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Item 1A. Risk Factors

2020-11-05 compared with 2020-08-06 · 94 added, 95 removed, 805 unchanged (19% of the section changed)

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The impact of the COVID-19 pandemic and related risks could have a material adverse impact on our research and development programs and financial condition.

The degree to which COVID-19 impacts our business operations, research and development programs and financial condition will depend on future developments, including new information which may emerge concerning the duration and/or severity of the outbreak and any resurgences, actions by government authorities to contain the spread of the virus, and when and to what extent normal economic and operating conditions can resume.

W e expect that this pandemic will result in delays to some of our clinical programs, as well as to our discovery programs, but we are unable to predict the extent of any such delays or impact.

Our laboratory-based operations were suspended due to shelter-in-place orders in force during the second quarter of 2020, which will affect our ability to meet some of our discovery and preclinical milestones and timelines.

In late June, we began to transition our laboratory-based personnel back into our facilities, however, our laboratories are operating at reduced capacity due to employee safety measures, such as social distancing requirements and shift work.

The full impact of the COVID-19 outbreak continues to evolve and is highly uncertain and subject to change.

The degree to which COVID-19 impacts our business operations, research and development programs and financial condition will depend on future developments, including the ultimate duration and/or severity of the outbreak and any resurgences, actions by government authorities to contain the spread of the virus, the timing, availability and effectiveness of any vaccines, and when and to what extent normal economic and operating conditions can resume.

The American Cancer Society has reported that the pandemic has led to declines in screening, diagnosis and treatment for patients , which will adversely impact the enrollment of patients in clinical trials targeting early stage cancers and retention of patients overall in our trials.

While we conduct our clinical trials in the U.S.

and internationally in geographic regions that are impacted by COVID-19 to varying degrees, due to the foregoing factors and the uncertainty on how the upcoming flu season may affect the COVID-19 pandemic, we are unable to predict the full impact of this pandemic on our clinical programs.

Our discovery programs were impacted by the suspension in our laboratory-based operations from mid-March to late June.

Despite the return of our laboratory-based personnel back into our facilities, our laboratories are operating at reduced capacity due to employee safety measures, such as social distancing requirements and shift work.

This has delayed the advancement of one of two preclinical programs that we had expected would enter the clinic in the first quarter of 2021.

The first program continues in preclinical development, however, the pandemic has delayed the second program until the second half of 2021.

The full impact of the COVID-19 outbreak remains highly uncertain and subject to change.

In connection with our resumption of laboratory operations, we instituted regular COVID-19 testing services in order to minimize the risk to our employees.

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We are an early-stage immuno-oncology company with a limited operating history.

We have incurred net losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.

We have incurred annual net losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.

We have never generated any revenue from product sales and may never be profitable.

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We have never generated any revenue from product sales and have incurred net losses each year since we commenced operations.

For the six months ended June 30, 2020 and the year ended December 31, 2019, our net losses were $72.8 million and $84.7 million, respectively.

As of June 30, 2020, we had an accumulated deficit of $278.2 million.

For the nine months ended September 30, 2020 and the year ended December 31, 2019, our net losses were $71.0 million and $84.7 million, respectively.

As of September 30, 2020, we had an accumulated deficit of $276.3 million.

We expect that it will be several years, if ever, before we have an investigational product ready for commercialization.

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This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our investigational products, obtaining marketing approval for these investigational products, manufacturing, marketing and selling those products for which we may obtain marketing approval and satisfying any post-marketing requirements.

We may never succeed in these activities and, even if we succeed in commercializing one or more of our investigational products, we may never generate

revenues that are significant or large enough to achieve profitability.

We may never succeed in these activities and, even if we succeed in commercializing one or more of our investigational products, we may never generate revenues that are significant or large enough to achieve profitability.

In addition, as a young business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown challenges.

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In addition, if we obtain marketing approval for any of our investigational products, we expect to incur significant commercialization expenses related to marketing, sales, manufacturing and distribution.

As of June 30, 2020, we had $462.5 million of cash, cash equivalents and short-term investments.

In addition, upon closing of the Gilead Collaboration Agreement, common stock purchase agreement and investor rights agreement with Gilead, we received an upfront payment of $175 million and equity investment of approximately $200 million.

As of September 30, 2020, we had $785.1 million of cash, cash equivalents and investments, which includes the upfront payment of $175 million and equity investment of approximately $200 million that we received from Gilead Sciences, Inc.

(Gilead) upon closing of the option, license and collaboration agreement (Gilead Collaboration Agreement) and the Stock Purchase Agreement.

While we believe that our cash position will be sufficient to fund our planned level of operations through at least the next 12 months, our future capital requirements will depend on many factors, including:

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the scope and costs of manufacturing development and commercial manufacturing activities;

the timing and number of programs Gilead exercises its option to, and the costs associated with our share of the global development plan for such optioned programs;

the timing and number of programs Gilead exercises its option to obtain an exclusive license to our current and future clinical programs, subject to the rights of our existing partners, and the costs associated with our share of the global development plan for such optioned programs;

the timing and amount of milestone payments we receive from Taiho Pharmaceuticals Co., Ltd.

(Taiho) under our option and license agreement (the Taiho Agreement) and Gilead Collaboration Agreement, and option fees under the Gilead Collaboration Agreement;

(Taiho) under our option and license agreement (the Taiho Agreement) and the Gilead Collaboration Agreement, and option fees under the Gilead Collaboration Agreement;

the extent to which we acquire or in-license other investigational products and technologies;

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We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all .

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our investigational products.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our investigational product s.

If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our

technologies or investigational products .

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or investigational products.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.

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We may encounter delays in enrolling, or be unable to enroll and maintain, a sufficient number of subjects to complete any of our clinical trials.

Patient enrollment and retention in clinical trials is a significant factor in the timing of clinical trials and depends on many factors, including the size of the patient population required for analysis of the trial’s primary endpoints, the nature of the trial protocol, our ability to recruit clinical trial investigators with the appropriate competencies and experience, the existing body of safety and efficacy data with respect to the investigational product, the number and nature of competing products or investigational products and ongoing clinical trials of competing investigational products for the same indication, the proximity of subjects to clinical trial sites, the eligibility criteria for the clinical trial and our ability to obtain and maintain subject consents.

protocol, our ability to recruit clinical trial investigators with the appropriate competencies and experience, the existing body of safety and efficacy data with respect to the investigational product, the number and nature of competing products or investigational products and ongoing clinical trials of competing investigational products for the same indication, the proximity of subjects to clinical trial sites, the eligibility criteria for the clinical trial and our ability to obtain and maintain subject consents.

For example, enrollment of oncology subjects in our zimberelimab clinical trial may be hampered by nivolumab from Bristol-Myers Squibb and pembrolizumab from Merck, both of which are approved and on the market.

Subjects may opt to be treated with an

approved product rather than our anti-PD-1 antibody investigational product.

Subjects may opt to be treated with an approved product rather than our anti-PD-1 antibody investigational product.

In addition, Roche/Genentech have initiated Phase 3 trials with their anti-TIGIT antibody, which could reduce the number of clinical sites and subjects available for our Phase 2 trial evaluating our own anti-TIGIT antibody, AB154.

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Public health outbreaks, such as the COVID-19 (coronavirus) pandemic, are also expected to adversely impact our clinical trial operations.

We anticipate that the limited resources available at investigational sites will limit their ability to conduct and report all patient assessments and hinder their ability to collect all patients samples, which may impact our ability to assess the activity of our investigational products in a timely manner.

We anticipate that the limited resources available at investigational sites will limit their ability to initiate new studies, screen and enroll subjects, conduct and report all patient assessments and hinder their ability to collect all patients samples, which may impact our ability to assess the activity of our investigational products in a timely manner.

Furthermore, any negative results that we may report in clinical trials of our investigational products may make it difficult or impossible to recruit and retain subjects in other clinical trials of that same investigational product.

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changes in regulatory requirements and policies, which may require us to amend clinical trial protocols to comply with these changes and resubmit our clinical trial protocols to IRBs for reexamination;

health crises and other epidemics, such as the recent COVID-19 outbreak, which has led to mandatory quarantines that has restricted the ability of trial sites to initiate new trials, screen patients for enrollment or treat enrolled patients, and has

diverted clinical trial site resources away from the conduct of our clinical trials.

These and other factors may also lead to the suspension or termination of clinical trials, and ultimately the denial of regulatory approval of an investigational product.

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(Gloria Biosciences, formerly known as Harbin Gloria Pharmaceuticals Co.

Ltd.) each licensed our rights to the same

anti-PD-1 antibody (which we refer to as zimberelimab ) from WuXi Biologics (Cayman) Inc.

Ltd.) each licensed our rights to the same anti-PD-1 antibody (which we refer to as zimberelimab) from WuXi Biologics (Cayman) Inc.

(WuXi Biologics).

Gloria Biosciences refers to this antibody as GLS-010 and is conducting clinical trials with GLS-010 in China.

We have no control over their clinical trials or development program, and adverse findings from the results or their conduct of clinical trials could adversely affect our development of zimberelimab or even the viability of zimberelimab as a n investigational product .

We may be required to report Gloria Biosciences’ adverse events or unexpected side effects to the FDA or comparable foreign regulatory authorities, which could, among other things, order us to cease further development of zimberelimab.

We may face similar risks to our programs that Taiho has exercise d its option to license development rights under the Taiho Agreement.

We may face similar risks to our programs that Taiho has exercised its option to license development rights under the Taiho Agreement.

A key element of our strategy is the development of intra-portfolio combinations.

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Certain of our investigational products may require companion diagnostics in certain indications.

Failure to successfully develop, validate and obtain regulatory clearance or approval for such tests could harm our product development strategy or prevent us from realizing the full commercial potential of our investigational products.

Failure to successfully develop, validate and obtain regulatory clearance or approval for such tests could harm our product development strategy or prevent us

from realizing the full commercial potential of our investigational products .

Companion diagnostics are subject to regulation by the FDA and comparable foreign regulatory authorities as a medical device and may require separate regulatory authorization prior to commercialization.

Certain clinical trials that we are conducting, or may in the future conduct, include the use of a diagnostic test to help identify eligible patients.

For example, we are conducting a clinical trial

in collaboration with Strata Oncology (Strata) to evaluate zimberelimab in patients in a tumor-agnostic fashion utilizing Strata’s precision drug development platform and proprietary biomarkers.

W e also have significant efforts directed to identifying changes in various cells and proteins to understand their relationship, if any, to the clinical activity observed in our clinical trials and to assess if such cells and/or proteins could be used as predictive biomarkers to select for patients more likely to respond to our investigational products.

For example, we are conducting a clinical trial in collaboration with Strata Oncology (Strata) to evaluate zimberelimab in patients in a tumor-agnostic fashion utilizing Strata’s precision drug development platform and proprietary biomarkers.

We also have significant efforts directed to identifying changes in various cells and proteins to understand their relationship, if any, to the clinical activity observed in our clinical trials and to assess if such cells and/or proteins could be used as predictive biomarkers to select for patients more likely to respond to our investigational products.

However, we cannot be certain that we will be able to identify any such biomarkers, that such biomarkers will result in us identifying the appropriate patients for our investigational products or that we or any third party collaborators will be able to validate any diagnostic tests incorporating any predictive biomarkers we may identify.

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In May 2020, we entered into an option, license and collaboration Agreement (the Gilead Collaboration Agreement) with Gilead Sciences, Inc.

(Gilead) pursuant to which Gilead obtained an exclusive option to all of our current and future programs during the 10-

year collaboration term.

Upon Gilead’s exercise of its option to a program, the companies will co-develop and equally share global development costs, subject to certain opt-out rights for us, expense caps on our spending and true-up adjustments.

(Gilead) pursuant to which Gilead obtained an exclusive option to all of our current and future programs during the 10-year collaboration term contingent upon Gilead’s payment of up to $400.0 million.

Upon Gilead’s exercise of its option to a program, the companies will co-develop and equally share global development costs, subject to certain opt-out rights for us, and expense caps on our spending and related subsequent adjustments.

For each optioned program, provided we have not exercised our opt-out rights, we have an option to co-promote in the United States and share equally all associated profits and losses.

Gilead has the right to exclusively commercialize any optioned programs outside of the U.S., subject to the rights of our existing partners to any territories, and will pay us tiered royalties as a percentage of revenues ranging from the high teens to the low twenties.

In connection with the entering into of the Gilead A greement, we and Gilead also entered into a common stock purchase agreement and an investor rights agreement.

In connection with the entering into of the Gilead Collaboration Agreement, we and Gilead also entered into a common stock purchase agreement and an investor rights agreement.

Our agreements with Gilead pose a number of risks including, but not limited to, the following:

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In addition, our clinical trials must be conducted with product produced under cGMP regulations.

Our failure to comply with these regulations may require us to stop and/or repeat clinical trials, which would delay the marketing approval process.

Our failure to comply with these regulations may require us

to stop and/or repeat clinical trials, which would delay the marketing approval process.

There is no guarantee that any such CROs, clinical trial investigators or other third parties on which we rely will devote adequate time and resources to our development activities or perform as contractually required.

If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, otherwise performs in a substandard manner, or

terminates its engagement with us, the timelines for our development programs may be extended or delayed or our development activities may be suspended or terminated.

If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, otherwise performs in a substandard manner, or terminates its engagement with us, the timelines for our development programs may be extended or delayed or our development activities may be suspended or terminated.

If any of our clinical trial sites terminates for any reason, we may experience the loss of follow-up information on subjects enrolled in such clinical trials unless we are able to transfer those subjects to another qualified clinical trial site, which may be difficult or impossible.

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These factors would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to have another third party manufacture our investigational products.

If we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines.

If we are required to change

manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines.

The delays associated with the verification of a new manufacturer could negatively affect our ability to develop investigational products in a timely manner or within budget.

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in the event of approval to market and commercialize our investigational products, an inability to meet commercial demands for our product or any other future investigational products.

We, or our third-party manufacturers, may be unable to successfully scale-up manufacturing of our investigational products in sufficient quality and quantity, which would delay or prevent us from conducting clinical trials and developing our investigational products.

In order to conduct clinical trials of our investigational products, we will need to manufacture them in large quantities.

We, or our manufacturing partners, may be unable to successfully increase the manufacturing capacity for any of our investigational products in a timely or cost-effective manner, or at all.

We, or our third-party manufacturers, may be unable to successfully produce or scale-up manufacturing of our investigational products in sufficient quality and quantity, which would delay or prevent us and/or our third-party collaborators from conducting clinical trials and developing our investigational products.

We, or our third-party manufacturers, will need to manufacture and supply large quantities of our investigational products to support our clinical development plans.

With respect to investigational products from optioned programs, we, or our third-party manufacturers, may need to produce additional quantities to support the scope of our joint clinical development program with Gilead, Gilead’s additional evaluations with its own proprietary products or Taiho’s independent clinical development plans.

Furthermore, we are a party to various collaboration and supply arrangements, such as our clinical trial collaboration with Genentech to evaluate etrumadenant and atezolizumab utilizing the MORPHEUS platform.

We, or our manufacturing partners, may be unable to successfully increase the manufacturing capacity for any of our investigational products in a timely or cost-effective manner, or at all, to support these collective needs.

In addition, quality issues may arise during scale-up activities.

If we or our manufacturing partners are unable to successfully scale up the manufacture of our investigational products in sufficient quality and quantity, the development, testing and clinical trials of that investigational product may be delayed or become infeasible, and marketing approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.

If we or our manufacturing partners are unable to successfully produce or scale up the manufacture of our investigational products in sufficient quality and quantity, the development, testing and clinical trials of that investigational product may be delayed or become infeasible, and marketing approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.

Changes in methods of investigational product manufacturing or formulation may result in additional costs or delay.

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our failure to establish sales and marketing capabilities;

the failure of our products to achieve the degree of market acceptance by physicians, patients, hospitals, cancer treatment centers, healthcare payors and others in the medical community necessary for commercial success;

the fa ilure of our products to achieve the degree of market acceptance by physicians, patients, hospitals, cancer treatment centers, healthcare payors and others in the medical community necessary for commercial success ;

unfavorable pricing regulations or third-party coverage and reimbursement policies;

inaccuracies in our estimates of the addressable patient population resulting in a smaller market opportunity than we believed.

If any of our investigational products for which we have or retain sales and marketing responsibilities are approved, we must either develop a sales and marketing organization, which would be expensive and time consuming, or outsource these functions to

other third parties.

We may be unable to recruit and retain adequate numbers of effective sales and marketing personnel, and i f we enter into arrangements with third parties to perform sales, marketing and distribution services our product revenue or the profitability of these product revenue to us are likely to be lower than if we were to market and sell any medicines that we develop ourselves.

We may be unable to recruit and retain adequate numbers of effective sales and marketing personnel, and if we enter into arrangements with third parties to perform sales, marketing and distribution services our product revenue or the profitability of these product revenue to us are likely to be lower than if we were to market and sell any medicines that we develop ourselves.

Furthermore, our commercial success is dependent on obtaining coverage and reimbursement approval for a product from a government or other third-party payor, which is a time-consuming and costly process that could require us and any collaborators to provide supporting scientific, clinical and cost effectiveness data for the use of our products to the payor.

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The law is complex and is still being interpreted and implemented by the FDA.

As a result, any such processes could have a material adverse effect on the future commercial prospects for our biological products.

As a result, any such processes could

have a material adverse effect on the future commercial prospects for our biological products.

Zimberelimab and AB154 are biological products and we may develop additional biological products in the future.

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Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.

Moreover, the extent to which a biosimilar, once approved, could be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-

biological products will depend on a number of marketplace and regulatory factors that are still developing.

Moreover, the extent to which a biosimilar, once approved, could be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products will depend on a number of marketplace and regulatory factors that are still developing.

Risks Related to our In-Licenses and Other Strategic Agreements

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As a result, if we enter into in-license, acquisition or collaboration agreements, or strategic partnerships, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture, which could delay our timelines or otherwise adversely affect our business.

We also cannot be certain that, following a strategic transaction or license, we will achieve the revenue or specific net income that justifies such transaction or such other benefits that led us to enter into the arrangement.

We also cannot be certain that, following a strategic transaction or license, we will achieve the revenue or specific net income

that justifies such transaction or such other benefits that led us to enter into the arrangement.

For example, under the Gilead Collaboration Agreement , for each program Gilead exercises its option to, it will pay an option fee that ranges from $200 million to $275 million for our current clinical programs, and $150 million per program for all other programs that enter clinical development.

Furthermore, we and Gilead will equally share global development costs, as well as profits and losses for the United States, subject to certain opt-out rights for us, expense caps on our spending and true-up adjustments.

Furthermore, we and Gilead will equally share global development costs, as well as profits and losses for the United States, subject to certain opt-out rights for us, and expense caps on our spending and related subsequent adjustments.

If Gilead does not exercise its option to develop a program, our capital requirements relating to that development program will significantly increase and we may need to seek a new partner in order to develop and commercialize our investigational products from that program.

any planned sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense.

Failure to realize the benefits of any collaborations or strategic alliances may further cause us to curtail the development of a n investigational product , reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any planned sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense.

If we elect to fund and undertake development or commercialization activities on our own, we will need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all.

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If we do not have sufficient funds, we may not be able to further develop our investigational products or bring them to market and generate product revenue.

Our operating activities may be restricted by certain covenants in our license and other strategic agreements, which could limit our development and commercial opportunities.

Our operating activities may be restricted by certain covenants in our license and other strategic agreements, which could limit our

development and commercial opportunities.

In connection with certain of our acquisitions, in-license or other collaborations or strategic alliances, we may agree to and be bound by negative covenants which may limit our development and commercial opportunities.

For example, pursuant to our in-license of anti-PD-1 antibodies from WuXi Biologics, we made certain covenants to not commercialize any anti-PD-1 antibody licensed or obtained by us after the date of the license agreement with WuXi Biologics other than anti-PD-1 antibodies licensed from WuXi Biologics, subject to certain exceptions as set forth in our license agreement with WuXi Biologics.

Furthermore, we agreed in our license agreement that WuXi Biologics would be our exclusive manufacturer of anti-PD-1 antibodies licensed thereunder until a certain number of years has elapsed following commercialization of such an anti-PD-1 antibody and that we would utilize WuXi Biologics as our exclusive provider of CMC development services for our biologic investigational products for five years from the

date of our license agreement, subject to certain exceptions in each case.

These exclusivity provisions may inhibit our development efforts, prevent us from forming strategic collaborations to develop and potentially commercialize any other anti-PD-1 antibody investigational products and may materially harm our business, financial condition, results of operations and prospects.

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In the event of litigation or administrative proceedings, we cannot be certain that the claims in any of our issued patents will be considered valid by courts in the United States or foreign countries.

We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third party patent which might adversely affect our ability to develop and market our products.

We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third party

patent which might adversely affect our ability to develop and market our products.

We cannot guarantee that any of our patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third party patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of our investigational products in any jurisdiction.

The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history.

Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may

negatively impact our ability to market our products.

Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our products.

We may incorrectly determine that our products are not covered by a third party patent or may incorrectly predict whether a third party’s pending application will issue with claims of relevant scope.

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

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

An adverse outcome in a litigation or proceeding involving our

patents could limit our ability to assert our patents against those parties or other competitors, and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products.

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

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Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation.

There could also be public

announcements of the results of hearings, motions or other interim proceedings or developments.

There could also be public announcements of the results of hearings, motions or other interim proceedings or developments.

If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock.

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As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents.

However, the patent position of biopharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation, resulting in court decisions, including Supreme Court decisions, that have increased uncertainties as to the ability to obtain and enforce patent rights in the future.

However, t he patent position of biopharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation, resulting in court decisions, including Supreme Court decisions, that have increased uncertainties as to the ability to obtain and enforce patent rights in the future.

Changes in either the patent laws or interpretation of the patent laws in the United States and other countries could increase the uncertainties and costs.

For example, in September 2011 the Leahy-Smith America Invents Act (the America Invents Act) was signed into law and included a number of significant changes to U.S.

For example, in September 2011 the Leahy-Smith America Invents Act (t he America Invents Act ) was signed into law and include d a number of significant changes to U.S.

patent law as then existed .

These include provisions that affect the way patent applications are prosecuted, redefine prior art and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents.

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.

After March 2013, under the America Invents Act, the United States transitioned to a first inventor to file system in which, assuming that the other statutory requirements are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention.

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If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property.

Such an outcome could have a material adverse effect on our business.

Such an outcome

could have a material adverse effect on our business.

Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

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Even if patents covering our investigational products are obtained, once the patent life has expired for a product, we may be open to competition from biosimilar or generic products.

A patent term extension based on regulatory delay may be available

in the United States.

A patent term extension based on regulatory delay may be available in the United States.

However, only a single patent can be extended for each marketing approval, and any patent can be extended only once, for a single product.

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Rosen and Jaen have significant experience identifying and developing biopharmaceuticals.

We believe that their drug discovery and development experience, and overall biopharmaceutical company management experience, would be difficult to

We believe that their drug discovery and development experience, and overall biopharmaceutical company management experience, would be difficult to replace.

However, the historical results, past performance and/or acquisitions of companies with which they were affiliated do not necessarily predict or guarantee similar results for our company.

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Regarding our anti-PD-1 antibody, zimberelimab, multiple large pharmaceutical companies have already received regulatory approvals for their anti-PD-1/PD-L1 antibodies, including AstraZeneca, Bristol-Myers Squibb, Merck, Pfizer in partnership with Merck KGaA, Regeneron in partnership with Sanofi Genzyme and Roche/Genentech, and there are also many other anti-PD-1 and anti-PD-L1 antibodies in clinical development.

With respect to our anti-TIGIT antibody, AB154, we are aware of several pharmaceutical companies developing antibodies against this target, including Astellas, Beigene, Bristol-Myers Squibb, Compugen, Genentech, Innovent, Merck KGaA, Mereo and Seattle Genetics.

With respect to our anti-TIGIT antibody, AB154, we are aware of several pharmaceutical companies developing antibodies against this target, including Agenus, Astellas, Beigene, Bristol-Myers Squibb, Compugen, Genentech, Innovent, iTeos Therapeutics, Merck KGaA, Mereo and Seattle Genetics.

To our knowledge, there are no approved anti-TIGIT antibodies.

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Smaller and other early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and subject enrollment for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and subject

enrollment for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

The key competitive factors affecting the success of all of our programs are likely to be their efficacy, safety, convenience, and availability of reimbursement.

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Furthermore, significant disruptions of our internal information technology systems or security breaches could result in the loss, misappropriation, and/or unauthorized access, use, or disclosure of, or the prevention of access to, confidential information (including trade secrets or other intellectual property, proprietary business information, and personal information), which could result in financial, legal, business, and reputational harm to us.

In particular, any such event that leads to unauthorized access, use, or disclosure of personal information, including personal information regarding our clinical trial subjects or employees, could harm our reputation directly, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information, which could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business.

In particular, any such event that leads to unauthorized access, use, or disclosure of personal information, including personal information regarding our clinical trial subjects or employees, could

harm our reputation directly, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information, which could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business.

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

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

The current global economic conditions are highly volatile due to the COVID-19 pandemic and government restrictions on movement, which may lead to disruptions in the capital and credit markets and reduce our ability to raise additional

capital when needed on acceptable terms, if at all.

Furthermore, we conduct, and we expect to continue to conduct, portions of our clinical trials outside the United States, and unfavorable economic conditions resulting in the weakening of the U.S.

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Our headquarters and main research facility are located in the San Francisco Bay Area, which in the past has experienced severe earthquakes and fires.

If these earthquakes, fires, other natural disasters, terrorism and similar unforeseen events beyond our control prevented us from using all or a significant portion of our headquarters or research facility, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.

If these earthquakes, fires, other natural disasters, terrorism and similar unforeseen events beyond our control

prevented us from using all or a significant portion of our headquarters or research facility, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.

We do not have a disaster recovery or business continuity plan in place and may incur substantial expenses as a result of the absence or limited nature of our internal or third party service provider disaster recovery and business continuity plans, which, particularly when taken together with our lack of earthquake insurance, could have a material adverse effect on our business.

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federal and state fraud and abuse, transparency and other healthcare laws and regulations, and similar laws in other jurisdictions in which we conduct our business.

These laws may impact, among other things, our research and proposed sales, marketing and education programs and constrain the business of financial arrangements and relationships with healthcare providers, physicians and other parties through which we market, sell and distribute our products for which we obtain

marketing approval.

The laws that may affect our ability to operate include, but are not limited to the federal Anti-Kickback Statute;

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the federal transparency requirements under the Physician Payments Sunshine Act;

state and foreign law equivalents of each of the se federal laws ;

state and foreign law equivalents of each of these federal laws;

and state and foreign laws that require pharmaceutical companies to implement compliance programs.

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We can be held liable for the corrupt or other illegal activities of our personnel, agents, or partners, even if we do not explicitly authorize or have prior knowledge of such activities.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or

incur costs that could have a material adverse effect on the success of our business.

We, and the third parties with whom we share our facilities, are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes.

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We cannot eliminate the risk of contamination or injury from these materials.

We could be held liable for any resulting damages in the event of contamination or injury resulting from the use of hazardous

materials by us or the third parties with whom we share our facilities, and any liability could exceed our resources.

We could be held liable for any resulting damages in the event of contamination or injury resulting from the use of hazardous materials by us or the third parties with whom we share our facilities, and any liability could exceed our resources.

We also could incur significant costs associated with civil or criminal fines and penalties.

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option fees received by us in connection with option exercises by Taiho and/or Gilead pursuant to their respective option agreements;

amounts payable by us in connection with the achievement of development, regulatory and commercial milestones under our in-license and other strategic agreements;

our ability to attract, hire and retain qualified personnel;

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Our internal control over financial reporting will not prevent or detect all errors and all fraud.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

A control system, no matter how well

designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

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To the extent necessary, implementing any changes to our internal controls may distract our officers and employees, entail substantial costs to modify our existing processes and take significant time to complete.

These changes may not,

however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our business.

These changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and harm our business.

Commencing with our fiscal year ending December 31, 2020, our independent registered public accounting firm will be required to perform an evaluation of our internal control over financial reporting.

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The concentration of our stock ownership will likely limit our stockholders’ ability to influence corporate matters, including the ability to influence the outcome of director elections and other matters requiring stockholder approval.

Based upon shares outstanding as of July 15, 2020, after the closing of our collaboration agreement with Gilead, our executive officers, directors and the holders of more than 5% of our outstanding common stock, in the aggregate, beneficially owned approximately 38.7% of our common stock.

Gilead, which owns approximately 13% of our outstanding common stock, also has the right to designate two individuals to be appointed to our board of directors, of which we have already appointed one of its designees.

Based upon shares outstanding as of October 15, 2020, our executive officers, directors and the holders of more than 5% of our outstanding common stock, in the aggregate, beneficially owned approximately 31.5% of our common stock.

Gilead, which owns approximately 13% of our outstanding common stock, also has the right to designate two individuals to be appointed to our board of

directors, of which we have already appointed one of its designees.

As a result, these stockholders, acting together, will have significant influence over all matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions.

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Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of our common stock.

stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders.

Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders.

In addition, our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following:

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Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our certificate of incorporation or our bylaws or any action asserting a claim against us that is governed by the internal affairs doctrine.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may discourage these types of lawsuits.

This choice of forum provision may limit a

stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may discourage these types of lawsuits.

Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions .

Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Defaults Upo n Senior Securities.

Mine Safety Disclosures.

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-Q

Item 1A. Risk Factors