to prosecution of the patent/s at issue
intentionally withheld material information from the USPTO or made a misleading statement during prosecution. Additional grounds for an
unenforceability assertion include an allegation of misuse or anticompetitive use of patent rights, and an allegation of incorrect inventorship
with deceptive intent. Third parties may also raise similar claims before the USPTO, even outside the context of litigation. The outcome
of any assertion of invalidity and/or unenforceability is unpredictable. If a defendant or third party were to prevail on a legal assertion
of invalidity and/or unenforceability, we and our licensors would lose at least part, and perhaps all, of the claims of the challenged
patent/s. Such a loss of patent protection could have a material adverse impact on our business.
 
 We are dependent on patents and proprietary technology. If we
fail to adequately protect this intellectual property or if we otherwise do not have exclusivity for the marketing of our products, our
ability to commercialize products could suffer. 
 
 Our commercial success will depend in part on our
ability to obtain and maintain patent protection sufficient to prevent others from marketing our product candidates, as well as to defend
and enforce these patents against infringement and to operate without infringing the proprietary rights of others. Protection of our product
candidates from unauthorized use by third parties will depend on having valid and enforceable patents that cover our product candidates
or their manufacture or use or on having effective trade secret protection. If our patent applications do not result in issued patents
or if our patents are found to be invalid, we will lose the ability to exclude others from making, using or selling the inventions claimed
therein. We have a limited number of patents and pending patent applications.
 
 The patent positions of biotechnology companies
can be uncertain and involve complex legal and factual questions. This is due to inconsistent application of policies and changes in policy
relating to the examination and enforcement of biotechnology patents to date on a global scale. The laws of some countries may not protect
intellectual property rights to the same extent as the laws of countries having well-established patent systems, and those countries may
lack adequate rules and procedures for defending our intellectual property rights. Also, changes in either patent laws or in the interpretations
of patent laws may diminish the value of our intellectual property. We are not able to guarantee that all of our patent applications will
result in the issuance of patents, and we cannot predict the breadth of claims that may be allowed in our patent applications or in the
patent applications we may license from others.
 
 The Leahy-Smith America Invents Act provides for
proceedings involving post-issuance patent review procedures, such as inter partes review, or IPR, and post-grant review, that allow third
parties to challenge the validity of an issued patent in front of the USPTO Patent Trial and Appeal Board. Each proceeding has different
eligibility criteria and different patentability challenges that can be raised. IPRs permit any person (except a party who has been litigating
the patent for more than a year) to challenge the validity of the patent on the grounds that it was anticipated or made obvious by prior
art. Patents covering pharmaceutical products have been subject to attack in IPRs from generic drug companies and from hedge funds. If
it is within nine months of the issuance of the challenged patent, a third party can petition the USPTO for post-grant review, which can
be based on any invalidity grounds and is not limited to prior art patents or printed publications.
 
 In post-issuance proceedings, USPTO rules and regulations
generally tend to favor patent challengers over patent owners. For example, unlike in district court litigation, claims challenged in
post-issuance proceedings are given their broadest reasonable meaning, which increases the chance a claim might be invalidated by prior
art or lack support in the patent specification. As another example, unlike in district court litigation, there is no presumption of validity
for an issued patent, and thus a challenger’s burden to prove invalidity is by a preponderance of the evidence, as opposed to the
heightened clear and convincing evidence standard. As a result of these rules and others, statistics released by the USPTO show a high
percentage of claims being invalidated in post-issuance proceedings. Moreover, with few exceptions, there is no standing requirement to
petition the USPTO for inter partes review or post-grant review. In other words, companies that have not been charged with infringement
or that lack commercial interest in the patented subject matter can still petition the USPTO for review of an issued patent. Thus, even
where we have issued patents, our rights under those patents may be challenged and ultimately not provide us with sufficient protection
against competitive products or processes.
 
 48 

 The degree of future protection for our proprietary
rights is uncertain, because legal means afford only limited protection and may not adequately protect our rights or permit us to gain
or keep our competitive advantage. For example:
 
 ● 
 we might not be the first to file patent applications for our inventions; 

 ● 
 others may independently develop similar or alternative product candidates to any of our product candidates that fall outside the scope of our patents; 

 ● 
 our pending patent applications may not result in issued patents; 

 ● 
 our issued patents may not provide a basis for commercially viable products or may not provide us with any competitive advantages or may be challenged by third parties; 

 ● 
 others may design around our patent claims to produce competitive products that fall outside the scope of our patents; 

 ● 
 we may not develop additional patentable proprietary technology related to our product candidates; and 

 ● 
 we are dependent upon the diligence of our appointed agents in national jurisdictions, acting for and on our behalf, which control the prosecution of pending domestic and foreign patent applications and maintain granted domestic and foreign patents. 

 An issued patent does not guarantee us the right
to practice the patented technology or commercialize the patented product. Third parties may have blocking patents that could be used
to prevent us from commercializing our patented products and practicing our patented technology. Our issued patents and those that may
be issued in the future may be challenged, invalidated or circumvented, which could limit our ability to prevent competitors from marketing
the same or related product candidates or could limit the length of the term of patent protection of our product candidates. Moreover,
because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before
any of our product candidates can be commercialized, any related patent may expire or remain in force for only a short period following
commercialization, thereby reducing any advantage of the patent. Patent term extensions may not be available for these patents.
 
 Our rights to develop and commercialize our product candidates
and proprietary product platform may be subject, in part, to the terms and conditions of current and future licenses granted to us by
others. 
 
 Some of our licensed rights could provide us with
freedom to operate for aspects of our products and services. We may need to obtain additional licenses from others to advance our research,
development and commercialization activities.
 
 Disputes may arise between us and our licensors
regarding intellectual property subject to a license agreement, including:
 
 ● 
 the scope of rights granted under the license agreement and other interpretation-related issues; 

 ● 
 whether, and the extent to which, our products, services, technology and processes infringe on the intellectual property of the licensor that is not subject to the license agreement; 

 ● 
 our right to sublicense patent and other rights to third parties under collaborative development relationships; 

 ● 
 our diligence obligations under the license agreement and what activities satisfy those diligence obligations; 

 ● 
 the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators; and 

 ● 
 the priority of invention of patented technology. 

 If we do not prevail in such disputes, we may
lose any or all of our rights under such license agreements.
 
 49 

 In addition, the agreements under which we currently
license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible
to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to
be the scope of our rights to the relevant intellectual property or technology or could increase what we believe to be our financial or
other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition,
results of operations and prospects. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability
to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize
any affected products or services, which could have a material adverse effect on our business, financial conditions, results of operations
and prospects.
 
 Absent the license agreements, we may infringe
patents subject to those agreements, and, if the license agreements are terminated, we may be subject to litigation by the licensor. Litigation
could result in substantial costs to us and distract our management. If we do not prevail, we may be required to pay damages, including
treble damages, attorneys’ fees, costs and expenses and royalties. We may also be enjoined from selling our products or services,
which could adversely affect our ability to offer products or services, our ability to continue operations, and our financial condition.
 
 If we infringe the rights of third parties, we could be prevented
from selling products, forced to pay damages and/or royalties, and forced to defend against litigation. 
 
 We do not believe that the products we are currently
developing infringe upon the rights of any third parties or are infringed upon by third parties. However, there can be no assurance that
our technology will not be found in the future to infringe upon the rights of others or be infringed upon by others. Moreover, patent
applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent
literature frequently occurs much later than the date on which the underlying discoveries were made and patent applications were filed.
Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result
in issued patents that our products or product candidates infringe. For example, pending patent applications may exist that provide support
or can be amended to provide support for a claim that results in an issued patent that is infringed by one or more of our products. In
such a case, others may assert infringement claims against us, and should we be found to infringe these patents or impermissibly use their
intellectual property, we might be forced to pay damages, potentially including treble damages, if we are found to have willfully infringed
on such third parties’ patent rights.
 
 In addition to any damages we might have to pay,
we may also be required to obtain licenses from the holders of this intellectual property, enter into royalty agreements, or redesign
our products so as not to use this intellectual property. Each of these penalties may prove to be uneconomical or otherwise impossible.
We may fail to obtain any such licenses or intellectual property rights on commercially reasonable terms. Even if we are able to obtain
a license, it may be non-exclusive, thereby giving our competitors access to the same licensed technologies. In that event, we may be
required to spend significant time and resources to develop or license replacement technologies. If we are unable to do so, we may be
unable to develop or commercialize the affected products, which could materially harm our business. Conversely, we may not be able to
pursue claims against third parties that infringe on our licensed or co-owned technology. Thus, our licensed and co-owned technology may
not provide adequate protection against competitors.
 
 The pharmaceutical industry is characterized by
extensive litigation regarding patents and other intellectual property rights. Moreover, the cost to us of any litigation or other proceeding
relating to our licensed and/or co-owned intellectual property rights, even if resolved in our favor, could be substantial. Any such litigation
would divert our management efforts, and we may not have sufficient resources to bring any such action to a successful conclusion. Uncertainties
resulting from the initiation and continuation of any litigation could limit our ability to continue operations.
 
 Additionally, because our pipeline may involve
additional development candidates that could require the use of proprietary rights held by third parties, the growth of our business could
depend in part on our ability to acquire, in-license or use these proprietary rights. In addition, our development candidates may require
specific formulations to work effectively and efficiently and these rights may be held by others. We may be unable to acquire or in-license
any compositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify. The
licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies
are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established
companies may have a competitive advantage over us due to their size, cash resources, and greater clinical development and commercialization
capabilities.
 
 50 

 For example, we sometimes collaborate with U.S.
and foreign academic institutions to accelerate our preclinical research or development under written agreements with these institutions.
Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology
resulting from the collaboration. Regardless of such right of first negotiation for intellectual property, we may be unable to negotiate
a license within the specified time frame or under terms that are acceptable to us. If we are unable to do so, the institution may offer
the intellectual property rights to other parties, potentially blocking our ability to pursue our program.
 
 In addition, companies that perceive us to be a
competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property
rights on terms that would allow us to make an appropriate return on our investment. If we are unable to successfully obtain rights to
require third-party intellectual property rights, our business, financial condition and prospects for growth could suffer.
 
 We may not be successful in obtaining, through acquisitions,
in-licenses or otherwise, necessary rights to our product candidates, proprietary product platform technologies or other technologies. 
 
 We currently have rights to certain intellectual
property, through licenses from third parties, to develop our product candidates and proprietary product platform technologies. Some healthcare
companies and academic institutions are competing with us in the field of phage-based therapies and may have patents and/or have filed
and are likely filing patent applications potentially relevant to our business. In order to avoid infringing these third-party patents,
we may find it necessary or prudent to obtain licenses to such patents from such third-party intellectual property holders. We may also
require licenses from third parties for certain technologies that we may be evaluating for use with our current or future product candidates.
However, we may be unable to secure such licenses or otherwise acquire or in-license any compositions, methods of use, processes or other
intellectual property rights from third parties that we identify as necessary for our current or future product candidates and our proprietary
product platform at a reasonable cost or on reasonable terms, if at all. The licensing or acquisition of third-party intellectual property
rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual
property rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due
to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive
us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual
property rights on terms that would allow us to make an appropriate return on our investment or at all.
 
 In the event that we try to obtain rights to required
third-party intellectual property rights and are ultimately unsuccessful, we may be required to expend significant time and resources
to redesign our technology, product candidates or the methods for manufacturing them or to develop or license replacement technology,
all of which may not be feasible on a technical or commercial basis. If we are unable to do so, we may be unable to develop or commercialize
the affected product candidates or continue to utilize our existing proprietary product platform technology, which could significantly
harm our business, financial condition, results of operations and prospects.
 
 We rely on our proprietary product platform to identify phage-based
therapies. Our competitive position could be materially harmed if our competitors develop a similar platform and develop rival product
candidates. 
 
 We rely on know-how, inventions and other proprietary
information to strengthen our competitive position. We consider know-how to be our primary intellectual property with respect to our proprietary
product platform. Our clinical trials allow us to collect clinical data, which we use as a feedback loop to make improvements to our proprietary
product platform. In particular, we anticipate that, with respect to this proprietary product platform, this data may over time be disseminated
within the industry through independent development, the publication of journal articles describing the method and the movement of skilled
personnel.
 
 We cannot rule out that our competitors may have
or obtain the knowledge necessary to analyze and characterize similar data to our known data for the purpose of identifying and developing
products that could compete with any of our product candidates. Our competitors may also have significantly greater financial, product
development, technical and human resources access to date. Further, our competitors may have significantly greater experience in using
translational science methods to identify and develop product candidates.
 
 We may not be able to prohibit our competitors
from using technology or methods that are the same as or similar to our proprietary product platform to develop their own product candidates.
If our competitors develop associated therapies, our ability to develop and market a promising product or product candidate may diminish
substantially, which could have a material adverse effect on our business, financial condition, prospects and results of operations.
 
 51 

 We rely on trade secrets and other forms of non-patent intellectual
property protection. If we are unable to protect our trade secrets, other companies may be able to compete more effectively against us. 
 
 We rely on trade secrets to protect certain aspects
of our technology, including our proprietary processes for manufacturing and purifying bacteriophage. Trade secrets are difficult to protect,
especially in the pharmaceutical industry, where much of the information about a product must be made public during the regulatory approval
process. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, outside scientific
collaborators and other advisors may unintentionally or willfully disclose our information to competitors. Enforcing a claim that a third
party illegally obtained and is using our trade secret information is expensive and time-consuming, and the outcome is unpredictable.
In addition, courts outside the United States may be less willing to or may not protect trade secrets. Moreover, our competitors may independently
develop equivalent knowledge, methods and know-how.
 
 If we are sued for infringing intellectual property rights of
third parties or if we are forced to engage in an interference proceeding, it will be costly and time-consuming, and an unfavorable outcome
in that litigation or interference would have a material adverse effect on our business. 
 
 Our ability to commercialize our product candidates
depends on our ability to develop, manufacture, market and sell our product candidates without infringing the proprietary rights of third
parties. Numerous U.S. and foreign patents and patent applications, which are owned by third parties, exist in the general field of anti-infective
products or in fields that otherwise may relate to our product candidates. If we are shown to infringe, we could be enjoined from the
use or sale of the claimed invention if we are unable to prove that the patent is invalid. In addition, because patent applications can
take many years to issue, there may be currently pending patent applications, unknown to us, that may later result in issued patents that
our product candidates may infringe or that may trigger an interference proceeding regarding one of our owned or licensed patents or applications.
There could also be existing patents of which we are not aware that our product candidates may inadvertently infringe or that may become
involved in an interference proceeding.
 
 The biotechnology and pharmaceutical industries
are characterized by the existence of a large number of patents and frequent litigation based on allegations of patent infringement. For
so long as our product candidates are in clinical trials, we believe our clinical activities fall within the scope of the exemptions provided
by 35 U.S.C. Section 271(e) in the United States, which exempts from patent infringement liability activities reasonably related to the
development and submission of information to the FDA. As our clinical investigational drug product candidates progress toward commercialization,
the possibility of a patent infringement claim against us increases. While we attempt to ensure that our active clinical investigational
drugs and the methods we employ to manufacture them, as well as the methods for their use we intend to promote, do not infringe other
parties’ patents and other proprietary rights, we cannot be certain they do not, and competitors or other parties may assert that
we infringe their proprietary rights in any event.
 
 We may be exposed to future litigation based on
claims that our product candidates, the methods we employ to manufacture them or the uses for which we intend to promote them infringe
the intellectual property rights of others. Our ability to manufacture and commercialize our product candidates may depend on our ability
to demonstrate that the manufacturing processes we employ and the use of our product candidates do not infringe third-party patents. If
third-party patents were found to cover our product candidates or their use or manufacture, we could be required to pay damages or be
enjoined and therefore unable to commercialize our product candidates, unless we obtained a license. A license may not be available to
us on acceptable terms, if at all.
 
 52 

 Risks Related to Our Reliance on Third Parties 
 
 We rely, and continue to rely, on third parties to conduct our
clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such
trials. 
 
 We continue to rely on third parties, such as contract
research organizations, or CROs, and clinical investigators, to conduct and manage our clinical trials.
 
 Our reliance on these third parties for research
and development activities will reduce our control over these activities but does not relieve us of our responsibilities. For example,
we remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and
protocols for the trial. Moreover, the FDA requires us to comply with GCPs for conducting, recording and reporting the results of clinical
trials to assure that data and reported results are credible and accurate and that the rights, safety and welfare of trial participants
are protected. Other countries’ regulatory agencies also have requirements for clinical trials with which we must comply. We are
also required to register ongoing clinical trials and post the results of completed clinical trials in a government-sponsored database,
clinicaltrials.gov, within specified time frames. Failure to do so can result in fines, adverse publicity, and civil and criminal sanctions.
 
 Furthermore, these third parties may also have
relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual
duties, do not meet expected deadlines, experience work stoppages, terminate their agreements with us or need to be replaced, or do not
conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we may need to enter into new arrangements
with alternative third parties, which could be difficult, costly or impossible, and our clinical trials may be extended, delayed, terminated
or need to be repeated. If any of the foregoing occurs, we may not be able to obtain, or may be delayed in obtaining, marketing approvals
for our product candidates and may not be able to, or may be delayed in our efforts to, successfully commercialize our product candidates.
 
 We also rely on other third parties to store and
distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay clinical development
or marketing approval of our product candidates or commercialization of our products, producing additional losses and depriving us of
potential product revenue.
 
 Third-party relationships are important to our business. If we
are unable to maintain our collaborations or enter into new relationships, or if these relationships are not successful, our business
could be adversely affected. 
 
 We have limited capabilities for product development
and do not yet have any capability for sales, marketing or distribution. Accordingly, we enter into relationships with other companies
and academic institutions to provide us with important technology, and we may receive additional technology and funding under these and
other collaborations in the future. The relationships we enter into may pose a number of risks, including the following:
 
 ● 
 third parties have, and future third-party collaborators may have, significant discretion in determining the efforts and resources that they will apply; 

 ● 
 current and future third parties may not perform their obligations as expected; 

 ● 
 current and future third parties may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the third parties’ strategic focus or available funding, or external factors, such as a strategic transaction that may divert resources or create competing priorities; 

 53 

 ● 
 third parties may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; 

 ● 
 current and future third parties could independently develop, or develop with third parties, products that compete directly or indirectly with our products and product candidates if the third parties believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; 

 ● 
 product candidates discovered in collaboration with us may be viewed by our current or future third parties as competitive with their own product candidates or products, which may cause such third parties to cease to devote resources to the commercialization of our product candidates; 

 ● 
 current and future third parties may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of a product candidate or product; 

 ● 
 current and future third parties with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; 

 ● 
 disagreements with current or future third parties, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; 

 ● 
 current and future third parties may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; 

 ● 
 current and future third parties may infringe the intellectual property rights of others, which may expose us to litigation and potential liability; 

 ● 
 current and future third parties may infringe regulatory frameworks (such as, but not limited to , cybersecurity and/or privacy frameworks), which may expose us to litigation and potential liability or require or lead us to terminate relationships with them; 

 ● 
 if a current or future third party is involved in a business combination, the collaborator might deemphasize or terminate the development or commercialization of any product candidate licensed to it by us; and 

 ● 
 current and future relationships may be terminated by the collaborator, and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates. 

 If our relationships do not result in the successful
discovery, development and commercialization of products or if one of our third-party collaborators terminates its agreement with us,
we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the funding
we expect under these agreements, our development of our technology and product candidates could be delayed, and we may need additional
resources to develop product candidates and our technology. Additionally, if any of our current or future third-party collaborators terminates
its agreement with us, we may find it more difficult to attract new collaborators, and our reputation in the business and financial communities
could be adversely affected.
 
 Relationships are complex and time-consuming to
negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies
that have resulted in a reduced number of potential future collaborators. We face significant competition in seeking appropriate collaborators.
Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of a collaborator’s
resources and expertise, the terms and conditions of a proposed collaboration and a proposed collaborator’s evaluation of a number
of factors.
 
 54 

 We may not be successful in maintaining or establishing collaborations,
which could adversely affect our ability to develop and, if required regulatory approvals are obtained, commercialize our product candidates. 
 
 In the future, in order to advance our clinical
development, or in connection with any potential out-licensing of product candidates or technologies, we may seek to enter into collaboration
agreements. In addition, we may consider entering into collaboration arrangements with medical technology, pharmaceutical or biotechnology
companies and/or seek to establish strategic relationships with marketing partners for the development, sale, marketing and/or distribution
of our product candidates within or outside of the United States. If we are unable to reach agreements with potential collaborators, then
we may fail to meet our business objectives for the affected product candidates or programs. Collaboration arrangements are complex and
time-consuming to negotiate, document and implement, and we may not be successful in our efforts, if any, to establish and implement collaborations
or other alternative arrangements. The terms of any collaboration or other arrangements that we establish may not be favorable to us,
and the success of any such collaboration will depend heavily on the efforts and activities of our collaborators. Moreover, our collaboration
agreement could be terminated or not renewed by a third party at a time that is costly or damaging to us. Any failure to engage successful
collaborators could cause delays in our product development and/or commercialization efforts, which could harm our financial condition
and operational results.
 
 Risks Related to Manufacturing and Supply 
 
 We rely on third parties to manufacture our clinical supply of
product candidates and we intend to rely on third parties to produce and process our products, if approved. 
 
 We currently rely on outside vendors to supply
raw materials and other important components, such as lab equipment. Additionally, our clinical trial material is being manufactured by
an outsourced contract manufacturing operation as our current GMP facility was put on hold. We have not yet caused any product candidates
to be manufactured or processed on a commercial scale and may not be able to do so for any of our product candidates. We will make changes
as it works to optimize the manufacturing process for our product candidates, and we cannot be sure that even minor changes in the process
will result in therapies that are safe and effective.
 
 The facilities used to manufacture our product
candidates must be approved by the FDA or equivalent foreign regulatory agencies pursuant to inspections that will be conducted after
we submit a marketing application to the FDA or equivalent foreign regulatory agency. Additionally, any facilities used for the manufacture
of product candidates commercialized for non-therapeutic uses will be subject to inspection by the FDA and foreign regulatory agencies.
We do not currently control all aspects of the manufacturing process of, and are currently largely dependent on, our contract manufacturing
partners for compliance with regulatory requirements, known as cGMP requirements, for manufacture of our product candidates. If and when
our manufacturing facility becomes operational, we will be responsible for compliance with cGMP requirements. If we or our contract manufacturers
cannot successfully manufacture in conformance with our specifications and the strict regulatory requirements of the FDA or other regulatory
authorities, we and they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities with respect
to the manufacture of our product candidates. In addition, we have no control over the ability of our contract manufacturers to maintain
adequate quality control, quality assurance and qualified personnel. If the FDA or an equivalent foreign regulatory agency does not approve
these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find
alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market
our product candidates, if approved.
 
 We
have limited experience manufacturing our product candidates for purposes of clinical trials for therapeutic indications or for non-therapeutic
clinical studies or trials. We cannot assure you that we can manufacture our product candidates in compliance with regulations
at a cost or in quantities necessary to make them commercially viable.
 
 Our product candidates rely on the availability of specialty
raw materials, which may not be available to us on acceptable terms or at all. 
 
 Our product candidates require certain specialty
raw materials, some of which we obtain from small companies with limited resources and experience to support a commercial product. These
third-party suppliers may be ill-equipped to support our needs, especially in non-routine circumstances like an FDA inspection or medical
crisis, such as widespread contamination. We do not currently have contracts in place with all of the suppliers that we may need at any
point in time and, if needed, may not be able to contract with them on acceptable terms or at all. Accordingly, we may experience delays
in receiving key raw materials to support clinical or commercial manufacturing.
 
 55 

 Risks Related to Our Common Stock 
 
 A significant number of shares of our Common Stock are subject
to issuance upon exercise of outstanding warrants and options or conversion of our Convertible Preferred Stock, which upon such exercise
or conversion, as applicable, may result in dilution to our security holders. 
 
 As of December 31, 2025, we had warrants outstanding to purchase an
aggregate of up to 1,205,920 shares of Common Stock with a weighted average exercise price of $24.2, or collectively, the Outstanding
Warrants, in each case subject to adjustment. Additionally, we had Convertible Preferred Stock that can be converted into 776,383 shares
of Common Stock. To the extent such Outstanding Warrants are exercised or Convertible Preferred Stock are converted, additional shares
of our Common Stock will be issued, which will result in dilution to the then existing holders of Common Stock and increase the number
of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect
the market price of our Common Stock.
 
 In addition, as of December 31, 2025, we had outstanding vested and
unvested options to purchase 150,387 shares of our Common Stock. To the extent any of these options are exercised, additional shares of
Common Stock will be issued that will generally be eligible for resale in the public market (subject to limitations under Rule 144 under
the Securities Act with respect to shares held by our affiliates), which will result in dilution to our security holders.
 
 As of February 16, 2026, and following the completion of the transactions
contemplated by the 2025 Second SPA (as defined above), we had warrants outstanding to purchase an aggregate of up to 4,604,920 shares
of Common Stock with a weighted average exercise price of $10.30 per share, Series X Convertible Preferred Stock that can be converted
into 776,383 shares of Common Stock and 3,300 shares of Series Y Convertible Preferred Stock that can be converted into shares of Common
Stock at a conversion price of $2.00 per share, subject to customary adjustments.
 
 We may issue additional options, warrants and shares
of preferred stock in the future. Furthermore, the issuance of additional shares of our Common Stock upon exercise of such securities,
as applicable, will result in dilution to the then existing holders of Common Stock and could also have an adverse effect on the market
price of our Common Stock.
 
 We have never paid dividends on our Common Stock, and we do not
anticipate paying any cash dividends on our Common Stock in the foreseeable future. 
 
 We have never declared or paid cash dividends on
our Common Stock. We do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. However, in connection
with the issuance of our Series Y Preferred Stock, as described below, we are required to accrue dividends on such preferred stock at
a rate of 15.0% per annum, compounded quarterly, payable in arrears, which dividends may, at the holder’s sole discretion, be paid
in cash (subject to legally available funds) or in shares of our common stock through conversion mechanics, and such dividend rate increases
to 24.0% per annum upon the occurrence and during the continuance of a Triggering Event (as defined in the certificate of designations).
In addition, while any shares of Series Y Convertible Preferred Stock remain outstanding, we are restricted from declaring or paying cash
dividends on any class of our capital stock, other than as required under the applicable certificate of designations.
 
 Subject to the above, we currently intend to retain
all available funds and any future earnings to fund the development and growth of our business. As a result, capital appreciation, if
any, of our Common Stock will be our stockholders’ sole source of gain for the foreseeable future.
 
 We may be unable to maintain the listing of our securities in
the future. 
 
 Our Common Stock trades on NYSE American, which
imposes continued listing requirements with respect to listed shares. If we fail to satisfy the continued listing standards, such as,
for example, the requirement that our shares not trade “for a substantial period of time at a low price per share” or fail to
meet stockholders equity requirements, among other requirements, or if the NYSE American determines that we do not maintain sufficient
ongoing business operations, or if we are unable to identify, pursue or successfully implement a viable alternative business strategy,
the NYSE American may issue a non-compliance letter or initiate delisting proceedings. If our Common Stock is delisted, we could face
significant material adverse consequences, including:
 
 ● 
 a limited availability of market quotations for our securities; 

 ● 
 reduced liquidity with respect to our securities; 

 ● 
 a determination that our shares are a “penny stock,” which will require brokers trading in our securities to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; 

 ● 
 a limited amount of news and analyst coverage for the Company; and 

 ● 
 a decreased ability to issue additional securities or obtain additional financing in the future. 

 56 

 The market price of our Common Stock and other securities may
be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our Common Stock. 
 
 The stock markets in general and the markets for
biotechnology stocks have experienced extreme volatility. The market for the common stock of smaller companies such as ours is characterized
by significant price volatility when compared to the shares of larger, more established companies that trade on a national securities
exchange and have large public floats, and our share price is more volatile than the shares of such larger, more established companies
for the indefinite future.
 
 In addition to the factors discussed in this “Risk
Factors” section, price declines in our Common Stock (and other securities) could also result from general market and economic conditions
and a variety of other factors, including:
 
 ● 
 
 developments regarding our evaluation and pursuit of strategic alternatives
 and other business opportunities;

 ● 
 adverse actions taken by regulatory agencies with respect to our product candidates, clinical trials or the manufacturing processes of our product candidates; 

 ● 
 adverse results or delays in our clinical trials; 

 ● 
 announcements of technological innovations, patents or new products by our competitors; 

 ● 
 regulatory developments in the United States and foreign countries; 

 ● 
 any lawsuit involving us or our product candidates; 

 ● 
 announcements concerning our competitors, or the biotechnology or pharmaceutical industries in general; 

 ● 
 developments concerning any strategic alliances or acquisitions we may enter into; 

 ● 
 actual or anticipated variations in our operating results; 

 ● 
 changes in recommendations by securities analysts or lack of analyst coverage; 

 ● 
 deviations in our operating results from the estimates of analysts; 

 ● 
 our inability, or the perception by investors that we will be unable, to continue to meet all applicable requirements for continued listing of our Common Stock on NYSE American, and the possible delisting of our Common Stock; 

 ● 
 sales of our Common Stock by our executive officers, directors and principal stockholders or sales of substantial amounts of Common Stock; and 

 ● 
 loss of any of our key scientific or management personnel. 

 Additionally, market prices for securities of biotechnology
companies historically have been very volatile. The market for these securities has from time to time experienced significant price and
volume fluctuations for reasons unrelated to the operating performance of any one company. Furthermore, our business may be adversely
impacted by risks, or the public perception of the risks, related to a pandemic or other health crisis, or as a result of the Israel’s
war with Hamas and Hezbollah or the Russian invasion of Ukraine and the resulting world sanctions on Russia, Belarus, and related parties.
A significant outbreak of contagious diseases could result in a widespread health crisis that could adversely affect the economies and
financial markets of many countries, resulting in an economic downturn.
 
 In the past, following periods of volatility in
the market price of a particular company’s securities, litigation has often been brought against that company. Any such lawsuit
could consume resources and management time and attention, which could adversely affect our business.
 
 57 

 As a “smaller reporting company” we are permitted
to provide less disclosure than larger public companies, which may make our Common Stock less attractive to investors. 
 
 We are currently a “smaller reporting company,”
as defined by Rule 12b-2 of the Exchange Act. As a smaller reporting company, we are eligible to take advantage of certain exemptions
from various reporting requirements applicable to other public companies. Consequently, it may be more challenging for investors to analyze
our results of operations and financial prospects which may result in less investor confidence. Investors may find our Common Stock less
attractive as a result of our smaller reporting company status. If some investors find our Common Stock less attractive, there may be
a less active trading market for our Common Stock and our stock price may be more volatile.
 
 General Risk Factors 
 
 Our success depends, in part, on our ability to retain key executives
and to attract, retain and motivate qualified personnel. 
 
 Our continued ability to attract, retain and motivate
highly qualified management, clinical and scientific personnel and our ability to develop and maintain important relationships with leading
academic institutions, clinicians and scientists is critical to our success. Competition for qualified personnel in the biotechnology
field is intense, and we face competition for personnel from other biotechnology and pharmaceutical companies, universities, public and
private research institutions and other organizations. We also face competition from other more well-funded and well-established businesses,
and we may also be viewed as a riskier choice from a job stability perspective due to our relatively newer status than longer existing
biotech and pharmaceutical companies. We may not be able to attract and retain qualified personnel on acceptable terms given the competition
for such personnel. If we are unsuccessful in our retention, motivation and recruitment efforts, we may be unable to execute our business
strategy.
 
 Expectations relating to environmental, social and governance
(ESG) programs may impose additional costs and expose us to new risks. 
 
 There is an increasing focus from certain investors
and other key stakeholders concerning corporate responsibility, specifically related to environmental, social and governance, or ESG,
factors. As a result, there is an increased emphasis on corporate responsibility ratings and a number of third parties provide reports
on companies in order to measure and assess corporate responsibility performance. In addition, the ESG factors by which companies’
corporate responsibility practices are assessed may change, which could result in greater expectations of us and cause us to undertake
costly initiatives to satisfy such new criteria. Alternatively, if we are unable to satisfy such new criteria, investors may conclude
that our policies with respect to corporate responsibility are inadequate. We risk damage to our brand and reputation if our corporate
responsibility procedures or standards do not meet the standards set by various constituencies. We may be required to make investments
in matters related to ESG, which could be significant and adversely impact our results of operations. Furthermore, if our competitors’
corporate responsibility performance is perceived to be greater than ours, potential or current investors may elect to invest with our
competitors instead. In addition, if we communicate certain initiatives and goals regarding ESG matters, we could fail, or be perceived
to fail, in our achievement of such initiatives or goals, or we could be criticized for the scope of such initiatives or goals. If we
fail to satisfy the expectations of investors and other key stakeholders or our initiatives are not executed as planned, our reputation
and financial results could be materially and adversely affected.
 
 58 

 Our business and operations would suffer in the event of computer
system failures, cyber-attacks or deficiencies in our cyber-security. 
 
 Despite the implementation of security measures,
our internal computer systems, and those of third parties on which we rely, are vulnerable to damage from computer viruses, malware, natural
disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the Internet, attachments
to emails, persons inside our organization, or persons with access to systems inside our organization. The risk of a security breach or
disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists,
has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our product development
programs. For example, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in
our clinical trial efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or
security breach was to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary
information, we could incur material legal claims and liability, and damage to our reputation, and the further development of our product
candidates could be delayed. We also maintain compliance programs to address the potential applicability of restrictions against trading
while in possession of material, nonpublic information generally and in connection with a cyber-security breach. However, a breakdown
in existing controls and procedures around our cyber-security environment may prevent us from detecting, reporting or responding to cyber
incidents in a timely manner and could have a material adverse effect on our financial position and value of our stock. 
 
 We incur significant costs operating as a public company. 
 
 As a public company, we incur significant costs
in connection with our directors and officers insurance, paying for service providers such as legal and accounting as well as other expenses.
We are subject to the reporting requirements of the Exchange Act, which require, among other things, that we file with the SEC annual,
quarterly and current reports with respect to our business and financial condition. In addition, the Sarbanes-Oxley Act, as well as rules
subsequently adopted by the SEC and NYSE American to implement provisions of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform
and Consumer Protection Act, or the Dodd-Frank Act, and the Public Company Accounting Oversight Board impose significant requirements
on public companies, including requiring the establishment and maintenance of effective disclosure and financial controls and changes
in corporate governance practices. These expenses will likely increase in the future, particularly if we cease to be a “smaller
reporting company”, as a result of additional corporate governance and disclosure requirements under the Sarbanes-Oxley Act, the
Dodd-Frank Act, and SEC rules and regulations.
 
 The rules and regulations applicable to public
companies result in us continuing to incur substantial legal and financial compliance costs. These costs increase our net loss or decrease
any net income and may require us to reduce costs in other areas of our business.
 
 59
Tessera Defense & Homeland Security Inc. 10-K

Item 1A. Risk Factors
