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Item 1A. Risk Factors

2024-02-27 compared with 2023-03-09 · 240 added, 304 removed, 1093 unchanged (33% of the section changed)

Risk Factors.

Our business faces significant risks.

If any of the events or circumstances described in the following risks actually occurs, our business may suffer, the trading price of our common stock could decline and our financial condition or results of operations could be harmed.

These risks should be read in conjunction with the other information set forth in this annual report on Form 10-K.

The risks and uncertainties described below are not the only ones facing us.

There may be additional risks faced by our business.

Other events that we do not currently anticipate or that we currently deem immaterial also may adversely affect our financial condition or results of operations.

Risks Related to Our Financial Position and Need for Additional Capital

We have incurred significant net losses since inception and we expect to continue to incur significant net losses for the foreseeable future.

We have incurred significant net losses since our inception and have financed our operations principally through equity and debt financing and our collaboration with Novartis.

We have incurred significant net losses since our inception and have financed our operations principally through equity and debt financing and our prior collaboration with Novartis.

We continue to incur significant research and development and other expenses related to our ongoing operations.

Our net loss was $123.3 million $97.3 million and

$41.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Our net loss was $161.3 million, $123.3 million and $97.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2023, we had an accumulated deficit of $499.7 million.

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• further develop manufacturing processes and manufacture our product candidates;

• experience delays or interruptions to preclinical studies, clinical trials, our receipt of services from our third-party service providers on whom we rely, or our supply chain due to the COVID-19 pandemic;

• seek regulatory approvals for any product candidates that successfully complete clinical trials;

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We expect our expenses to increase in connection with our ongoing activities, particularly as we conduct our planned clinical trials of bexotegrast and any future product candidates that we may develop, seek regulatory approvals for our product candidates and to launch and commercialize any products for which we receive regulatory approval.

Accordingly, we will need to obtain substantial additional funding in order to maintain our continuing

Accordingly, we will need to obtain substantial additional funding in order to maintain our continuing operations.

If we are unable to raise capital when needed or on acceptable terms, we may be forced to delay, reduce, or eliminate one or more of our research and drug development programs or future commercialization efforts.

As of December 31, 2022, we had approximately $331.2 million in cash, cash equivalents and short-term investments.

We believe that our existing capital resources, together with the proceeds from our July 2022 and January 2023 public offerings will be sufficient to meet our projected operating requirements into the second half of 2026.

As of December 31, 2023, we had approximately $495.70 million in cash, cash equivalents, restricted cash and short-term investments.

Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments will be sufficient to fund our anticipated operating expenses and capital expenditure requirements into the second half of 2026.

However, our future capital requirements and the period for which our existing resources will support our operations may vary significantly from what we expect, and we will in any event require additional capital in order to complete clinical development of any of our current programs.

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• the clinical development plans we establish for these product candidates;

• the timelines of our clinical trials and the overall costs to conduct and complete the clinical trials, including any increased costs due to disruptions caused by the ongoing COVID-19 pandemic or other geopolitical conditions;

• the timelines of our clinical trials and the overall costs to conduct and complete the clinical trials, including any increased costs due to disruptions caused by marketplace conditions, including the effects of health epidemics and pandemics, such as COVID-19, or other geopolitical conditions;

• the cost and capital commitments required for developing manufacturing processes for our product candidates and manufacturing our product candidates at clinical and commercial scales;

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• the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;

• whether we are able to maintain our existing collaboration with Novartis and enter into additional collaboration agreements and the terms of any such agreements;

• whether we are able to enter into future collaboration agreements and the terms of any such agreements;

• the ability to and timing of achieving a favorable pricing and reimbursement decision by the pricing authorities in the markets of interest;

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Further, to the extent that we raise additional capital through the sale of common stock or securities convertible or exchangeable into common stock, your ownership interest will be diluted.

In addition, any debt financing may subject us to fixed payment obligations and covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital

expenditures, or declaring dividends.

If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish certain valuable intellectual property or other rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.

We also may be required to seek collaborators for any of our product candidates at an earlier stage than otherwise would be desirable or relinquish our rights to product candidates or technologies that we otherwise would seek to develop or commercialize ourselves.

Market volatility resulting from the COVID-19 pandemic or other financial markets factors could also adversely impact our ability to access capital as and when needed.

Market volatility resulting from challenging financial markets factors, including the effects of health epidemics and pandemics, such as the COVID-19 pandemic, could also adversely impact our ability to access capital as and when needed.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates or one or more of our other research and development initiatives.

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Because substantially all of our assets are pledged to secure the Oxford Loan Agreement obligations, our ability to incur additional indebtedness or to sell or dispose of assets to raise capital may be impaired, which could have an adverse effect on our financial flexibility.

In addition, if we are unable to comply with certain financial and operating restrictions in the Oxford Loan Agreement, we may be limited in our business activities and access to credit or may default under the Oxford Loan Agreement.

Provisions in the Oxford Loan Agreement impose restrictions or require prior approval on our ability, and the ability of certain of our subsidiaries to, among other things:

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• the risk/benefit profile, cost and reimbursement policies with respect to our product candidates, if approved, and existing and potential future therapeutics that compete with our product candidates;

• general market conditions or extraordinary external events, such as recessions or the COVID-19 pandemic;

• general market conditions or extraordinary external events, such as recessions or the effects of health epidemics and pandemics, such as COVID-19 pandemic;

• the changing and volatile U.S.

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In addition, as a business with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors and risks frequently experienced by early-stage biopharmaceutical companies in rapidly evolving fields.

Consequently, we expect our operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are

beyond our control, and predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing drug products.

Our business is highly dependent on the success of our lead product candidate, bexotegrast, as well as PLN-1474 and any other product candidates that we advance into the clinic.

Consequently, we expect our operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control, and predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing drug products.

Our business is highly dependent on the success of our lead product candidate, bexotegrast and any other product candidates that we advance into the clinic.

Our product candidates will require significant additional development before we may be able to seek regulatory approval for and launch a product commercially.

We currently have no products that are approved for commercial sale and may never be able to develop marketable products.

We are early in our clinical development for both bexotegrast and PLN-1474.

If bexotegrast encounters safety or efficacy problems, development delays, regulatory issues or other problems, our development plans and business would be significantly harmed.

We have completed several Phase 1 trials of bexotegrast and are currently conducting three Phase 2a trials in our lead indications:

two in IPF and one in PSC.

We have collaborated with Novartis to develop PLN-1474 for advanced liver fibrosis associated with NASH and have completed a Phase 1a SAD/MAD study evaluating PLN-1474 in healthy volunteers.

As part of a broad strategic realignment, Novartis discontinued clinical development in NASH and, as a result, discontinued development of PLN-1474.

In February 2023, Novartis issued a termination notice for the collaboration and license agreement, and returned global rights to Pliant for PLN-1474 and we may pursue other collaborations to further clinical development of PLN-1474.

All of the risks and uncertainties that apply to bexotegrast or any candidates that we develop independently or in collaboration with third parties.

See “Risks Related to Our Reliance on Third Parties.”

We are currently conducting a Phase 2b trial of bexotegrast in IPF and a Phase 2a trial in PSC and have no products that are approved for commercial sale and may never be able to develop marketable products.

If bexotegrast or any of our other product candidates encounter safety or efficacy problems, development delays, regulatory issues or other problems, our development plans and business would be significantly harmed.

Before we can generate any revenue from sales of our lead product candidate, bexotegrast, or any of our other product candidates, we must undergo additional preclinical and clinical development, regulatory review, and approval in one or more jurisdictions.

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• product-related side effects experienced by subjects in our clinical trials or by individuals using drugs or therapeutics similar to our product candidates;

• delays in submitting INDs or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial, or a suspension or termination of a clinical trial once commenced;

• delays in submitting investigational new drug (IND) applications or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial, or a suspension or termination of a clinical trial once commenced;

• conditions imposed by the FDA or comparable foreign authorities regarding the scope or design of our clinical trials;

• delays in enrolling subjects in clinical trials, including due to the COVID-19 pandemic;

• high drop-out rates of subjects from clinical trials;

• delays in enrolling subjects in clinical trials, including due to operational challenges, competition with other clinical trials or the effects of health epidemics and pandemics, such as the COVID-19 pandemic;

• high drop-out rates or screening failures of subjects from clinical trials;

• inadequate supply or quality of product candidates or other materials necessary for the conduct of our clinical trials;

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Our approach is designed to discover and develop targeted treatments for fibrosis with an initial focus on the antagonism of tissue-specific TGF-β signaling through the inhibition of integrins known to mediate the release of activated TGF-β in fibrotic tissue.

However, although multiple studies are currently underway, to date, this mechanism has not been definitively proven to successfully treat fibrosis.

However, this mechanism has not been definitively proven to successfully treat fibrosis.

Targeting integrins to treat fibrosis is a novel approach in a rapidly developing field, and there can be no assurance that we will not experience currently unknown problems or delays in developing our product candidates, that such problems or delays will not result in unanticipated costs, or that any such development problems can be solved.

We have primarily tested our lead product candidate, bexotegrast, in healthy volunteers.

Therefore, we may ultimately discover that our approach and any product candidates resulting therefrom do not possess properties required for therapeutic effectiveness.

As a result, we may never succeed in developing a marketable product.

In addition, while we have developed an extensive panel of cell assays and precision cut tissue assays and have utilized animal models to uncover biological pathways, understood gene expression changes and optimized the potency and selectivity of our potential product candidates, there can be no assurance that our technology will yield their intended benefits.

While we believe our assays represent a differentiator in our approach to drug development, our approach has not yet been clinically proven to yield results.

Our practice of evaluating our product candidates in live human fibrotic tissue samples before advancing them into the clinic is intended to serve as a bridge between animal models and clinical proof-of-concept.

However, there can be no assurance that positive results observed from preclinical animal testing and human fibrotic tissue models will be replicated when a program is advanced into clinical development.

In addition, our practice of utilizing live human fibrotic tissue as part of our development efforts may become more widespread in the future, and this approach may be adopted and replicated by others, including our competitors.

Studies involving human tissue samples may also be subject to institutional and government human subject privacy policies that may vary by territory.

We or our partners who provide us with human tissue samples or conduct tissue and/or animal studies on our behalf, may be found to be in violation of one or more of these regulations or policies and may be subject to closure, censure or other penalties.

In some cases, these penalties could materially impact the performance, availability, or validity of studies conducted by us or on our behalf.

Even in the absence of violations resulting in penalties, regulatory and other authorities may refuse to authorize the conduct or to accept the results of studies for regulatory or ethical reasons.

Clinical development involves a lengthy, complex, and expensive process, with an uncertain outcome.

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Phase 3 clinical trials typically involve hundreds of patients, have significant costs and take years to complete.

A product candidate can fail at any stage of testing, even after observing promising signals of activity in earlier preclinical studies or clinical trials.

A product candidate can fail at any stage of testing, even after observing promising signals of activity in earlier preclinical studies or earlier stage clinical trials.

The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials.

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Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical trials.

A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unacceptable safety issues, notwithstanding promising results in earlier trials.

Most product candidates that commence clinical trials are never approved as products and there can be no assurance that any of our future clinical trials will ultimately be successful or support further clinical

development of bexotegrast or any of our other product candidates.

A large number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unacceptable safety issues, notwithstanding promising results in earlier trials.

Product candidates that appear promising in the early phases of development may fail to reach the market for several reasons, including:

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In addition, the standards that the FDA and comparable foreign regulatory authorities use when regulating us require judgment and can change, which makes it difficult to predict with certainty how they will be applied.

Although we are initially focusing our efforts on development of small molecule drug products, we are also considering the development of biological products, including a potential candidate for muscular dystrophies, which could make us subject to additional regulatory requirements.

Although we are initially focusing our efforts on development of small molecule drug products, we are also commencing the development of biological products, including a potential candidate for muscular dystrophies, which could make us subject to additional regulatory requirements.

Any analysis we perform of data from preclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval.

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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.

If we seek to conduct clinical trials in foreign countries or pursue marketing approvals in foreign jurisdictions, we must comply with numerous foreign regulatory requirements governing, among other things, the conduct of clinical trials, manufacturing and marketing authorization, pricing and third-party reimbursement.

We must comply with numerous foreign regulatory requirements governing, among other things, the conduct of clinical trials, manufacturing and marketing authorization, and if approved for marketing, pricing and third-party reimbursement.

The foreign regulatory approval process varies among countries and may include all of the risks associated with FDA approval described above as well as risks attributable to the satisfaction of local regulations in foreign jurisdictions.

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• the FDA or other comparable regulatory authorities may disagree with our clinical trial design, including with respect to dosing levels administered in our planned clinical trials, which may delay or prevent us from initiating our clinical trials with our originally intended trial design;

• we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective CROs, which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

• we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective contract research organizations, or CROs, which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

• the number of subjects required for clinical trials of any product candidates may be larger than we anticipate or subjects may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate;

• our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators;

• due to the impact of the COVID-19 pandemic, we have experienced, and may continue to experience, delays and interruptions to our preclinical studies and clinical trials, we may experience delays or interruptions to our manufacturing supply chain, or we could suffer delays in reaching, or we may fail to reach, agreement on acceptable terms with third-party service providers on whom we rely;

• we may experience delays or interruptions to our manufacturing supply chain, or we could suffer delays in reaching, or we may fail to reach, agreement on acceptable terms with third-party service providers on whom we rely;

• additional delays and interruptions to our clinical trials could extend the duration of the trials and increase the overall costs to finish the trials as our fixed costs are not substantially reduced during delays;

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Our ongoing and future clinical trials may reveal significant adverse events or unexpected drug-drug interactions not seen in our preclinical studies and may result in a safety profile that could delay or prevent regulatory approval or market acceptance of any of our product candidates.

We completed our Phase 1a clinical trial of our lead product candidate bexotegrast in healthy volunteers, and, with the exception of a number of reported minor adverse events, the product candidate was observed to be generally well-tolerated across all doses in 71 trial participants.

In addition, we announced Positive interim data from our first Phase 2a INTEGRIS-IPF trial in July 2022 and January 2023 in which the product candidate was observed to be well-tolerated over a 12-week treatment period in the 88 patients treated with bexotegrast.

In our clinical trials to date, bexotegrast has been generally well tolerated.

However, if significant adverse events or other side effects are observed in any of our ongoing or future clinical trials, we may have difficulty recruiting patients to our clinical trials, patients may drop out of our trials, or we may be required to abandon the trials or our development efforts altogether.

In addition, in our ongoing Phase 2a clinical trials, we are evaluating bexotegrast administered with approved IPF agents.

We have completed a Phase 1a study evaluating one-way interaction of bexotegrast on nintedanib or pirfenidone, concluding that clinical safety and pharmacokinetic data indicate that no dose adjustments are needed for nintedanib or pirfenidone when combined with bexotegrast.

nintedanib or pirfenidone when combined with bexotegrast.

However, we may encounter unexpected drug-drug interactions in our planned trials, and may be required to further test these candidates, including additional drug-drug interaction studies, which may be expensive, time-consuming and result in delays to our programs.

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• the size of the patient population required for analysis of the trial’s primary endpoints and the process for identifying patients;

• the willingness or availability (including legality under any future or reinstated COVID-19 shelter-in-place regulations) of patients to participate in our trials (including due to fears of contracting COVID-19);

• the willingness or availability of patients to participate in our trials ;

• the proximity of patients to trial sites;

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

• clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied in relation to other available therapies, including any new products that may be approved for the indications we are investigating;

• the availability of competing commercially available therapies and other competing product candidates’ clinical trials;

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As a result, we may encounter difficulties enrolling subjects in our clinical trials of bexotegrast due, in part, to the small size of these patient populations.

Moreover, our Phase 2a PET imaging IPF trial is being conducted at a single site, which could limit the availability of IPF patients at the site and may slow enrollment in that specific trial.

In addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors.

Since the number of qualified clinical investigators is limited,

we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials in such clinical trial site.

Further, timely enrollment in clinical trials is reliant on clinical trial sites which may be adversely affected by global health matters, including, among other things, pandemics.

For example, our clinical trial sites have been affected by the COVID-19 pandemic.

Commencement of enrollment of our clinical trials of bexotegrast in IPF and PSC was delayed.

While these trials have resumed patient enrollment, and in some cases completed enrollment, we believe we have experienced and may continue to experience slower than expected enrollment due to the pandemic.

Also, while the Phase 1 trial of PLN-1474 has completed, this trial experienced delays due to COVID-19.

In addition, after enrollment in these trials, if patients contract COVID-19 during participation in our trials or are subject to isolation or shelter-in-place restrictions, this may cause them to drop out of our trials, miss scheduled doses or follow-up visits or otherwise fail to follow trial protocols.

If patients are unable to follow the trial protocols or if our trial results are otherwise disputed due to the effects of the COVID-19 pandemic or actions taken to mitigate its spread, the integrity of data from our trials may be compromised or not accepted by the FDA or other regulatory authorities, which would represent a significant setback for the applicable program.

Our clinical trials compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors.

Since the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials in such clinical trial site.

Additionally, the FDA may modify or enhance trial requirements, which may affect enrollment.

For example, in August 2023, the FDA published a guidance document, “Informed Consent, Guidance for IRBs, Clinical Investigators, and Sponsors,” which supersedes past guidance and finalizes draft guidance on informed consent.

The FDA’s new guidance presents evolving requirements for informed consent which may affect recruitment and retention of patients in clinical trials.

Effects on recruitment and retention of patients may hinder or delay a clinical trial and could cause a significant setback to an applicable program.

The design or execution of our ongoing and future clinical trials may not support marketing approval.

The design or execution of a clinical trial can determine whether its results will support marketing approval, and flaws in the design or execution of a clinical trial may not become apparent until the clinical trial is well advanced.

We recently completed enrollment of two Phase 2a trials of bexotegrast in IPF.

In the first of these trials, the study is designed to enroll IPF patients and utilize a positron emission tomography, or PET, ligand to measure αvß6 target engagement by bexotegrast in the lungs post-treatment.

The second trial is a double-blind placebo-controlled trial to evaluate safety, tolerability and pharmacokinetics of bexotegrast in IPF patients for up to 48 weeks at doses of up to 320 mg.

It is possible that we may need to amend our clinical trial, which would require us to resubmit our clinical trial protocols to competent authorities and ethics committees for reexamination, and may impact the costs, timing, or successful completion of such clinical trial.

In addition, we may desire to test bexotegrast at doses exceeding those evaluated in an ongoing Phase 1a trial and may not be able to do so.

Additionally, in some instances, there can be significant variability in safety or efficacy results between different trials with the same product candidate due to numerous factors, including differences in trial protocols, size and type of the patient populations, variable adherence to the dosing regimen or other protocol requirements and the rate of dropout among clinical trial participants.

clinical trial participants.

We do not know whether any clinical trials we conduct will demonstrate consistent or adequate efficacy and safety to obtain marketing approval to market our product candidates.

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The FDA or comparable foreign regulatory authorities may disagree with our trial designs and our interpretation of data from preclinical studies or clinical trials.

Further, requirements regarding clinical trial data may evolve.

In June 2023, the FDA published draft guidance, which seeks to unify standards for clinical trial data for ICH member countries and regions.

Changes to data requirements may cause the FDA or comparable foreign regulatory authorities to disagree with data from preclinical studies or clinical trials, and may require further studies.

In addition, any of these regulatory authorities may change requirements for the approval of a product candidate even after reviewing and providing comments or advice on a protocol for a pivotal Phase 3 or registrational clinical trial.

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Under the Orphan Drug Act of 1983, the FDA, may designate a product candidate as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States.

In order to obtain orphan designation in the EEA, the product must fulfill certain challenging criteria.

In order to obtain orphan designation in the European Economic Area (EEA) and the U.K., the product must fulfill certain challenging criteria.

Under Article 3 of Regulation (EC) 141/2000, a medicinal product may be designated as an orphan medicinal product if it meets the following criteria:

(1) such product is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition;

(2) either the prevalence of such condition must not be more than five in 10,000 persons in the EU when the application is made, or without the benefits derived from orphan status, it must be unlikely that the marketing of the medicine would generate

sufficient return in the EU to justify the investment needed for its development;

and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000.

In the EEA, the grant of the orphan designation does not mean that the product will be granted orphan status at the time it is assessed in parallel with the application for a marketing authorization.

The authorities reassess then whether the product still fulfills the criteria for orphan status.

Although we have received U.S.

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Orphan drug exclusivity may be revoked if any regulatory agency determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition.

On April 26, 2023, the European Commission adopted a proposal for a new Regulation set to replace Regulation (EC) No 726/2004 and a new Directive replacing Directive 2001/83 on the Community Code relating to

medicinal products for human use.

If made into law, this proposal will revise and replace the existing general pharmaceutical legislation and may make it more difficult to obtain orphan designation in the EEA.

Even if we obtain orphan drug exclusivity for a product candidate, that exclusivity may not effectively protect the product candidate from competition because different drugs with different active moieties can be approved for the same condition in the United States or EEA.

Even after an orphan drug is approved, the FDA or EMA, as applicable, may subsequently approve another drug with the same active moiety for the same condition if the FDA concludes that the latter drug is not a similar medicinal product or is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.

In addition, Congress is considering updates to the orphan drug provisions of the FDCA in response to a recent decision by the U.S.

In addition, Congress is considering updates to the orphan drug provisions of the Food, Drug, and Cosmetic Act, or FDCA, in response to a recent decision by the U.S.

Court of Appeals for the Eleventh Circuit.

Any changes to the orphan drug provisions could change our opportunities for, or likelihood of success in obtaining, orphan drug exclusivity and would materially adversely affect our business, results of operations, financial condition and prospects.

A Fast Track designation by the FDA, even if granted for other current or future product candidates, may not lead to a faster development or regulatory review, licensure process and does not increase the likelihood that our product candidates will receive marketing licensure.

A Fast Track designation by the FDA, even if granted for other current or future product candidates, may not lead to a faster development or regulatory review or approval process and does not increase the likelihood that our product candidates will receive marketing approval.

We may seek Fast Track designation for one or more of our future product candidates.

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There are a number of biopharmaceutical and biotechnology companies that are currently pursuing the development of products for the treatment of fibrosis.

Companies that we are aware of that are targeting the treatment of various fibrosis indications through inhibiting various parts of the TGF-β pathway include companies with significant financial resources such as AbbVie Inc., AstraZeneca plc, Bristol Myers Squibb Co., Corbus Pharmaceutical, DiCE Therapeutics, Inc., FibroGen, Inc., Gilead Sciences, Inc., Galapagos NV, Morphic Therapeutics, Inc., Novartis AG, and Takeda Pharmaceutical Company.

Companies that we are aware of that are targeting the treatment of various fibrosis indications through inhibiting various parts of the TGF-β pathway include companies with significant financial resources such as AbbVie Inc., AstraZeneca plc, Bristol Myers Squibb Co., Corbus Pharmaceutical, Merck & Co., Inc., Morphic Therapeutics, Inc., Novartis AG, Scholar Rock, Inc., and Takeda Pharmaceutical Company.

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

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Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market.

Additionally, products or technologies developed by our competitors may render our potential product candidates uneconomical or obsolete and we may not be successful in

marketing any product candidates we may develop against competitors.

Additionally, products or technologies developed by our competitors may render our potential product candidates uneconomical or obsolete and we may not be successful in marketing any product candidates we may develop against competitors.

The availability of competitive products could limit the demand, and the price we are able to charge, for any products that we may develop and commercialize.

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Even if bexotegrast or any other product candidate we develop receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients and third-party payors.

In addition, the availability of coverage by third-party payors may be affected by existing and future health care reform measures designed to reduce the cost of health care.

In addition, the availability of coverage by third-party payors may be affected by existing and future healthcare reform measures designed to reduce the cost of health care.

If the product candidates we develop do not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become profitable.

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• the recommendations with respect to our product candidates in guidelines published by various scientific organizations applicable to us and our product candidates;

• positive HTA assessment in jurisdictions where required;

• the strength of marketing and distribution support;

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If government and other third-party payors do not provide coverage and adequate reimbursement levels for any products we commercialize, market acceptance and commercial success would be reduced.

Coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, if approved, which could make it difficult for us to sell any product candidates profitably.

Coverage and reimbursement may be limited or unavailable or pricing unfavorable in certain market segments for our product candidates, if approved, which could make it difficult for us to sell any product candidates profitably.

Significant uncertainty exists as to the coverage and reimbursement status of any products for which we may obtain regulatory approval.

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Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment.

Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance.

Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors are critical to new product acceptance.

Patients are unlikely to use our product candidates unless coverage is provided, and reimbursement is adequate to cover a significant portion of the cost.

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It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for our product candidates, if approved.

A primary trend in the United States and European health care industries is toward cost containment, as government authorities, third-party payors, and others have attempted to control costs by limiting coverage and the amount of reimbursement available for certain treatments.

Such third-party payers, including Medicare, may question the coverage of, and challenge the prices charged for medical products, and many third-party payers limit coverage and reimbursement for newly approved health care products.

A primary trend in the United States and European health care industries is toward cost containment, as legislative bodies, government authorities, third-party payors, and others have attempted to control costs by limiting coverage, pricing

and the amount of reimbursement available for certain treatments.

Such third-party payers, including Medicare, may question the coverage of, and challenge or seek to lower the prices charged for medical products, and many third-party payers limit coverage and reimbursement for newly approved health care products.

Moreover, reimbursement, if available, may vary according to the use of the product and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost products and may be incorporated into existing payments for other services.

Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payers, by any future laws limiting drug prices.

If we are unable to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payers for any approved products that we develop there could be a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

Changes to these current laws and state and federal healthcare reform measures that may be adopted in the future that impact coverage and reimbursement for drug or biologic products may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.

Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payers or by future laws, regulations, or guidance seeking to limit prescription drug prices.

If we are unable to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payers for any approved products that we develop, or if net prices are reduced by mandatory discounts or rebates, there could be a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

Changes to current healthcare laws and state and federal healthcare reform measures that may be adopted in the future that impact coverage and reimbursement for drug or biologic products may result in additional payment reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.

For additional details regarding healthcare reform measures, see the discussion in the risk factor under the heading “Ongoing healthcare legislative and regulatory reform measures may have a material adverse effect on our business and results of operations.”

Even if we obtain FDA approval of any of our product candidates, we may never obtain approval or commercialize such products outside of the United States, which would limit our ability to realize their full market potential.

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If any of our product candidates ultimately receives regulatory approval, we expect to establish a marketing and sales organization with technical expertise and supporting distribution capabilities to commercialize each such product in major markets, which will be expensive and time consuming.

We have no prior experience as a company in the marketing, sale and distribution of pharmaceutical products and there are significant risks involved in building and managing a sales

organization, including our ability to hire, retain and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel and effectively manage a geographically dispersed sales and marketing team.

We have no prior experience as a company in the marketing, sale and distribution of pharmaceutical products and there are significant risks involved in building and managing a sales organization, including our ability to hire, retain and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel and effectively manage a geographically dispersed sales and marketing team.

Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of these products.

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If we are not successful in commercializing our products, either on our own or through arrangements with one or more third parties, we may not be able to generate any future product revenue and we would incur significant additional losses.

Our relationships with healthcare providers and 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 biopharmaceutical products.

Arrangements with third-party payors and customers can expose biopharmaceutical manufacturers to broadly applicable fraud and abuse and other healthcare laws and regulations, as detailed in Part I, Item 1 - Business - Government Regulation - Other Healthcare Laws.

Our relationships with healthcare providers, physicians, third-party payors, and other potential referral sources 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, third-party payors, and other potential referral sources in the United States and elsewhere play a primary role in the distribution, recommendation and prescription of biopharmaceutical products.

In particular, the research of our product candidates, as well as the promotion, sales and marketing of healthcare items and services, and 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 commission(s), certain customer incentive programs, remuneration provided to health care professionals and their affiliates, charitable donations 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 distribution of biopharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of biopharmaceutical products.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform.

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.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment.

Ensuring business arrangements comply with applicable healthcare laws can be time- and resource-consuming.

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.

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Even if we receive regulatory approval of any product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense 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 are approved, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, pharmacovigilance, and submission of safety, efficacy and other post-market information, including both federal

and state requirements in the United States and requirements of comparable foreign regulatory authorities.

In addition, we will be subject to continued compliance with current Good Manufacturing Practice, or cGMP, and Good Clinical Practice, or GCP, requirements for any clinical trials that we conduct post-approval.

In addition, we will be subject to continued compliance with current Good Manufacturing Practice, or cGMP, and GCP requirements for any clinical trials that we conduct post-approval.

Manufacturers and their facilities are required to comply with extensive FDA and comparable foreign regulatory authority requirements, including ensuring that quality control and manufacturing procedures conform to cGMP regulations.

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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.

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.

efficacy of the product candidate.

The FDA may also require a risk evaluation and mitigation strategies, or 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.

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Ongoing healthcare 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 governing the regulatory clearance or approval, manufacture, and marketing of regulated products or the pricing, coverage and reimbursement thereof could impact our business in the future by requiring, for example:

In the United States and other jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes and proposed changes to the healthcare system that could affect our ability to profitably sell any product candidates for which we obtain marketing approval or licensure.

Changes in regulations, statutes or the interpretation of existing regulations governing the regulatory approval or licensure, manufacture, and marketing of regulated products or the pricing, coverage and reimbursement thereof could impact our business in the future by resulting in, for example:

(i) changes to our manufacturing arrangements;

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(iii) the recall or discontinuation of our products;

or (iv) additional

record-keeping requirements.

(iv) more rigorous coverage criteria or additional downward pressure on the price that we receive for product candidates for which we obtain marketing approval;

or (v) 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 healthcare costs, as detailed in Part I, Item 1 – Business – Government Regulation – Current and Future Healthcare Reform Legislation.

For example, in August 2022, President Biden signed into law the IRA, which implements substantial changes to the Medicare program, including drug pricing reforms and changes to the Medicare Part D benefit design.

Among other reforms, the IRA, imposes inflation rebates on drug manufacturers for products reimbursed under Medicare Parts B and D if the prices of those products increase faster than inflation;

implements changes to the Medicare Part D benefit that, beginning in 2025, will cap benefit annual out-of-pocket spending at $2,000, while imposing new discount obligations for pharmaceutical manufacturers;

and, beginning in 2026, establishes a “maximum fair price” for a fixed number of high spend pharmaceutical and biological products covered under Medicare Parts B and D following a price negotiation process with the Centers for Medicare and Medicaid Services.

The IRA explicitly excludes from price negotiation orphan drugs designated for only one rare disease or condition and for which the only approved indication is for such disease or condition.

However, those drugs with multiple orphan designations are not explicitly excluded from drug price negotiation.

We cannot predict the likelihood, nature, or extent of health reform initiatives that may arise from future legislation or administrative action.

implements changes to the Medicare Part D benefit that, beginning in 2025, will cap patient annual out-of-pocket spending at $2,000, while imposing new discount obligations for pharmaceutical manufacturers and payors;

and, beginning in 2026, establishes a “maximum fair price” for a fixed number

of high spend pharmaceutical and biological products covered under Medicare Parts B and D following a price negotiation process with the Centers for Medicare and Medicaid Services.

The IRA explicitly excludes from price negotiation orphan drugs designated for only one rare disease or condition and for which the only active approved indication is for such disease or condition.

Those drugs with multiple orphan designations are not excluded from drug price negotiation.

As we are developing bexotegrast in multiple orphan indications, this aspect of the IRA could have a negative impact on our ability to seek reimbursement in the U.S.

Since its enactment, the Centers for Medicare and Medicaid Services, or CMS, has taken steps to implement various drug pricing provisions of the IRA.

This includes, without limitation, issuing new guidance on June 30, 2023 detailing the requirements and parameters of the first round of price negotiations, to take place during 2023 and 2024, for products subject to the “maximum fair price” provision that would become effective in 2026 and, on August 29, 2023, releasing the initial list of 10 drugs subject to price negotiations.

While it remains to be seen how the drug pricing provisions imposed by the IRA will affect the broader pharmaceutical industry (including orphan drug or small molecule development), several pharmaceutical manufacturers and other industry stakeholders have challenged the law, including through lawsuits brought against the U.S.

Department of Health and Human Services (HHS), the Secretary of HHS, CMS, and the CMS Administrator challenging the constitutionality and administrative implementation of the IRA’s drug price negotiation provisions.

We cannot predict whether the IRA, or any of its component parts, will be overturned, repealed, replaced, or amended nor can we predict the likelihood, nature, or extent of other health reform initiatives that may arise from future legislation, administrative, or other action.

However, we expect these initiatives to increase pressure on drug pricing.

Further, certain broader legislation that is not targeted to the health care industry may nonetheless adversely affect our profitability.

Further, certain broader legislation that is not targeted to the healthcare industry may nonetheless adversely affect our profitability.

If we or any third parties we may engage are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we or such third parties are not able to maintain regulatory compliance, our product candidates may lose any regulatory approval that may have been obtained and we may not achieve or sustain profitability.

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

Separately, between March 2020 and February 2022, foreign and domestic inspections were largely placed on hold due to the COVID-19 pandemic.

Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 or other future pandemics.

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

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

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

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In these countries, pricing negotiations with governmental authorities can take considerable time after obtaining marketing approval of a product candidate.

Furthermore, in many European countries (including the UK), effective access to the market depends on whether the product obtains a positive recommendation from the relevant health technology assessment body.

Furthermore, in many European countries (including the U.K.), effective access to the market depends on whether the product obtains a positive recommendation from the relevant health technology assessment body.

In addition, market acceptance and sales of our product candidates will depend significantly on the availability of adequate coverage and reimbursement from third-party payors for our product candidates and may be affected by existing and future health care reform measures.

Much like the federal Anti-Kickback Statute prohibition in the United States, the provision of benefits or advantages to induce or reward improper performance generally to induce or encourage the prescription, recommendation,

endorsement, purchase, supply, order or use of medicinal products is also prohibited in the EU.

The provision of benefits or advantages to induce or reward improper performance generally is governed by the national anti-bribery laws of EU Member States, and in respect of the U.K.

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despite its departure from the EU.

Payments made to physicians in certain EU Member States and more generally throughout Europe (including the UK) and other countries must be publicly disclosed under applicable transparency provisions..

Payments made to physicians in certain EU Member States and more generally throughout Europe (including the U.K.) and other countries must be publicly disclosed under applicable transparency provisions.

Moreover, agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his or her competent professional organization and/or the regulatory authorities of the individual EU Member States.

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Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.

In addition, in most foreign countries, including the EEA, the proposed pricing for a drug must be approved before it may be lawfully marketed.

In addition, in most foreign countries, including those within the EEA, the proposed pricing for a drug must be approved before it may be lawfully marketed.

The requirements governing drug pricing and reimbursement are the prerogative of the Member States and vary widely from country to country.

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nationals, of information products classified for national security purposes, as well as certain products, technology and technical data relating to those products.

If we expand our presence outside of the United States, it will require us to dedicate additional resources to comply with these laws, and these laws may preclude us from developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential and increase our development costs.

If we expand our presence outside of the United States, it will require us to dedicate additional resources to comply with these laws, and these laws may preclude us from

developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential and increase our development costs.

The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government contracting.

The Securities and Exchange Commission,

or SEC, also may suspend or bar issuers from trading securities on U.S.

The SEC, also may suspend or bar issuers from trading securities on U.S.

exchanges for violations of the FCPA’s accounting provisions.

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Among other matters, U.S.

and foreign anti-corruption, 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.

and foreign anti-corruption, 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, contract 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.

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We cannot be certain that we were the first to invent the inventions covered by pending patent applications and, if we are not, we may be subject to priority disputes.

Furthermore, for United States applications in which all claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third-party or instituted by the United States Patent and Trademark Office, or USPTO, to determine who was the first to invent any of the subject matter covered by the patent claims of our applications.

Similarly, for United States applications in which at least

one claim is not entitled to a priority date before March 16, 2013, derivation proceedings can be instituted to determine whether the subject matter of a patent claim was derived from a prior inventor’s disclosure.

Furthermore, for United States applications in which all claims are entitled

to a priority date before March 16, 2013, an interference proceeding can be provoked by a third-party or instituted by the United States Patent and Trademark Office, or USPTO, to determine who was the first to invent any of the subject matter covered by the patent claims of our applications.

Similarly, for United States applications in which at least one claim is not entitled to a priority date before March 16, 2013, derivation proceedings can be instituted to determine whether the subject matter of a patent claim was derived from a prior inventor’s disclosure.

We may be required to disclaim part or all of the term of certain patents or all of the term of certain patent applications.

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The effects of these changes are currently unclear as the USPTO only recently developed new regulations and procedures in connection with the America Invents Act and many of the substantive changes to patent law, including the “first-to-file” provisions, only became effective in March 2013.

In addition, the courts have yet to address many of these provisions and the applicability of the Act and new regulations on specific patents discussed herein have not been determined and would need to be reviewed.

In addition, the courts have yet to address many of these provisions and the applicability of the America Invents Act and new regulations on specific patents discussed herein have not been determined and would need to be reviewed.

However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

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• the patents of others may have an adverse effect on our business.

We may enter into license or other collaboration agreements in the future that may impose certain obligations on us.

If we fail to comply with our obligations under such future agreements with third parties, we could lose license rights that may be important to our future business.

In connection with our efforts to expand our pipeline of product candidates, we may enter into certain licenses or other collaboration agreements in the future pertaining to the in-license of rights to additional candidates.

We may enter into license or other collaboration agreements that may impose certain obligations on us.

If we fail to comply with our obligations under such agreements with third parties, we could lose license rights that may be important to our future business.

In connection with our efforts to expand our pipeline of product candidates, we may enter into certain licenses or other collaboration agreements pertaining to the in-license of rights to additional candidates.

Such agreements may impose various diligence, milestone payment, royalty, insurance, or other obligations on us, subject to antitrust law restrictions.

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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 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 the affected product candidates, which could have a material adverse effect on our business, financial conditions, 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 the affected product candidates, which could have a material adverse effect on our business, financial conditions, results of operations, and prospects.

In addition, we may have limited control over the maintenance and prosecution of these in-licensed patents and patent applications, or any other intellectual property that may be related to our in-licensed intellectual property.

For example, we cannot be certain that such activities by any future licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights.

For example, we

cannot be certain that such activities by any future licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights.

We have limited control over the manner in which our licensors initiate an infringement proceeding against a third-party infringer of the intellectual property rights or defend certain of the intellectual property that is licensed to us.

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There is a substantial amount of litigation involving patents and other intellectual property rights in the biotechnology and biopharmaceutical industries, as well as administrative proceedings for challenging patents, including interference, derivation, inter partes review, post grant review, and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions.

We may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that our product candidates and/or proprietary

technologies infringe their intellectual property rights.

We may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that our product candidates and/or proprietary technologies infringe their intellectual property rights.

Numerous U.S.

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In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents.

holders of any such patent may be able to block our ability to develop and commercialize the product candidate unless we obtained a license or until such patent expires or is finally determined to be held invalid or unenforceable.

If any third-party patent were held by a court of competent jurisdiction to cover our product candidates, intermediates used in the manufacture of our product candidates or our materials generally, aspects of our formulations or methods of use, the holders of any such patent may be able to block our ability to develop and commercialize the product candidate unless we obtained a license or until such patent expires or is finally determined to be held invalid or unenforceable.

In either case, such a license may not be available on commercially reasonable terms or at all.

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Even if we obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us.

In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.

In addition, if the breadth or strength of protection

provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.

Parties making claims against us may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our product candidates.

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If we are unable to do so, the institution may offer the intellectual property rights to others, potentially blocking our ability to pursue our program.

If we are unable to successfully obtain rights to required third-party intellectual property or to maintain the existing intellectual property rights we have, we may have to abandon development of such program and our business and financial condition could suffer.

If we are unable to successfully obtain rights to required third-party intellectual property or to

maintain the existing intellectual property rights we have, we may have to abandon development of such program and our business and financial condition could suffer.

The licensing and acquisition of third-party intellectual property rights is a competitive area, and companies, which may be more established, or have greater resources than we do, may also be pursuing strategies to license or acquire third-party intellectual property rights that we may consider necessary or attractive in order to commercialize our product candidates.

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Assuming that other requirements for patentability are met, prior to March 16, 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent.

On March 16, 2013, under the Leahy-Smith America Invents Act, or the America Invents Act, enacted in September 2011, the United States transitioned to a first inventor to file system.

On March 16, 2013, under the America Invents Act, enacted in September 2011, the United States transitioned to a first inventor to file system.

A third party that files a patent application in the USPTO on or after March 16, 2013, but before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by such third party.

This will require us to be cognizant of the time from invention to filing of a patent application.

Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our

licensors were the first to either (i) file any patent application related to our product candidates or (ii) invent any of the inventions claimed in our or our licensor’s patents or patent applications.

Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any patent application related to our product candidates or (ii) invent any of the inventions claimed in our or our licensor’s patents or patent applications.

The America Invents Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation.

These include allowing third party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter-partes review, and derivation proceedings.

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.

Because of a lower evidentiary

standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.

Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action.

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Even if patents covering our product candidates are obtained, once the patent life has expired, we may be open to competition from competitive products.

Given the amount of time required for the development, testing and regulatory

review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.

Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.

As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

At the EU level, the Court of Justice of the European Union, or CJEU, has recently narrowed the availability of patent term extension for second medical use therefore affecting the scope of patent protection available.

If we do not obtain patent term extension and data exclusivity for any product candidates we may develop, our business may be materially harmed.

At the EU level, the CJEU, has recently narrowed the availability of patent term extension for second medical use therefore affecting the scope of patent protection available.

If we do not obtain patent term extension, data exclusivity and orphan exclusivity for any product candidates we may develop, our business may be materially harmed.

Depending upon the timing, duration, and specifics of any FDA or foreign marketing approval of any product candidates we may develop, one or more of our U.S.

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In addition, within the EU, regulatory protections afforded to medicinal products such as data exclusivity, marketing protection, market exclusivity for orphan indications and pediatric extensions are currently under review and is likely to be curtailed in future years.

If made into law, this proposal will revise and replace the existing general pharmaceutical legislation and will affect the existing period of regulatory protection afforded to medicinal products in the European Union and Northern Ireland.

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

It should be noted that the European Commission’s new proposed legislation, if implemented, will also affect the current EU legal framework of pediatric medicines.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

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Risks Related to Our Reliance on Third Parties

We have entered into a collaboration agreement with Novartis for the development of PLN-1474, and may in the future seek to enter into collaborations with third parties for the development and commercialization of other product candidates.

If we fail to enter into such collaborations, or if our collaborations are not successful, we may be unable to continue development of such product candidates, we would not receive any contemplated milestone payments or royalties, and we could fail to capitalize on the market potential of such product candidates.

In October 2019, we entered into a license and collaboration agreement with Novartis for the development and commercialization of our then preclinical product candidate, PLN-1474, and up to three integrin research targets.

In December 2019, we received an upfront license payment of $50.0 million for the worldwide exclusive license to PLN-1474 and have subsequently earned $29.0 million of the $416.0 million developmental, regulatory and commercial milestones under the arrangement.

In the second quarter of 2022 we recognized a $4.0 million target validation fee as Novartis exercised their right to opt-in to a research program and secured an exclusive license to compounds associated with an integrin reseach target.

Pursuant to the Novartis Agreement, as amended, we expect to receive research and development funding totaling up to $20.0 million for PLN-1474 development services and funding of up to $18.4 million for optional research and development services on the integrin research targets.

Substantially all of the services contemplated under the development plan and associated with integrin research targets had been completed as of December 31, 2022.

As part of a broad strategic realignment, Novartis has discontinued clinical development in NASH and, as a result, discontinued development of PLN-1474.

In February 2023, Novartis issued a termination notice for the collaboration and license agreement, and returned global rights to Pliant for PLN-1474.

We may pursue additional collaborations to further clinical development of PLN-1474.

Accordingly, we may become reliant upon the efforts and capabilities of others with respect to the advancement of this candidate.

If we or our potential future collaborators are unable to successfully advance the development of our product candidates, including PLN-1474, or achieve milestones, revenue and cash resources from milestone payments under our collaboration agreements will be substantially less than expected.

In addition, to the extent that any of our existing or future collaborators were to terminate a collaboration agreement, we may be forced to independently develop these product candidates, including funding preclinical or clinical trials, assuming marketing and distribution costs and defending intellectual property rights, or, in certain instances, abandon product candidates altogether, any of which could result in a change to our business plan and a material and adverse effect on our business, financial condition, results of operations and prospects.

We rely on third parties to conduct certain aspects of our preclinical studies and clinical trials.

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These third parties may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other product development activities, which could affect their performance on our behalf.

If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the preclinical or clinical data they obtain is compromised due to the failure to adhere to our protocols or regulatory requirements or for other reasons or if due to federal or state orders or absenteeism due to the COVID-19 pandemic they are unable to meet their contractual and regulatory obligations, our development timelines, including clinical development timelines, may be extended, delayed or terminated and we may not be able to complete development of, obtain regulatory approval of or successfully commercialize our product candidates.

If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the preclinical or clinical data they obtain is compromised due to the failure to adhere to our protocols or regulatory requirements or for other reasons or if due to federal or state orders or absenteeism due to global conditions, including health epidemics and pandemics, they are unable to meet their contractual and regulatory obligations, our development timelines, including clinical development timelines, may be extended, delayed or terminated and we may not be able to complete development of, obtain regulatory approval of or successfully commercialize our product candidates.

As a result, our financial results and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed.

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If so, we may not be able to reach agreements with alternative partners or do so on terms acceptable to us.

If we are unable to enter into

such agreements, our research and development activities will be delayed and our ability to implement a key part of our development strategy will be compromised.

If we are unable to enter into such agreements, our research and development activities will be delayed and possibly impaired.

Because we rely on third-party manufacturing and supply vendors, including single-source vendors and vendors in foreign jurisdictions, including China, our supply of research and development, preclinical and clinical development materials may become limited or interrupted or may not be of satisfactory quantity or quality.

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We do not own manufacturing facilities for producing any clinical trial product supplies.

There can be no assurance that our preclinical and clinical development product supplies will not be limited, interrupted, or of satisfactory quality or continue to be available at acceptable prices, including due to ongoing effects of the COVID-19 pandemic.

In addition, we rely on vendors in foreign jurisdictions, including China for our clinical drug supply for bexotagrast.

If this supply is interrupted for business or geopolitical reasons, the development of bexotagrast could be materially delayed.

In addition, we rely on vendors in foreign jurisdictions, including China for our clinical drug supply for bexotegrast.

If this supply is interrupted for business or geopolitical reasons, the development of bexotegrast could be materially delayed.

In particular, any replacement of our manufacturers could require significant time, effort and expertise because there may be a limited number of qualified replacements and the process to transfer technology and initiate manufacturing is complex and time consuming.

In addition, three vaccines for COVID-19 were granted Emergency Use Authorization by the FDA in late 2020 and early 2021.

The resultant demand for vaccines and potential for manufacturing facilities and materials to be commandeered under the Defense Production Act of 1950, equivalent foreign legislation or heightened demand on manufacturers may make it more difficult to obtain materials or manufacturing slots for the products needed for our development efforts, which could lead to delays in our clinical trials and scientific development efforts.

The manufacturing process for a product candidate is subject to FDA and foreign regulatory authority review.

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In the future, if we advance a biological product candidate into IND-enabling studies, we will need to identify and contract with suppliers who are able to produce biological product candidates and adhere to additional cGMP compliance obligations required for biologicals.

Our existing collaborations and future collaborations are and will be important to our business.

If we are unable to enter into new collaborations, or if these collaborations are not successful, our business could be adversely affected.

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Further, we have limited capabilities for product development and do not yet have any capability for commercialization.

Accordingly, we have and may in the future enter into collaborations with other companies to provide us with important technologies and funding for our programs and technology.

Our existing collaborations and any future collaborations we enter into may pose a number of risks, including the following:

• collaborators have significant discretion in determining the efforts and resources that they will apply;

Accordingly, we have in the past and may in the future enter into collaborations with other companies to provide us with important technologies and funding for our programs and technology.

Any future collaborations we enter into may pose a number of risks, including the following:

• collaborators may have significant discretion in determining the efforts and resources that they will apply;

• collaborators may not perform their obligations as expected;

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• collaborators 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;

• collaborators may not provide us with timely and accurate information regarding development progress and activity under any future license agreement, which could

adversely impact our ability to report progress to our investors and otherwise plan development of our product candidates;

• collaborators may not provide us with timely and accurate information regarding development progress and activity under any future license agreement, which could adversely impact our ability to report progress to our investors and otherwise plan development of our product candidates;

• disagreements with collaborators, 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;

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• collaborations 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 existing collaborations and any future collaborations we enter into do not result in the successful discovery, development and commercialization of product candidates or if one of our collaborators terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under such collaboration.

If collaborations we enter into do not result in the successful discovery, development and commercialization of product candidates or if a future collaborator terminates its agreement with us, we may not receive any research funding or milestone or royalty payments under such collaboration.

All of the risks relating to product development, regulatory approval and commercialization described in this Report also apply to the activities of our therapeutic collaborators.

Additionally, if one of our existing or future collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and our perception in the business and financial communities could be adversely affected.

We face significant competition in seeking appropriate collaborators for our product candidates, and the negotiation process is time-consuming and complex.

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If we fail to enter into future collaborations or do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates, bring them to market and generate revenue from sales of drugs or continue to develop our technology, and our business may be materially and adversely affected.

Even if we are successful in our efforts to establish new strategic collaborations, the terms that we agree upon may not be favorable to us, and we may not be able to maintain such strategic collaborations if, for example, development or approval of a product candidate is delayed or sales of an approved product are disappointing.

we are successful in our efforts to establish new strategic collaborations, the terms that we agree upon may not be favorable to us, and we may not be able to maintain such strategic collaborations if, for example, development or approval of a product candidate is delayed or sales of an approved product are disappointing.

Any delay in entering into new strategic collaboration agreements related to our product candidates could delay the development and commercialization of our product candidates and reduce their competitiveness even if they reach the market.

Our collaborators, prospective collaborators, and suppliers may need assurances that our financial resources and stability on a stand-alone basis are sufficient to satisfy their requirements for doing or continuing to do business with us.

Some of our collaborators, prospective collaborators, and suppliers may need assurances that our financial resources and stability on a stand-alone basis are sufficient to satisfy their requirements for doing or continuing to do business with us.

If our collaborators, prospective collaborators or suppliers are not satisfied with our financial resources and stability, it could have a material adverse effect on our ability to develop our drug candidates, enter into licenses or other agreements and on our business, financial condition or results of operations.

Our suppliers and any future collaborators may need assurances that our financial resources and stability on a stand-alone basis are sufficient to satisfy their requirements for doing or continuing to do business with us.

If these parties are not satisfied with our financial resources and stability, it could have a material adverse effect on our ability to develop our drug candidates, enter into licenses or other agreements and on our business, financial condition or results of operations.

Risks Related to Managing Our Business and Operations

The outbreak of the coronavirus disease, COVID-19, could adversely impact our business, including our preclinical studies and clinical trials.

The outbreak of COVID-19 and government measures taken in response thereto have had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred;

supply chains have been disrupted;

facilities and production have been suspended;

and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen.

In response to the initial spread of COVID-19, we significantly limited access to our executive offices with the majority of our administrative employees continuing their work outside of our offices and limited the presence of our staff in the laboratory and in the administrative spaces to levels that adhere to social distancing protocols.

As a result of the COVID-19 pandemic, we have experienced disruptions and may continue to experience disruptions that could severely impact our business, preclinical studies and clinical trials, including:

• delays or difficulties in commencing enrollment of patients in our clinical trials

• the impact from potential delays, including potential difficulties in clinical site initiation and related processes such as in recruiting clinical site investigators and clinical site staff;

• diversion of healthcare resources, including employee resources, away from the conduct of preclinical studies and clinical trials;

• interruption of key clinical trial activities, such as clinical trial site data monitoring, due to any future limitations on travel or interruption of clinical trial subject visits and study procedures that are deemed non-essential, which may impact the integrity of subject data and clinical study endpoints;

• interruption or delays in the operations of the FDA or other regulatory authorities, which may impact review and approval timelines;

• 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;

• interruptions in preclinical studies due to restricted or limited operations at our laboratory facility;

• interruption or delays to our sourced discovery and clinical activities.

The COVID-19 pandemic continues to rapidly evolve and new variants and subvariants of the virus continue to emerge.

The extent to which the outbreak impacts our business, preclinical studies and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, renewed travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

The foregoing disruptions, and other continued disruptions to our business in connection with the COVID-19 pandemic, could have a material adverse impact on our business, financial condition or results of operations.

In addition, the COVID-19 pandemic heightens many of the other risks and uncertainties discussed herein.

Global health pandemics, including the effects of health epidemics and pandemics, such as COVID-19, could adversely impact our business, including our preclinical studies and clinical trials.

The outbreak of COVID-19 and government measures taken in response thereto had a significant impact, both direct and indirect, on businesses and commerce.

As a result of COVID-19, we experienced disruptions that negatively impacted our business, preclinical studies and clinical trials.

Any resurgences of COVID-19 or other pandemics may result in renewed travel restrictions and social distancing in the United States and other countries, business closures or business disruptions.

Any such disruptions could have a material adverse impact on our business, financial condition or results of operations.

We may encounter difficulties in managing our growth, which could adversely affect our operations.

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Our future growth would impose significant added responsibilities on members of management, including:

• identifying, recruiting, integrating, maintaining and motivating additional employees;

• identifying, recruiting, integrating, retaining and motivating additional employees;

• managing our development and commercialization efforts effectively, including the clinical and FDA review process for bexotegrast and any other product candidates, while complying with our contractual obligations to contractors and other third parties;

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Our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.

We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services, including contract manufacturers and companies focused on research and development and discovery activities.

There can be no assurance that the services of independent organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements.

In addition, if we are unable to effectively manage our outsourced activities or if the quality, accuracy or quantity of the services provided is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain, or may be substantially delayed in obtaining, regulatory approval of our product candidates or otherwise advance our business.

There can be no assurance that we will be able to manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, or at all.

If we are not able to effectively expand our organization by hiring new 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 bexotegrast or any other product candidates and, accordingly, may not achieve our research, development and commercialization goals.

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Our ability to compete in the highly competitive biotechnology and biopharmaceutical industries depends upon our ability to attract and retain highly qualified managerial, scientific, and medical personnel.

We are highly dependent on our management, scientific and medical personnel, including Bernard Coulie, M.D., Ph.D., our President and Chief Executive Officer, Keith Cummings, M.D., our Chief Financial Officer, Johannes (Hans) Hull, J.D., our Chief Business Officer and Éric Lefebvre, M.D., our Chief Medical Officer.

The loss of the services of any of our executive officers, other key employees and other scientific and medical advisors, and our inability to find suitable replacements could result in delays in product development and harm our business.

We are highly dependent on our management, scientific and medical personnel, including key members of our senior management and executive team.

loss of the services of any of our executive officers, other key employees and other scientific and medical advisors, and our inability to find suitable replacements could result in delays in product development and harm our business.

We conduct our operations at our facility in South San Francisco, California.

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Despite our efforts to retain valuable employees, members of our management, scientific and development teams may terminate their employment with us on short notice.

Our key employees are at-will employees, which means that any of our employees could leave our employment at any time, with or

without notice.

Our key employees are at-will employees, which means that any of our employees could leave our employment at any time, with or without notice.

We do not maintain “key person” insurance policies on the lives of these individuals or the lives of any of our other employees.

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Our current operations are concentrated in one location, and we or the third parties upon whom we depend may be adversely affected by earthquakes or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster, including earthquakes, outbreak of disease or other natural disasters.

Our current operations are located in our facilities in South San Francisco, California.

Any unplanned event, such as flood, fire, explosion, earthquake, extreme weather condition, medical epidemics, power shortage, telecommunication failure or other natural or man-made accidents or incidents that result in us being unable to fully utilize our facilities, or the manufacturing facilities of our third-party contract manufacturers, may have a material and adverse effect on our ability to operate our business, particularly on a daily basis, and have significant negative consequences on our financial and operating conditions.

Our operations are located in our facilities in South San Francisco, California.

Any unplanned event, such as flood, fire, explosion, earthquake, extreme weather condition, medical epidemics, power shortage, telecommunication failure or other natural or man-made accidents or incidents that result in us being unable to fully utilize our facilities, or the manufacturing facilities of our third-party contract manufacturers, may have a material and adverse effect on our ability to operate our business and have significant negative consequences on our financial and operating conditions.

Loss of access to these facilities may result in increased costs, delays in the development of our product candidates or interruption of our business operations.

Earthquakes or other natural disasters could further disrupt our operations and have a material and adverse effect on our business, financial condition, results of operations and prospects.

In addition, global climate change could result in certain types of natural disasters occurring more frequently or with more intense effects.

If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our research facilities or the manufacturing facilities of our third-party contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time.

The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event.

We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which, could have a material adverse effect on our business.

As part of our risk management policy, we maintain insurance coverage at levels that we believe are appropriate for our business.

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We adopted a code of business conduct and ethics, but it is not always possible to identify and deter misconduct by our employees, independent contractors, consultants, commercial partners and vendors, and the precautions we take to detect and prevent this activity 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 comply with these laws or regulations.

If any actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could result in the imposition of civil, criminal and administrative penalties, damages, monetary fines, imprisonment, disgorgement, possible exclusion from participation in government healthcare programs, additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings and the curtailment of our operations.

these laws, contractual damages, reputational harm, diminished profits and future earnings and the curtailment of our operations.

We use and generate materials that may expose us to material liability.

Our research programs involve the use of hazardous materials and chemicals, which are generally handled by third parties.

We are subject to foreign, federal, state, and local environmental and health and safety laws and regulations governing, among other matters, the use, manufacture, handling, storage and disposal of hazardous materials and waste

products such as human tissue samples that may have the potential to transmit diseases.

We may incur significant costs to comply with these current or future environmental and health and safety laws and regulations.

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federal income tax purposes of $31.5 million, which begin to expire in 2036, and state income tax purposes of $7.1 million, which can be carried forward indefinitely.

Under Section 382 of the Internal Revenue Code, as amended, or the Code, changes in our ownership may limit the amount of our net operating loss carryforwards and tax credit carryforwards that could be utilized annually to offset our future taxable income, if any.

Under Section 382 of the

Internal Revenue Code, as amended, or the Code, changes in our ownership may limit the amount of our net operating loss carryforwards and tax credit carryforwards that could be utilized annually to offset our future taxable income, if any.

This limitation would generally apply in the event of a cumulative change in ownership of our company of more than 50 percentage points within a three-year period.

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We have performed an analysis under Internal Revenue Code Sections 382 and 383 to determine the amount of our net operating loss carryforwards and research and development credit carryforwards that will be subject to annual limitation.

This analysis concluded that we have experienced one or more such ownership changes prior to December 31, 2022, and the Company’s

net operating losses and tax credit carryforwards generated prior to the identified ownership changes are subject to no permanent limitation under Sections 382 or 383.

This analysis concluded that we have experienced one or more such ownership changes prior to December 31, 2023, and the Company’s net operating losses and tax credit carryforwards generated prior to the identified ownership changes are subject to no permanent limitation under Sections 382 or 383.

In addition, we may experience subsequent ownership changes as a result of future equity offerings or other changes in our stock ownership.

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In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Report, these factors include:

• the commencement, enrollment or results of our current Phase 2a clinical trials of bexotegrast and any other clinical trials for our product candidates conducted by us or our collaborators;

• the commencement, enrollment or results of our current Phase 2a and Phase 2b clinical trials of bexotegrast and any other clinical trials for our product candidates conducted by us or our collaborators;

• any delay in identifying and advancing a clinical candidate for our other development programs;

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• our inability to obtain adequate product supply for any approved product or inability to do so at acceptable prices;

• failure to secure a positive health technology assessment recommendation ;

• our inability to establish collaborations, if needed;

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• other events or factors, many of which are beyond our control.

In addition, the stock market in general, and the market for biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies, including as a result of the COVID-19 pandemic, the Russian invasion of Ukraine and rising inflationary pressures.

In addition, the stock market in general, and the market for biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies, including as a result of effects of health epidemics and pandemics, such as COVID-19, geopolitical events, such as the Russian invasion of Ukraine, the Israel-Hamas conflict and related global escalation of geopolitical tensions, and rising inflationary pressures.

Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.

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Shares of common stock that are either subject to outstanding options or reserved for future issuance under our existing equity compensation plans will become eligible for sale in the public market as they become vested.

If these additional shares of common stock are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

Additionally, the number of shares of our common stock reserved for issuance under our 2020 Stock Option and Incentive Plan will automatically increase on January 1 of each year by 5% of the total

number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by our board of directors or compensation committee.

additional shares of common stock are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

Additionally, the number of shares of our common stock reserved for issuance under our 2020 Stock Option and Incentive Plan will automatically increase on January 1 of each year by 5% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by our board of directors or compensation committee.

Moreover, the number of shares of our common stock reserved for issuance under our 2020 Employee Stock Purchase Plan, or ESPP, will automatically increase on January 1 of each year by the lesser of 700,000 shares of common stock, 1% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by our board of directors or compensation committee.

Unless our board of directors elects not to increase the number of shares available for future grant each year, our stockholders may experience additional dilution.

Effective December 31, 2023, we became a large accelerated filer and no longer qualify as a smaller reporting company, which increases our costs and demands on management.

Based on the market value of our common stock held by our non-affiliates as of June 30, 2023, we are no longer considered a smaller reporting company and are considered a “large accelerated filer” effective as of December 31, 2023.

Thus, we are subject to accelerated filing deadlines as well as the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, which require our independent registered public accounting firm to formally attest to the effectiveness of our internal control over financial reporting.

We have devoted, and expect to continue to devote, significant time and effort to implement and comply with the additional standards, rules and regulations that apply to us.

Compliance with the additional requirements of being a large accelerated filer will also increase our legal, accounting and financial compliance costs.

Further, due to the complexity and logistical difficulty of implementing the standards, rules and regulations that now apply to our business, there is an increased risk that we may be found to be in non-compliance with such standards, rules and regulations or to have significant deficiencies or material weaknesses in our internal controls over financial reporting.

Any failure to maintain effective disclosure controls and internal control over financial reporting could materially and adversely affect our business, results of operations and financial condition, and could cause a decline in the trading price of our common stock.

Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control which could limit the market price of our common stock and may prevent or frustrate attempts by our stockholders to replace or remove our current management.

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(iii) any action asserting a claim against us arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws;

action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws;

(iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws;

or (v) any action asserting a claim governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein, or the Delaware forum provision.

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Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

We are required to disclose changes made in our internal controls and procedures on a quarterly basis and our management is required to assess the effectiveness of these controls annually.

However, for as long as we are “non-accelerated filer,” as defined by the SEC, our independent registered public accounting firm is not required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404.

An independent assessment of the effectiveness of our internal controls over financial reporting could detect problems that our management’s assessment might not.

We are required to disclose changes made in our internal controls and procedures on a quarterly basis.

If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public

accounting firm is unable to express an opinion on the effectiveness of our internal control, including as a result of any identified material weakness, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC.

In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

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These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of

two or more people or by an unauthorized override of the controls.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls.

Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.

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In July 2022 and January 2023, we completed underwritten public offerings of our common stock.

In July 2021, we entered into a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent, pursuant to which we may issue and sell up to $150.0 million of shares of common stock from time to time.

On July 2, 2021, we filed a registration statement on Form S-3 (File No.

333-257684), as amended, which included a sales agreement prospectus registering the offer and sale of shares under the Sales Agreement (the “Sales Agreement Prospectus”).

From July 2, 2021 to January 23, 2023, no shares of common stock were sold pursuant to the Sales Agreement or the Sales Agreement Prospectus.

We terminated the Sales Agreement Prospectus on January 23, 2023 in connection with our January 2023 public offering, but the Sales Agreement remains in full force and effect.

We will not make any sales of shares of our common stock pursuant to the Sales Agreement unless and until a new sales agreement prospectus or prospectus supplement is filed, which we may do at a later date.

In July 2021, we entered into the Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent, pursuant to which we may issue and sell shares of common stock from time to time.

On March 27, 2023, we filed a registration statement on Form S-3 (File No.

333-270862) which included a sales agreement prospectus registering the offer and sale of up to $150.0 million of shares under the Sales Agreement (the Sales Agreement Prospectus).

As part of our business strategy, we may acquire or make investments in complementary companies, products or technologies and issue equity securities to pay for any such acquisition or investment.

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For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the same or similar coverage.

We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.

We cannot predict or estimate the amount or timing of additional

costs we may incur to respond to these requirements.

The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

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Any failure or perceived failure by us to comply with federal, state, or foreign laws or self-regulatory standards could result in negative publicity, diversion of management time and effort and proceedings against us by governmental entities or others.

Numerous federal and state laws and regulations, including HIPAA and HITECH, govern the collection, dissemination, security, use and confidentiality of patient-identifiable health information or personal information.

Numerous federal and state laws and regulations, including the Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health Act (HITECH), govern the collection, dissemination, security, use and confidentiality of patient-identifiable health information or personal information.

In the course of performing our business we obtain personally identifiable information (PII), including health-related information.

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While HIPAA does not create a private right of action allowing individuals to sue us in civil court for HIPAA violations, its standards have been used as the basis for a duty of care claim in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.

The Department of Health and Human Services Office for Civil Rights (OCR) has recently increased its enforcement efforts on compliance with HIPAA, including the security regulations (Security Rule), bringing actions against entities which have failed to implement security measures sufficient to reduce risks to electronic protected health information or to conduct an accurate and thorough risk analysis, among other violations.

The HHS Office for Civil Rights (OCR) has recently increased its enforcement efforts on compliance with HIPAA, including the security regulations (Security Rule), bringing actions against entities which have failed to implement security measures sufficient to reduce risks to electronic protected health information or to conduct an accurate and thorough risk analysis, among other violations.

HIPAA enforcement actions may lead to monetary penalties and costly and burdensome corrective action plans.

Moreover, compliance with state laws related to health privacy may cause additional compliance costs.

For instance, Washington State recently passed the “My Health My Data Act” which will regulate “consumer health data” which is defined as “personal information that is linked or reasonably linkable to a consumer and that identifies a consumer’s past, present, or future physical or mental health.” The “My Health My Data Act” provides exemptions for personal data used or shared in research, including data subject to 45 C.F.R.

Parts 46, 50, and 56.

Nevada also recently enacted a consumer health data privacy bill, and additional states may adopt health-specific privacy laws that could impact our business activities depending on how they are interpreted.

We may encounter vendors that engage in information blocking practices that may inhibit our ability to access the relevant data on behalf of clients or impose new or additional costs.

In 2020, the U.S.

Department of Health and Human Services’ Office of the National Coordinator for Health Information Technology (ONC) and the Centers for Medicare and Medicaid Services promulgated final rules to support access, exchange, and use of electronic health information (EHI).

Specifically, the information blocking rules were implemented as part of the 21st Century Cures Act, and are primarily designed to facilitate technology interoperability and enable the free flow of healthcare information for healthcare treatment, payment or operation purposes.

On June 27, 2023, the Department of Health and Human Services Office of the Inspector General (HHS-OIG) published its final rule implementing information blocking penalties for “actors,” which is supplemented by ONC’s January 9, 2024 final rule enhancing certain blocking requirements.

HHS-OIG may impose penalties for information blocking that has occurred after September 1, 2023, and ONC and HHS proposed a rule on November 1, 2023 listing certain disincentives for actors that conduct information blocking.

The impact on the information blocking rules to our business is currently unclear.

California passed the California Consumer Protection Act of 2018, or the CCPA, which went into effect in January 2020 and provides data privacy rights for consumers and new operational requirements for companies, which may increase our compliance costs and potential liability.

The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.

The CCPA gives California residents expanded rights to access and delete their

personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.

Failure to comply with the CCPA risks regulatory fines, and the CCPA grants a private right of action and statutory damages for an unauthorized access and exfiltration, theft, or disclosure of certain types of personal information resulting from the company’s violation of a duty to maintain reasonable security procedures and practices.

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In addition, the CCPA was expanded on January 1, 2023, when the California Privacy Rights Act of 2020, or the CPRA, became operative.

The CPRA, among other things, gives California residents the ability to limit use of certain sensitive personal information, further restricts the use of cross-contextual advertising, establishes restrictions on the retention of personal information, expands the types of data breaches subject to the CCPA’s private right of action, provides for increased penalties for CPRA violations concerning California residents under the age of 16, and establishes a new California Privacy Protection Agency to implement and enforce the new law.

The CPRA, among other things, gives California residents the ability to limit use of certain sensitive personal information, further restricts the use of cross-contextual advertising, establishes restrictions on the retention of personal information, expands the types of data breaches subject to the CCPA’s private right of action, provides for increased penalties for CPRA violations concerning California residents under the age of 16, and established a new California Privacy Protection Agency to implement the law through additional regulations and to enforce the law.

Although there are limited exemptions for clinical trial data under the CCPA, the CCPA and other similar laws could impact our business activities depending on how it is interpreted.

In the interim, the CPRA will require additional investment in compliance programs and potential modifications to business processes.

The CCPA and CPRA could mark the beginning of a trend toward more stringent privacy legislation in the United States, as other states or the federal government may follow California’s lead and increase protections for U.S.

For example, on March 2, 2021, the Virginia Consumer Data Protection Act was signed into law, which went into effect on January 1, 2023, and on July 8, 2021, the Colorado Privacy Act, was signed into law, which will take effect on July 1, 2023, was signed into law.

On September 18, 2021, the Uniform Law Commission published the Uniform Personal Data Protection Act, which states may begin to adopt.

The CCPA has already prompted a number of proposals for new federal and state privacy legislation that, if passed, could increase our potential liability, add layers of complexity to compliance in the U.S.

market, increase our compliance costs and adversely affect our business.

Additionally, the Federal Trade Commission (FTC) and many state attorneys general are interpreting existing federal and state consumer protection laws to impose evolving standards for the collection, use, dissemination and security of health-related and other personal information.

Multiple states have followed California to legislate comprehensive privacy laws with data privacy rights.

For example, on March 2, 2021, the Virginia Consumer Data Protection Act was signed into law, which went into effect on January 1, 2023, on May 10 2022, the Connecticut Data Privacy Act was signed into law, which went into effect on July 1, 2023, and on July 8, 2021, the Colorado Privacy Act, was signed into law, which went into effect on July 1, 2023.

Multiple states have enacted similar legislation which will go into effect in the coming years, and additional states have contemplated new health-specific privacy laws, such as the new Washington My Health My Data Act.

While these new laws generally include exemptions for HIPAA-covered and clinical trial data, they add layers of complexity to compliance in the U.S.

market, and could increase our compliance costs and adversely affect our business.

Courts may also adopt the standards for fair information practices promulgated by the FTC, which concern consumer notice, choice, security and access.

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Furthermore, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5 of the FTC Act.

Additionally, the FTC recently published an advance notice of proposed rulemaking on commercial surveillance and data security, and is seeking comment on whether it should implement new trade regulation rules or other regulatory alternatives concerning the ways in which companies (1) collect, aggregate, protect, use, analyze, and retain consumer data, as well as (2) transfer, share, sell, or otherwise monetize that data in ways that are unfair or deceptive.

Additionally, the FTC published an advance notice of proposed rulemaking in 2022 on commercial surveillance and data security, and may implement new trade regulation rules or other regulatory alternatives concerning the ways in which companies (1) collect, aggregate, protect, use, analyze, and retain consumer data, as well as (2) transfer, share, sell, or otherwise monetize that data in ways that are unfair or deceptive in the coming years.

Our business relies on secure and continuous processing of information and the availability of our Information Technology (IT) networks and IT resources, as well as critical IT vendors that support our technology and data processing operations.

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Attacks upon information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise.

OCR, pursuant to legislation passed in 2021, recently issued guidance on recognized security practices for covered entities and business associates.

OCR, pursuant to legislation passed in 2021, issued guidance on recognized security practices for covered entities and business associates.

OCR indicated that recognized security practices will not be an aggravating factor in OCR investigations, but that implementation of recognized security practices strengthen an organization’s cybersecurity and regulatory posture, as well as possibly lessening enforcement penalties in a potential regulatory enforcement.

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If we, or any of our IT support vendors, fail to comply with laws requiring the protection of sensitive personal information, or fail to safeguard and defend personal information or other critical data assets or IT systems, we may be subject to regulatory enforcement and fines as well as private civil actions.

We may be required to expend significant resources in the response, containment, mitigation of cybersecurity incidents as well as in defense against claims that our information security was unreasonable or otherwise violated applicable laws or contractual obligations.

In addition to our operations in the United States, which may be subject to healthcare and other laws relating to the privacy and security of health information and other personal data, we may seek to conduct clinical trials in the EEA and may become subject to additional EEA data privacy laws, regulations and guidelines.

The General Data Protection Regulation, or EU GDPR, became effective on May 25, 2018, and deals with the collection, use, storage, disclosure, transfer or other processing of personal data, including personal health data, regarding individuals in the EEA.

The EU GDPR imposes a broad range of strict requirements on companies subject to the EU GDPR, including requirements relating to having legal bases for processing personal data (i.e., data relating to identifiable individuals) and transferring such personal data outside the EEA, including to the United States, and providing details to those individuals regarding the processing of their personal data, keeping personal data secure, having data processing agreements with third parties who process personal data on our behalf, responding to individuals’ requests to exercise their rights in respect of their personal data, reporting security breaches involving personal data to the competent national data protection authority and affected individuals, appointing data protection officers, conducting data protection impact assessments and record-keeping.

Further, national laws of member states of the EU may partially deviate from the EU GDPR and impose different obligations from country to country, so that we do not expect to operate in a uniform legal landscape in the EEA.

In particular, as it relates to processing and transfer of genetic data and health data, the EU GDPR specifically allows national laws to impose additional and more specific requirements or restrictions, and European laws have historically differed quite substantially in this field, leading to additional uncertainty.

The EU GDPR increases substantially the penalties to which we could be subject in the event of any non-compliance, including fines of up to €10,000,000 or up to 2% of our total worldwide annual turnover for certain comparatively minor offenses, or up to €20,000,000 or up to 4% of our total worldwide annual turnover, whichever is greater, for more serious offenses.

The EU GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the EU GDPR.

If our efforts to comply with EU GDPR or other applicable EU laws and regulations are not successful, or are perceived to be unsuccessful, it could adversely affect our business in the EU.

The EU GDPR also prohibits the transfer of personal data from the EEA to the United States and other countries that are not recognized as having “adequate” data protection laws by the European Commission unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data.

One of the primary safeguards allowing U.S.

companies to import personal data from the EEA has been certification to the EU-U.S.

Privacy Shield framework administered by the U.S.

Department of Commerce.

However, the European Court of Justice, or the ECJ, issued a decision in July 2020 which invalidated the EU-U.S.

Privacy Shield framework for international transfers (Schrems II) and imposed further restrictions on the use of standard contractual clauses (SCCs) including, a requirement for companies to carry out a transfer privacy impact assessment, which among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under the SCCs will need to be implemented to ensure an essentially equivalent level of data protection to that afforded in the EU.

Following that decision, the Swiss Federal Data Protection and Information Commissioner (FDPIC) took a similar view and considered that data transfers based on the Swiss-U.S.

Privacy Shield framework are no longer lawful (despite the fact that Schrems II is not directly applicable in Switzerland (unless the Swiss based company is subject to the EU GDPR) and the Swiss-U.S.

Privacy Shield has not been officially invalidated).

Further, the European Commission published new EU SCCs in June 2021, which place onerous obligations on the contracting parties.

Therefore, until recently, there were few, if any, viable alternatives to the SCCs.

However, on October 7, 2022, President Biden introduced an Executive Order to facilitate a new Trans-Atlantic Data Privacy Framework which will act as a successor to the invalidated EU-U.S.

Privacy Shield.

If approved by the European Commission and implemented, the agreement will facilitate the transatlantic flow of personal data and provide an alternative data transfer mechanism (in addition to SCCs) for companies transferring personal data from the EU to the U.S.

However, before entities rely on the new EU-U.S.

Privacy Shield, there are still legislative and regulatory steps that must be undertaken both in the U.S.

and in the EU.

Therefore, at present, the new EU SCCs are still the primary safeguard available for personal data transfers from the EU to the U.S.

As such, the current legal position could restrict our activities in the EEA/Switzerland, limit our ability to provide our products and services in the EEA/Switzerland, and/or increase our costs and obligations and impose limitations upon our ability to efficiently transfer personal data from the EEA/Switzerland to the United States.

Following the U.K.’s departure from the EU (Brexit), the EU GDPR’s data protection obligations continue to apply to the UK in substantially unvaried form under the so-called “UK GDPR”.

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

Under the UK GDPR, companies not established in the UK but who process personal data in relation to the offering of goods or services to individuals in the UK, or to monitor their behavior will be subject to the UK GDPR – the requirements of which are (at this time) largely aligned with those under the EU GDPR and as such, may lead to similar compliance and operational costs with potential fines of up to £17.5 million or 4% of global turnover.

As a result, we are potentially exposed to two parallel data protection regimes, each of which authorizes fines and the potential for divergent enforcement actions.

It should be noted that the UK GDPR also prohibits the transfer of personal data from the UK to other countries that are not recognized as having “adequate” data protection laws, including the U.S., in a similar manner to the EU.

In addition, the UK Government has published its own form of SCCs, known as the International Data Transfer Agreement and International Data Transfer Addendum to the new EU SCCs.

The UK Information Commissioner’s Office has also published its version of the transfer impact assessment and revised guidance on international transfers, although companies may choose to either use the EU style or UK style transfer impact assessment.

In terms of international data transfers between the UK and US, it is understood that the UK and the US are negotiating an adequacy agreement.

In the event we commence clinical trials in the EEA, the UK or Switzerland, applicable data protection laws may increase our responsibility and liability in relation to personal data that we process, and we may be required to put in place additional mechanisms and safeguards to ensure compliance, including as implemented by individual countries.

Compliance with data protection laws in the EEA, the UK and Switzerland is a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation and reputational harm in connection with our European activities.

We may be required to expend significant resources in the response, containment, mitigation of

cybersecurity incidents as well as in defense against claims that our information security was unreasonable or otherwise violated applicable laws or contractual obligations.

Further, as the EU GDPR may be implemented differently in national laws of member states of the European Union, we may face additional costs associated with complying with potentially varying data protection requirements in these member states.

In the event we commence clinical trials in the EEA, the U.K.

or Switzerland, applicable data protection laws may increase our responsibility and liability in relation to personal data that we process, and we may be required to put in place additional mechanisms and safeguards to ensure compliance, including as implemented by member states in the European Union.

Compliance with data protection laws in the EEA, the U.K.

and Switzerland is a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation and reputational harm in connection with our European activities.

We expect that we will continue to face uncertainty as to whether our efforts to comply with any obligations under European privacy laws will be sufficient.

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ceased being a Member State of the EU.

and the EU signed a EU-UK Trade and Cooperation Agreement, or TCA, which became effective on May 1, 2021.

and the EU signed a EU-U.K.

Trade and Cooperation Agreement, or TCA, which became effective on May 1, 2021.

Such a withdrawal from the EU is unprecedented, and it is unclear how the restrictions on the U.K.’s access to the European single market for goods, capital, services and labor within the EU, or single market, and the wider commercial, legal and regulatory environment, will impact our current and future operations (including business activities conducted by third parties and contract manufacturers on our behalf) and clinical activities in the U.K.

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legislation may depart from EU legislation.

For instance, now the transition period has expired, Great Britain will no longer be covered by the centralized procedure for obtaining an EEA-wide marketing authorization from the European Medicines Agency, or EMA, and a separate process , will be required for authorization of drug products covering the UK or Great Britain only.

For instance, now the transition period has expired, Great Britain will no longer be covered by the centralized procedure for obtaining an EEA-wide marketing authorization from the EMA and a separate process will be required for authorization of drug products covering the U.K.

or Great Britain only.

Any delay in obtaining, or an inability to obtain, any regulatory approvals, as a result of Brexit or otherwise, would prevent us from commercializing our product candidates in the U.K.

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and/or EU for our product candidates, which could significantly and materially harm our business.

The UK government is currently trying to renegotiate fundamental aspects of the Northern Ireland Protocol so this is an unpredictable area for companies in the near future.

Failed attempts to renegotiate the Northern Ireland Protocol have led to media reports of the UK potentially triggering Article 16 of the Northern Ireland Protocol, a safeguarding measure, that may be engaged unilaterally if the application of the Protocol leads to serious economic, societal or environmental difficulties that are liable to persist, or to diversion of trade.

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

Government and the EU recently adopted a new agreement, the “Windsor Framework,” which will replace the Northern Ireland Protocol.

According to the Windsor Framework, medicinal products intended for the U.K.

market, including Northern Ireland, will be authorized by the MHRA and will bear a “U.K.

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

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

Changes in U.S.

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tax laws on an investment in our common stock.

Our internal computer systems, or those of our collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.

Our internal computer systems and those of our current and any future collaborators, other contractors or consultants, and third-party suppliers (i.e.

Our information systems, or those of our collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.

Our information systems and those of our current and any future collaborators, other contractors or consultants, and third-party suppliers (i.e.

our supply chain) are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.

We exercise little or no direct control over how these third parties operate their networks, which increases our vulnerability to problems with their systems.

While we have not experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our information systems, it could result in a disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions.

While we have not experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our information systems or those of our collaborators, vendors, contractors or consultants, it could result in a disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions, as well as reputational harm and adverse legal and regulatory consequences.

For example, the loss of clinical trial data from future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

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

We could be subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release, exposure or loss of information maintained in the information systems and networks of our company and our vendors, including personal information of our employees and study subjects, and company and vendor confidential data.

In addition, outside parties may attempt to penetrate our systems or those of our vendors or fraudulently

induce our personnel or the personnel of our vendors to disclose sensitive information in order to gain access to our data and/or systems.

We are also subject to cybersecurity risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release, exposure or loss of information maintained in the information systems and networks of our company and our vendors, including personal information of our employees and study subjects, and company and vendor confidential data.

In addition, outside parties may attempt to penetrate our systems or those of our vendors or fraudulently induce our personnel or the personnel of our vendors to disclose sensitive information in order to gain access to our data and/or systems.

We may experience threats to our data and systems, including malicious code and viruses, supply chain attacks, phishing and other cyberattacks.

The number and complexity of these threats continue to increase over time.

If a material breach of, or accidental or intentional loss of data from, our information technology systems or those of our vendors occurs, the market perception of the effectiveness of our security measures could be harmed and our reputation and credibility could be damaged.

While we have not experienced, to date, a cybersecurity threat, including as a result of any previous cybersecurity incidents, that has materially affected or is reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, we cannot guarantee that we will not experience such a threat or incident in the future.

We could be required to expend significant amounts of money and other resources to repair or replace information systems or networks..

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In addition, while we maintain insurance policies that may cover certain liabilities in connection with a cybersecurity incident, we cannot be certain that the insurance coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.

The successful assertion of one or more large claims that exceed available insurance coverage, or the occurrence of changes in insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including its financial condition, results of operations and reputation.

The successful assertion of one or more large claims that exceed available insurance coverage, or the

occurrence of changes in insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including its financial condition, results of operations and reputation.

Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.

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Furthermore, the most recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets.

A severe or prolonged economic downturn, including due to the impact of the COVID-19 pandemic, Russian invasion of Ukraine, rising inflationary pressures and rising interest rates could result in a variety of risks to our business, including a reduced ability to raise additional capital when needed on acceptable terms, if at all.

A severe or prolonged economic downturn, due to factors including the effects of health epidemics and pandemics, such as COVID-19, geopolitical events, such as the Russian invasion of Ukraine, the Israel-Hamas conflict and related global escalation of geopolitical tensions, rising inflationary pressures and rising interest rates could result in a variety of risks to our business, including a reduced ability to raise additional capital when needed on acceptable terms, if at all.

A weak or declining economy or international trade disputes could also strain our suppliers, some of which are located outside of the United States, possibly resulting in supply disruption.

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When such disclosures occur, there is a risk that trial enrollment may be adversely impacted, that we may fail to monitor and comply with applicable adverse event reporting obligations or that we may not be able to defend our business or the public’s legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our product candidates.

There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or

comments about us on any social networking website.

There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social networking website.

If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face regulatory actions or incur other harm to our business.

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Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.

Unresolved Staff Comments

Not Applicable.

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

What changed 10-K

Item 1A. Risk Factors